Tsumitate NISA - Change of Holdings

[jatman]

Dear all,

In April this year I started a tsumitate NISA account based on 2 holdings (one domestic and one international). I would like to ask if it is possible to change 1 of the holdings. If it is possible I would like to know:
1/ When can you change your holdings?
2/ What are tax implications of changing (ie selling) one of you holdings.

Thank you.

JATMAN

[zeroshiki]

Dear all,

In April this year I started a tsumitate NISA account based on 2 holdings (one domestic and one international). I would like to ask if it is possible to change 1 of the holdings. If it is possible I would like to know:
1/ When can you change your holdings?
2/ What are tax implications of changing (ie selling) one of you holdings.

Thank you.

JATMAN

When you say holdings do you mean you bought 2 different funds with Tsumitate NISA?

There is no way to change them outside of selling them. You could start buying different funds starting now and just forget about the one you don't like.

Tsumitate NISA is tax free so there is no tax hit but if you do sell something that's only 4 months old, you won't really get that much of a profit anyways AND the amount you had bought counts against your tsumitate NISA limit for the year. Its why alot of the regulars here (and RJ himself) recommends going with a safe fund like the emaxis slim all country where there's little chance you will want to sell it in the 20 years you would be holding it.

[Kanto]

Dear all,

In April this year I started a tsumitate NISA account based on 2 holdings (one domestic and one international). I would like to ask if it is possible to change 1 of the holdings. If it is possible I would like to know:
1/ When can you change your holdings?
2/ What are tax implications of changing (ie selling) one of you holdings.

Thank you.

JATMAN

When you say holdings do you mean you bought 2 different funds with Tsumitate NISA?

There is no way to change them outside of selling them. You could start buying different funds starting now and just forget about the one you don't like.

Tsumitate NISA is tax free so there is no tax hit but if you do sell something that's only 4 months old, you won't really get that much of a profit anyways AND the amount you had bought counts against your tsumitate NISA limit for the year. Its why alot of the regulars here (and RJ himself) recommends going with a safe fund like the emaxis slim all country where there's little chance you will want to sell it in the 20 years you would be holding it.

It is almost always better just to hold and not sell. With the Tsumtiate NISA virtually all holdings are investment trusts. As long as you chose something fairly diversified, with a low-fee structure I would not consider selling.

[beanhead]

Yes, just change it for your future investments and leave what you have sitting there. In the long term, over 20 years, you won't really notice the poor performance or high fees of that left-over small holding in whatever you don't like.

I would not suggest putting any domestic funds into Tsumitate NISA. This is a tax-advantaged account; you want the highest growth. So go with world equity funds. Keep away from bond funds in the NISA too.
REITs - not sure, the jury is still out for me. If we are really looking at a 20-year horizon, I think the all country or developed world funds are a safer bet for growth, personally.

[Kanto]

Yes, just change it for your future investments and leave what you have sitting there. In the long term, over 20 years, you won't really notice the poor performance or high fees of that left-over small holding in whatever you don't like.

I would not suggest putting any domestic funds into Tsumitate NISA. This is a tax-advantaged account; you want the highest growth. So go with world equity funds. Keep away from bond funds in the NISA too.
REITs - not sure, the jury is still out for me. If we are really looking at a 20-year horizon, I think the all country or developed world funds are a safer bet for growth, personally.

I agree with this sentiment. However, you cannot put bond funds in a NISA. The closest things are the 3-way - 8-way asset split funds.

Emaxis REIT funds reinvest internally, so you do not have the dividend tax worry. And you probably want them at 10% max of you portfolio, so it is probably easier to balance them in a taxable.

I think 100% growth equities make sense for Tsumitate.

My wife went 100% Advanced-Country, I went 100% All-Country.

She is winning.

[beanhead]

I agree with this sentiment. However, you cannot put bond funds in a NISA. The closest things are the 3-way - 8-way asset split funds.

Ah, yes, I forgot that. Good point. It's weird that you can put them in iDeCo but not tsumitate NISA, isn't it?

[zeroshiki]

I assume its because one of the main purposes of NISA was to encourage equity investments.

[Kanto]

I assume its because one of the main purposes of NISA was to encourage equity investments.

Indeed. Bonds are also very accessible and more familiar to the average Japanese investor.

Mizuho tried to get my wife to buy Japanese bonds directly, or invest in a bond fund or annuity-like product. This is how a lot of Japanese end up "investing". (These calls and meetings requests are triggered once your cash-holdings hit a certain amount).

The FSA wants to encourage actual growth through equity investments. The Tsumitate - Nisa also forces banks, to have at least passable offerings. Though they tend to be much worse than the big online firms.

[beanhead]

Indeed. Bonds are also very accessible and more familiar to the average Japanese investor.

Another good point. I have a small amount of non-traded bonds from the local bank. When I got them they paid out 4%, so not bad, even considering the 20% tax. Dividend this June was down to about 2%. I think that, given that these things cannot be liquidated quickly, I would be better off buying 100 stocks in a dividend-paying company that is traded on a market...