How will the re-investment work?

[nanaya]

I'm wondering, given these steps:

1. put in 100000
2. it grows to 150000
3. take out 50000

how much of the limit will I get back? 25000? how is it calculated? is it by number of stocks multiplied by original purchase price?

what if the purchases span over several months/years? is it by average? or based on original purchase price? in that case, in what order?

The limit is a contribution amount. The value of the current holdings are irrelevant.

yes but how much of the contribution is taken out when I sell part of it? I'm pretty sure I won't get full 50000 limit back in my example above? ...or will I?

I hope this can make the question a bit clearer:

1. put in 100000 (contributed 100000 / (18M-100k) remains)
2. it grows to 150000 (contributed 100000 / (18M-100k) remains)
3. take out 50000 (contributed 100000 / (18M-100k) remains)
4. wait a year (contributed how much? 50000? 66667? 100000? / (18M-???) remains)

[Roger Van Zant]

I could use up 100,000 yen's worth, sell it, and still have 300,000 yen left to use.
So selling and reinvesting is not an issue, as long as I don't max out the 400,000 yen limit.

What are people talking about with regard to the 新NISA? What's the difference?

Example 1 - Classic Regular Nisa -> 1,2000,000 year. Lifetime total - > 6,000,000.

A. If your Nisa account had 6,000,000 yen total, (5 years' worth of investment) And you sold 3,000,000 yen. That is it. No more space for you. You "used it up".

The only possible way your Nisa can grow now is through your investment increasing in value. No more contributions.

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Example 2 - New Nisa -> 3,6000,000 year. Lifetime total - > 18,000,000.

B. You have 18,000,000 yen. A full Regular Nisa. You sell 5,000,000 yen to put a downpayment on a house in 2030.

In 2031 you can put 3,200,000 yen into your account
In 2032 you can put 1,800,000 yen into your account

How is the 3,200,000 yen figure arrived at? That's the maximum per year?

[Roger Van Zant]

I could use up 100,000 yen's worth, sell it, and still have 300,000 yen left to use.
So selling and reinvesting is not an issue, as long as I don't max out the 400,000 yen limit.

What are people talking about with regard to the 新NISA? What's the difference?

Example 1 - Classic Regular Nisa -> 1,2000,000 year. Lifetime total - > 6,000,000.

A. If your Nisa account had 6,000,000 yen total, (5 years' worth of investment) And you sold 3,000,000 yen. That is it. No more space for you. You "used it up".

The only possible way your Nisa can grow now is through your investment increasing in value. No more contributions.

------------------------------------------------------------------------------------

Example 2 - New Nisa -> 3,6000,000 year. Lifetime total - > 18,000,000.

B. You have 18,000,000 yen. A full Regular Nisa. You sell 5,000,000 yen to put a downpayment on a house in 2030.

In 2031 you can put 3,200,000 yen into your account
In 2032 you can put 1,800,000 yen into your account

Also....from what you have written above, the 18,000,000 yen is not really a "lifetime total" at all, is it?
In your example, even though you may have reached the 18,000,000 total, all you have to do is sell a chunk, and then you can start investing again. Any time you reach 18,000,000 total, just sell some. You could thus invest way more than 18,000,000 over several decades.
This 18,000,000 should more rightly be called "The maximum balance you can hold at any one point in time", no?

[TokyoBoglehead]

I'm wondering, given these steps:

1. put in 100000
2. it grows to 150000
3. take out 50000

how much of the limit will I get back? 25000? how is it calculated? is it by number of stocks multiplied by original purchase price?

what if the purchases span over several months/years? is it by average? or based on original purchase price? in that case, in what order?

The limit is a contribution amount. The value of the current holdings are irrelevant.

yes but how much of the contribution is taken out when I sell part of it? I'm pretty sure I won't get full 50000 limit back in my example above? ...or will I?

I hope this can make the question a bit clearer:

1. put in 100000 (contributed 100000 / (18M-100k) remains)
2. it grows to 150000 (contributed 100000 / (18M-100k) remains)
3. take out 50000 (contributed 100000 / (18M-100k) remains)
4. wait a year (contributed how much? 50000? 66667? 100000? / (18M-???) remains)

Growth and Contributions are separate, I think you are conflating them.

Contribution limits: 3,600,000 years/18,000,000 lifetime
Growth limit: Unlimited

[TokyoBoglehead]

I could use up 100,000 yen's worth, sell it, and still have 300,000 yen left to use.
So selling and reinvesting is not an issue, as long as I don't max out the 400,000 yen limit.

What are people talking about with regard to the 新NISA? What's the difference?

Example 1 - Classic Regular Nisa -> 1,2000,000 year. Lifetime total - > 6,000,000.

A. If your Nisa account had 6,000,000 yen total, (5 years' worth of investment) And you sold 3,000,000 yen. That is it. No more space for you. You "used it up".

The only possible way your Nisa can grow now is through your investment increasing in value. No more contributions.

