New NISA strategy -GO!

[Bushiman]

I'm in exactly the same boat.
Wouldn't you want to sell 'before' the old 5yr NISA wrapper comes off i.e. in December to lock in all those gains tax-free? If you wait till those investments have been moved to your taxable account and then sell, you'll be liable for tax on any increase in value from January 1st, no?

I think it would be a mere matter of days so probably not likely to accrue any major taxable gains or losses over the interim.

Indeed. And the long term capital gains savings you'll receive will more than make-up for an missed market movement.

Adams advice might be suited for those who would never comment in a thread like this though ..

OK cool...
So the general consensus is to let Legacy NISA investments transfer into the taxable account, then sell early January and instantly buy back in the New NISA?

[adamu]

I'm going to keep posting because people might be arriving here from web searches figuring out what to do with the new NISA, and the majority probably do not have a full old NISA of investments, or an active interest in investing, so the focus on selling/rebuying is a huge message in the wrong direction.

I agree that if you have existing investments and investing the full New NISA annual amount from new money is out of your reach, it makes sense to transfer the investments to the new NISA (hoping the market doesn't shoot up while you are out of it. To be fair it tends to shoot down, then creep up again).

However, for the majority, just setting up monthly investments of up to ¥300k/mo is the way to go.

I guess you could try to lump-sum the growth portion every January, but I still think unless you do it on a strict schedule, that will lead to attempting to time the market, so the monthly contribution route is better.

[RetireJapan]

I'm going to keep posting because people might be arriving here from web searches figuring out what to do with the new NISA, and the majority probably do not have a full old NISA of investments, or an active interest in investing, so the focus on selling/rebuying is a huge message in the wrong direction.

I agree that if you have existing investments and investing the full New NISA annual amount from new money is out of your reach, it makes sense to transfer the investments to the new NISA (hoping the market doesn't shoot up while you are out of it. To be fair it tends to shoot down, then creep up again).

However, for the majority, just setting up monthly investments of up to ¥300k/mo is the way to go.

I guess you could try to lump-sum the growth portion every January, but I still think unless you do it on a strict schedule, that will lead to attempting to time the market, so the monthly contribution route is better.

If you have decades and buy something vaguely sensible, it's not going to matter much when and how you fill your New NISA, as long as you do so

[sutebayashi]

I agree with adamu that for someone accumulating, spreading out in monthly investments tsumitate style is the way to go about it. (I too will continue to tsumitate so long as I have spare income with which to do so.)

But for those with money already accumulated and invested or available otherwise, then going straight into the NISA growth allocation with a lump sum shot seems a good idea (there were threads about this elsewhere). If I got an inheritance or gift for example, I would probably go lump sum, or maybe split it across a few months at least to avoid the risk of buying the top and feeling stink (better to lump sum theoretically, but whatever as RetireJapan says).

Still, the annual NISA limit will limit a lump sum to a couple of million anyway. With money already invested, I see the tax free of NISA as just a giveaway (to the rich, frankly - many may never max out their new NISA) to be taken advantage of, but I’m going to be invested anyway.

But indeed for those attracted to investing because of the effective lowering of the cap gains tax rate to 0% in NISA, going with tsumitate is probably the best way to start. That’s what I did myself, 9 years back when starting out, and continue to do everywhere.

[adamu]

As a general rule, set and forget monthly investments is the simplest, easiest way to set yourself up for success.

If you have a lump sum / individual stocks / special circumstances, sure, make use of the growth portion. Just don't time the market.

But favouring habit over discipline (which automated monthly investments helps with) is always going to be better in the long run

[eyeswideshut]

Well that sucks, 2019 and 2020 were incredible years for me. I've got over 4m in both of those years.

woah - what did you invest in? That is a 350% ROI over 5 years!

[sutebayashi]

Yes, tell me about it! Individual stocks perhaps?

I got a biannual report from one of our DC plans the other day, and in it they showed the distribution of returns for all invested in the DC. As one would expect there was a concentration of modest returns in the middle, like a bell curve.
But then on the outlying ends, top and bottom, some were making or losing more than 20%.
I have gotta check what one could put all ones money in to either win big or lose big like that. It’s not like one can buy any old thing in a DC, so at a glance it was a surprise.

[Jansen]

Well that sucks, 2019 and 2020 were incredible years for me. I've got over 4m in both of those years.

woah - what did you invest in? That is a 350% ROI over 5 years!

Nothing special, just AAPL, MSFT, AMZN and GOOG. I expected these to go up so I bought them inside NISA. My ETFs and eMaxis are in standard taxed accounts.

[TokyoBoglehead]

Well that sucks, 2019 and 2020 were incredible years for me. I've got over 4m in both of those years.

woah - what did you invest in? That is a 350% ROI over 5 years!

Nothing special, just AAPL, MSFT, AMZN and GOOG. I expected these to go up so I bought them inside NISA. My ETFs and eMaxis are in standard taxed accounts.

That's the 4/5 of the top QQQ holdings, or 40% of the index.

I'm glad your concentrated us tech bet worked out for you!

[Deep Blue]

However, for the majority, just setting up monthly investments of up to ¥300k/mo is the way to go.

I agree. That is what I will do.