The importance of time in the market

News around Trump’s push to renegotiate tariffs and the ongoing drama involving Elon Musk have been making headlines—and shaking things up a bit. While the broader market has held steady, Tesla’s share price has taken a hit in response to recent events.

We’ve also seen movement on the economic front, with budget announcements and interest rate cuts coming into play.

With all the noise and volatility, it’s worth remembering why we stay the course. The fund managers we work with are actively adjusting portfolios as needed, so you don’t have to react to every headline. It’s a timely reminder to keep your focus on medium- to long-term goals.

The graph below is a great visual of why time in the market beats trying to time the market—missing just a few key days can make a big difference (source: Russell Investments).

This graph shows the final outcomes of an initial $100K investment, based on how many of the best days in the market that the investment missed.

• If you missed none of the best days, the $100K would have grown by 129.2% (or 8.65% per year) over the 10 years ending 31 May 2024.

• If you missed the best 10 days, the $100K would have grown by 64.41% (or 5.10% per year) over the 10 years ending 31 May 2024.

• If you missed the best 20 days, the $100K would have grown by 33.85% (or 2.96% per year) over the 10 years ending 31 May 2024.

• If you missed the best 30 days, the $100K would have grown by 11.31% (or 1.08% per year) over the 10 years ending 31 May 2024.

• If you missed the best 40 days, the $100K would have lost 6.10% (or -0.63% per year) over the 10 years ending 31 May 2024.

As you can see, by missing just 10 days, your final outcome may only be half as good as you would have achieved by just staying invested.

The 2025 Budget and May OCR

Budget 2025 KiwiSaver changes

In the 2025 Budget, the government introduced changes to KiwiSaver and other sectors, including health, business, education, defence, infrastructure, cost of living, etc.

Click the button below to read more.

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May 2025 OCR Decision

On 28 May, the Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 25 basis points to 3.25%, marking the second consecutive small cut.

Key points:

• Inflation rose to 2.5% in Q1 but remains within the RBNZ’s 1–3% target band.

• Core inflation is easing, and there’s spare capacity in the economy, which supports the case for rate cuts.

• The decision was not unanimous—one member of the Monetary Policy Committee was against the cut.

• The RBNZ is cautious about the global outlook, citing rising tariffs and policy uncertainty in major economies like the US and China.

• The central bank hinted at possibly one more cut later in the year.

The cut to 3.25% should ease mortgage costs and help households with the cost of living. The next OCR review is due on 9 July 2025.

For more information on the May OCR update, please click below.

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Market update

United States

• The S&P 500 rose +6.2%, and the NASDAQ surged +9.6% in May, driven by tech sector strength.

• US 10-year treasury bond yield increased by around +0.14%, but bond markets remain volatile.

• Market optimism was fueled by easing trade tensions and postponed tariffs.

• Job growth exceeded expectations; unemployment remains steady at 4.2%.

• Inflation (CPI) came in lower than expected.

• The Federal Reserve held rates steady but signalled a more hawkish stance due to potential stagflation risks.

• Markets now expect two rate cuts of -0.25% each in September and December.

New Zealand

• Unemployment held at 5.1% in Q1 2025, better than the expected rise to 5.3%, due to a lower participation rate.

• Wage growth slowed, indicating a softening job market—aligned with RBNZ’s inflation goals.

• The Budget emphasised fiscal restraint; Treasury downgraded growth forecasts and raised borrowing needs.

• Market expectations now lean towards one more cut, with a small chance of a second.

• NZ term interest rates rose: 2-year +0.24%, 5-year +0.25%.

• The NZD appreciated by +0.47% in May.

Australia

• Employment data beat forecasts, showing continued economic strength.

• The RBA cut interest rates by -0.25% to 3.85%, with a dovish tone.

• The Board considered a larger cut but opted for caution due to inflation and uncertainty.

• Markets see an 80% chance of another rate cut in July.

Asia

• Asian markets in May saw strong gains, especially in Taiwan (up +3.13%) and South Korea (up +9.26%).

• A weaker US dollar and easing trade tensions with the US supported broader regional gains.

• China's market remained mixed, with cautious investor sentiment amid uneven economic data and ongoing trade negotiations.

Europe

• The MSCI Europe ex-UK Index rose +4.9% in May, supported by progress in US–EU trade negotiations, easing recession fears, and expectations of fiscal support and upward earnings revisions.

• The UK FTSE All-Share Index increased +4.1%, making it one of the weaker performers among major European markets.

• UK small-cap stocks outperformed, supported by a Bank of England rate cut and renewed UK–EU cooperation.

• Overall, European equities benefited from improved investor sentiment and transatlantic cooperation.

Finally, please check on your KiwiSaver contributions to make sure you’re on track to receive the maximise government contribution for this KiwiSaver year, which runs from 1 July 2024 to 30 June 2025. The government contribution is currently eligible for those aged 18 to 64.

If you would like to discuss your investment portfolio, retirement planning needs, goals-based investing approach, or any other financial planning matters, please feel free to give our office a call at 09 553 8928 or email us at info@trilogyfs.co.nz.

We are always happy to help.

Sincerely,

The Team at Trilogy Financial Solutions