------------------------------------------------------------------------------------

Example 2 - New Nisa -> 3,6000,000 year. Lifetime total - > 18,000,000.

B. You have 18,000,000 yen. A full Regular Nisa. You sell 5,000,000 yen to put a downpayment on a house in 2030.

In 2031 you can put 3,200,000 yen into your account
In 2032 you can put 1,800,000 yen into your account

Also....from what you have written above, the 18,000,000 yen is not really a "lifetime total" at all, is it?
In your example, even though you may have reached the 18,000,000 total, all you have to do is sell a chunk, and then you can start investing again. Any time you reach 18,000,000 total, just sell some. You could thus invest way more than 18,000,000 over several decades.
This 18,000,000 should more rightly be called "The maximum balance you can hold at any one point in time", no?

the 32,000,000 should have been 36,000,000

______________________

18,000,000 is a lifetime contribution limit. It is not the maximum balance. The pot can grow past that, but only through dividend growth (mutual fund), or increase evaluation.

[Roger Van Zant]

Example 1 - Classic Regular Nisa -> 1,2000,000 year. Lifetime total - > 6,000,000.

A. If your Nisa account had 6,000,000 yen total, (5 years' worth of investment) And you sold 3,000,000 yen. That is it. No more space for you. You "used it up".

The only possible way your Nisa can grow now is through your investment increasing in value. No more contributions.

------------------------------------------------------------------------------------

Example 2 - New Nisa -> 3,6000,000 year. Lifetime total - > 18,000,000.

B. You have 18,000,000 yen. A full Regular Nisa. You sell 5,000,000 yen to put a downpayment on a house in 2030.

In 2031 you can put 3,200,000 yen into your account
In 2032 you can put 1,800,000 yen into your account

Also....from what you have written above, the 18,000,000 yen is not really a "lifetime total" at all, is it?
In your example, even though you may have reached the 18,000,000 total, all you have to do is sell a chunk, and then you can start investing again. Any time you reach 18,000,000 total, just sell some. You could thus invest way more than 18,000,000 over several decades.
This 18,000,000 should more rightly be called "The maximum balance you can hold at any one point in time", no?

the 32,000,000 should have been 36,000,000

______________________

18,000,000 is a lifetime contribution limit. It is not the maximum balance. The pot can grow past that, but only through dividend growth (mutual fund), or increase evaluation.

The lifetime contribution can easily go above 18,000,000 yen though....

For example:

2024 contribute 3.6m
2025 contribute 3.6m
2026 contribute 3.6m
2027 contribute 3.6m
2028 contribute 3.6m
....total contributed is now 18m

2029 sell 2m
2030 contribute 2m (the 2m you sold in 2029 has "freed up" 2m for you in 2030)
2031 sell 1.5m
2032 contribute 1.5m (the 1.5m you sold in 2031 has "freed up" 1.5m for you in 2032)
....total contributed is now 18m (2024~2028) + 2m + 1.5m = 21.5m.

You just have to sell a chunk in order to be able to pay more in the next year?

[sutebayashi]

There is no 5-year period from 2024. It is forever/eternal/"until the end of time" NISA.

Right, but I regards 5 years as relevant with respect to the re-invest angle, because it will take 18m / 3.6m per year = 5 years to use up the full allocation first time around.

how much of the limit will I get back?

50,000/150,000 is a third, so for your basic case I think you’d have freed up 33,333 yen.

what if the purchases span over several months/years? is it by average? or based on original purchase price? in that case, in what order?

Have fun calculating that, but it should be FIFO treatment, oldest positions getting sold first. It would not be by average, but looking at each purchase made.

[sutebayashi]

This 18,000,000 should more rightly be called "The maximum balance you can hold at any one point in time", no?

Yes I think your gist of it is correct, but this “balance” you mention is the amount invested (and not yet sold), not the current market value of that investment.

[Roger Van Zant]

I could use up 100,000 yen's worth, sell it, and still have 300,000 yen left to use.
So selling and reinvesting is not an issue, as long as I don't max out the 400,000 yen limit.

What are people talking about with regard to the 新NISA? What's the difference?

Example 1 - Classic Regular Nisa -> 1,2000,000 year. Lifetime total Contribution Limit - > 6,000,000.

A. If your Nisa account had 6,000,000 yen total, (5 years' worth of investment) And you sold 3,000,000 yen. That is it. No more space for you. You "used it up".

The only possible way your Nisa can grow now is through your investment increasing in value. No more contributions.

------------------------------------------------------------------------------------

Example 2 - New Nisa -> 3,6000,000 year. Lifetime total Contribution Limit - > 18,000,000.

B. You have 18,000,000 yen. A full Regular Nisa. You sell 5,000,000 yen to put a downpayment on a house in 2030.

In 2031 you can put 3,600,000* yen into your account
In 2032 you can put 1,800,000 yen into your account

Okay, I get the 3,600,000 yen amount.
How do you arrive at the 1,800,000? Shouldn't that be 1,400,000 (5,000,000 - 3,600,000)?

[TokyoBoglehead]

.