NISA or Tsumitate Nisa? Help me choose

[al3x_jp]

Hi everyone,
I'm really new in investing, I've spent the past weeks reading about NISA and Tsumitate NISA but still can't decide which option is better for me.

Little background: european living in Japan, japanese wife and 2 kids. Recently started Junior NISA for them and iDECO (23,000/month)
Have 7m yen that I wan to invest, was thinking to lump sum the NISA every year for 5 years then rollover to a Tsumitate NISA or just get started with the TN right away?
I've read a lot of differnt opinion but still confused about my case, is it worth it max out the NISA for five years?

Appreciate your help

[RetireJapan]

Both are good options. How long till you need the money?

For many people tsumitate NISA is a better choice. You can automate it, it is small amounts of money, the products available in the accounts are very suitable for diversified long-term investing.

You can invest alongside t-NISA in a taxable account if you have extra money to invest.

[al3x_jp]

We have an emergency account already, so hopefully don't need them anytime soon.
At the same time I don't want to leave everything in the bank, as you said investing in a taxable account might be a good option. I've read good comments about the eMAXIS Slim, is it a good move to invenst on them in the TN and the rest on the taxable account?

[adamu]

In both cases you will need to invest extra in a taxable account, because you have 7M and the max you can put into a NISA in a year is 1.2M, and you probably won't want to leave it in cash for years, especially with rising inflation.

Which NISA to go for depends if you favour simplicity or if you want as much tax-free allowance as soon as possible. In the end, they work out about the same as long as you also top up in a taxable account too, so it's probably best to go for the simplest (Tsumitate) one. But if you have itchy feet (like me) and Tsumitate feels slow, you might want to to for the NISA route.

NISA route: Invest 1.2M in a NISA in 2022 and 2023, 1.22 in a New NISA for the 2024-2026 (the system changes in 2024), roll your expiring NISA into the New NISA for 2027 and 2028, then roll your expiring 5 years of New NISA into a Tsumitate NISA for 2029-2033. The rest of the years (2034-2042) same as the Tsumitate route below.

Tsumitate route: Tsumitate every month from 2022 to 2042.

[al3x_jp]

Thanks for the detailed explanation.

The point is that I have zero experience in investing so I'd prefer put as much as possible into NISA or TS because it looks simpler and more safe.
Or there are some safe options I can invest too with a taxable account?

[adamu]

The products you can buy in a NISA are also available in a taxable account. So just buy the same thing in both the NISA and taxable account.

If you want simplicity, you can't go wrong with Tsumitate NISA. Once that's up and running, you can start to think about making lump sum or regular automated taxable investments too.

[beanhead]

The point is that I have zero experience in investing so I'd prefer put as much as possible into NISA or TS because it looks simpler and more safe.

There is nothing intrinsically safe about NISA or tsumitate NISA.
You are buying mutual funds, or individual stocks. If those funds go down in value, so will your investment. The only difference between the NISA and non-NISA investing is the tax treatment of your gains.

Your concern about 'safe' investing suggests that you may need to do a little bit more research and decide what your preferred asset allocation (cash, some bonds (?), equity funds) should be.

[RetireJapan]

We have an emergency account already, so hopefully don't need them anytime soon.
At the same time I don't want to leave everything in the bank, as you said investing in a taxable account might be a good option. I've read good comments about the eMAXIS Slim, is it a good move to invenst on them in the TN and the rest on the taxable account?

I get the feeling you might benefit from reading a book about investing before getting started.

Millionaire Teacher is a good one: https://amzn.to/39BzpXm
as is The Simple Path to Wealth: https://amzn.to/3Pv5OPT
and Just Keep Buying: https://amzn.to/3PpFB5z

Just one of those should be enough.

[al3x_jp]

I get the feeling you might benefit from reading a book about investing before getting started.

Millionaire Teacher is a good one: https://amzn.to/39BzpXm
as is The Simple Path to Wealth: https://amzn.to/3Pv5OPT
and Just Keep Buying: https://amzn.to/3PpFB5z

Just one of those should be enough.

Thank you very much the suggestion, will definitely look into those

[Bubblegun]

We have an emergency account already, so hopefully don't need them anytime soon.
At the same time I don't want to leave everything in the bank, as you said investing in a taxable account might be a good option. I've read good comments about the eMAXIS Slim, is it a good move to invenst on them in the TN and the rest on the taxable account?

I get the feeling you might benefit from reading a book about investing before getting started.

Millionaire Teacher is a good one: https://amzn.to/39BzpXm
as is The Simple Path to Wealth: https://amzn.to/3Pv5OPT
and Just Keep Buying: https://amzn.to/3PpFB5z

Just one of those should be enough.

Millionaire teacher is indeed a good read, but
May I just add one caveat, in regards to that book. The author in the book references vanguard a lot, and I mean a lot, which got me thinking why and looking at the pages nobody reads and after that search, he does have a connection to Vanguard. Just for the clarity! I think it's important that what ever books we reader Youtuber we listen to, we consider the authors motivation. Including our own.

We have three accounts with vanguard and have been very happy with them so far, but I also have E maxi too.

I would also add to that list The richest man in Babylon.I enjoyed it and is a tale about investments. The book is about 100 years old, and still holds true.