Tsumitate NISA launch
We talked briefly on the blog about the new tsumitate NISA accounts that will become available next year.
I got an email from Rakuten Securities last week telling me my new (2018-2023) NISA account application had successfully completed. The way the NISA system was set up was two five-year periods, so we are about to start the second one. At present the NISA system will end in 2023. I hope it will be extended or replaced with something similar or better.
The email also said that the Tsumitate NISA account option will start next year, and explained how to change to it.
Basically you log in, go to the NISA section, click on ‘NISA・ジュニアーNISA申し込み/受付状態’, then choose ‘口座の種類を変更申し込み’.
The process at Rakuten seems to involve a postal application, so might be worth doing sooner rather than later if you want to change to a tsumitate NISA.
Apparently once you change to a tsumitate NISA you have to use it for a year and won’t be able to change back until the following year.
Rakuten Securities does not have a list of the products that will be available in the tsumitate NISA yet, but apparently these are the rules set by the government as to the kinds of funds that would be appropriate.
The idea is that only low-cost products will be offered in the tsumitate NISA, although the fee of up to 1.25% on ETFs doesn’t seem particularly low cost to me!
It is nice to see that both foreign and domestic ETFs may be available in the new accounts alongside mutual funds.
So what do you think? Is anyone considering the new tsumitate NISA? I think I will stick to the regular one and continue aiming to max out my account, my wife’s, and my granddaughter’s junior NISA.
Hello Ben
SBI Securities has a list of pre-approved mutual funds which are eligible for the new NISA scheme, so chances are most of them will also eventually appear on Rakuten’s list.
However other than a small handful of low cost index funds, the remainder seems to be really expensive.
I think the most reasonable strategy going forward is to continue maxing out any NISA accounts under the current scheme until 2023, then switch over to this new scheme assuming nothing changes by that time.
Barring any unexpected changes to NISA again, starting from 2024 the most reasonable strategy should be to max out iDeCO, then NISA, then any remaining sum into the Vanguard Total World Stock ETF (VT) at quarterly intervals.
That’s disappointing. Hopefully competition will force them to expand the range of decent options in the fund.
I’m still hoping we’ll get a NISA 2.0 when the current one runs out!
The range of funds doesn’t seem to be that bad actually. Both the new Rakuten funds (the ones containing total US stock market and total world ETFs) are there.
https://site1.sbisec.co.jp/ETGate/WPLETmgR001Control?OutSide=on&getFlg=on&burl=search_nisa&cat1=nisa&cat2=tsumitate&dir=tsumitate&file=nisa_tsumitate_lineup.html
Like we talked about in the comments to another post, I think I would only be interested in the tsumitate NISA for my daughter’s Jr NISA, but I haven’t had any emails from Rakuten telling me that I can do that, so I guess it’s not possible.
Yeah, the Junior NISA doesn’t make much sense, eh? Why not make it tax-free until they are 18?
A nagging sense that I’m missing something, but is there any point at all in changing from a normal to tsumitate NISA right now, rather than waiting until the normal one runs out and then changing? Unless I win the lottery I’m not going to be maxing out my regular NISA next year, but still don’t see any point in changing. But as mentioned, I may well have missed something…
I can’t see one. If you can only put in up to the limit of the tsumitate NISA (400,000 yen) it might be a good option if you find investments offered in there that you want, otherwise my plan is to use the regular for as long as possible then tsumitate if there is no other option.
According to a recent article in the Nippon Keizai Shinbun (Nikkei), the tsumitate NISA is essentially intended to entice young, inexperienced savers into putting their money into investments rather than savings accounts. That is why there is so much emphasis on minimizing risk and keeping the total possible investment amount relatively low. Apparently over half of the current NISA accounts are dormant, having being opened but never used. According to the same article the majority of investment funds will be provided by the online brokers like Rakuten and SBI. The major banks don’t seem all that keen on the scheme; Sumitomo Mitsui Bank for example is only planning on offering 3 funds. The rather strict limitations imposed by the Japanese Financial Agency on the types of investments has meant that in total only 114 funds so far meet the necessary criteria which has obvious implications for investment options and portfolio rebalancing. Of these 114 approved funds, 100 are index funds most of which will undoubtedly track the larger stock indices like the Dow Jones, Nasdaq, Topix, etc. with much overlap between, which will again reduce your potential investment options. Better to stick to the current NISA scheme and hope they extend/enlarge it.
As an aside I would recommend to you (and your readers) the Saturday edition of the Nikkei. It publishes a ‘Money & Investment’ section each week which provides very helpful insight and analysis on various aspects of personal finance issues in Japan. In recent weeks it has covered Tsumitate NISA, robo-advisers (jury is still out in their long-term worth), and the government’s student loan scheme (could be much better). Finally, I thoroughly enjoy your blog and sincerely hope you keep up the good work.
Thanks, Brian. Some useful context there 🙂
Will also check out the Saturday Nikkei. My wife’s a subscriber luckily!
One reason I eventually thought of that might justify changing if it’s true, is: if I can ‘pause’ my normal NISA by changing to
… to continue, if I can ‘pause’ my normal NISA by changing to a tsumitate one, then change back when I think my income will be higher and I have more to invest, that would be a good reason to change now. But I’m not sure that’s how it works – any ideas?
Hi Adam
I don’t think that is how NISA works. Each year of the NISA is independent of the others, so in a sense you don’t have a ‘NISA account’ to pause, you just have a bunch of NISA years that have a maximum duration of five or (for the new one) twenty years…
Right, I feared that might be the case. Thanks, that settles it then 🙂
Hi all, new to Japan and NISA. My naive question assumes the following scenario: open and max regular NISA in 2018 and end with 6mm JPY tax-free in the end of 2022. From then on can I just move this 6mm to a tsumitate NISA, max it every year for remaining 15 years and end up with the whole 12mn JPY tax free in 2037? Or is it that tsumitate will start from 0 tax free and I can only invest 6mm for 15 years? Many thanks!
Hi John
Sadly no 😉
NISA probably should work like that, but instead of a single account, NISA treats each year separately.
Each year of a normal NISA is tax-free for five years, then the assets come out and get moved into your taxable account or rolled over into a new NISA year. For the tsumitate it’s twenty years, but the same concept.
Each year’s allowance is dealt with separately.