Switching from tsumitate NISA and if it's worth it

[zeroshiki]

Rakuten seems to imply its possible
https://www.rakuten-sec.co.jp/nisa/tsum ... count.html

※ 10月1日から12月31日の間に区分変更のお手続きをいただいた場合、翌年のNISA口座区分からの変更となります。
※ 一般NISAとつみたてNISAを選択後、お取引された場合、翌年まで区分変更（一般NISA⇒つみたてNISA、つみたてNISA⇒一般NISA）できませんので、ご注意ください。

- Application after October means your change will only apply in January.
- Application after you've already made a transaction will apply the next year

[bryanc]

thanks all.

im monex-but it would seem that it would be impossible this yr as the change would only apply from jan which would be too late for this yrs amount.Or can i apply now and use this yrs one in Jan?

[zeroshiki]

thanks all.

im monex-but it would seem that it would be impossible this yr as the change would only apply from jan which would be too late for this yrs amount.Or can i apply now and use this yrs one in Jan?

The NISA allowance is valid per year. You can apply to change to T-NISA next year (and you probably should if you want to) but for this year just use your normal one. 5 years is better than nothing.

[Jansen]

My spreadsheet has 5 different patterns:
1. Infinite NISA rollovers (we don't know if this is possible)
2. 1 time NISA, tokutei afterwards
3. TNISA
4. NISA rollover to TNISA
5. NISA with a rollver then rollover to TNISA

Of these 5, the just TNISA option gives you the least return

I am not disagreeing with your math, but this is all assuming a 1,200,000 yen lump sum investment in January?

I think NISA (regular) has always been considered the best option in that scenario.

However, the vast majority of users cannot achieve this. That is why T-NOSA + Tokutei is usually suggested as a default.

That math certainly shows that it`s not worth losing too much sleep over either way.

Yeah, 1.2M every January. Instinctively, you think NISA is the better option if you have the funds but this basically shows that the longer no-tax period does bring TNISA quite close (at 20 years you can make the argument that TNISA is better). Its why I don't recommend NISA on this forum anymore unless its for users with only a short period for investment.

It just occured to me that since I'm rolling over next year, I have an additional 1.2m that's going straight into my tokutei account. Sounds like that might advantage the NISA column a bit more. Or maybe you've already factored that into your calculations, then don't mind me.

[zeroshiki]

It just occured to me that since I'm rolling over next year, I have an additional 1.2m that's going straight into my tokutei account. Sounds like that might advantage the NISA column a bit more. Or maybe you've already factored that into your calculations, then don't mind me.

Yeah, that's part of the spreadsheet up there. It assumes 1.2M no matter what and has the scenarios for NISA rolling over to itself or even to T-NISA.

[tbsmj]

An often unstated assumption in many of the comparisons between NISA and Tsumitate NISA is that whatever investment vehicle you used in the starting year continues to exist throughout the tax-free period.

That might sound far-fetched, but although I'm only doing NISA, I've already encountered that issue: I put some of my very first NISA allowance into an emerging market ETF five years ago, and that ETF ended up being liquidated a year or so later. I got my money back just fine, but it left a 200k yen hole into that year's NISA allowance that couldn't be recouped.

Many of the funds we recommend around here are only a few years old, so it's not a given that they will still exist 20 years from now, completely independently of the performance of the indices they replicate. Maybe they have enough assets under management to continue forever, but maybe the fund managers decide to close them for whatever reason, and the same issue arises. That's one of the reasons I prefer regular NISA over Tsumitate.

[EmaxisSlim Cultist]

Many of the funds we recommend around here are only a few years old, so it's not a given that they will still exist 20 years from now, completely independently of the performance of the indices they replicate. Maybe they have enough assets under management to continue forever, but maybe the fund managers decide to close them for whatever reason, and the same issue arises. That's one of the reasons I prefer regular NISA over Tsumitate.

I would not extend this to the funds commonly recommended on this site: Emaxis Slim (All Country/Developed Countries and S&p500 funds) along with Rakuten-Vanguard products.

1. Rakuten Vanguard products invest in the American ETFs. It is harder to get safer than that. (VTI/VOO)

2. Emaxis Slim Products have a massive amount under management, track indexes that are well understood, and are managed by MUFJ the world's biggest bank outside of China. These are passive investments.

Now if you want to talk about active funds, ESG wraps, and the like. Absolutely, there is a huge risk.

By contrast, in my opinion, the regular NISA is a much more risky proposition. 5 years of a bear market, and a poor fund/stock selection and you have wasted your allocation. The ONLY reason I see to go with Regular Nisa is if you are a high earner who has 1.2million yen to invest every January. Or, if you have a short timeline, (Less than a decade in Japan).

[adamu]

12million yen

Need to step that down an order of magnitude.

[zeroshiki]

I mean if you have 12M every January to invest, that probably solves alot of problems

[EmaxisSlim Cultist]

12million yen

Need to step that down an order of magnitude.

Indeed, I found the missing "."

However, my point still stands! I think those anxieties are really misplaced.