Different NISA Type Returns

[Gulliver]

Has anybody found out for sure yet if when you have money in the three different NiSA types (Legacy, New 1 and 2) next year, and it is all in the same brokerage and the same fund- will the the balance of all three be combined when calculating returns? Or will each individual type generate a separate return amount (reducing your compounding advantage etc.)?

Also, if you found the answer please provide a reference.

[RetireJapan]

I don't understand the question. Why would having the investments be split up on paper make any difference to your return?

I presume they will all be shown separately, as currently buying the same fund with a broker in taxable, tokutei, and NISA results in three different entries.

[Gulliver]

I don't understand the question. Why would having the investments be split up on paper make any difference to your return?

I presume they will all be shown separately, as currently buying the same fund with a broker in taxable, tokutei, and NISA results in three different entries.

So that would mean to get the biggest return as quickly as possible, your priority would be filling the ¥2.4 million type? (And if you hypothetically had 1.2 million saved in the legacy Nisa you would want to take that out and put that into the new general Nisa and add 1.2 million in new money, for a total of 2.4 mill).

[RetireJapan]

All things being equal, it would be better to have your investments in a tax-free account.

So if you can't fill the New NISA with new money, it might be worth selling investments in taxable accounts in order to fill NISA.

I'll probably do that if I can't get enough new cash to fill in 2024.

[Gulliver]

All things being equal, it would be better to have your investments in a tax-free account.

So if you can't fill the New NISA with new money, it might be worth selling investments in taxable accounts in order to fill NISA.

I'll probably do that if I can't get enough new cash to fill in 2024.

Hmmm. Not sure if we’re going over each other’s heads.

I’m only talking about the three different tax free Nisa types we now have to deal with, and how to get the best return next year.

Like I said, let’s create a hypothetical scenario where you have 1.2 million in a legacy Nisa and suddenly have 1.2 million to invest for 2024. Also, I want to get the best potential return.

Wouldn’t it make sense to buy the new general (2.4 million) Nisa with that money? Vs. having two different $1.2 million accounts?

[northSaver]

Wouldn’t it make sense to buy the new general (2.4 million) Nisa with that money? Vs. having two different $1.2 million accounts?

Why? The returns you'll get will be exactly the same, regardless of whether the money is in two NISAs or one. This assumes that you'll be investing in the same fund of course, e.g. eMAXIS Slim All World in both. If you don't believe this then have a play with a compound interest calculator such as this one:

http://www.moneychimp.com/calculator/co ... ulator.htm

[RetireJapan]

Hmmm. Not sure if we’re going over each other’s heads.

I really don't understand what you are thinking here.

Each yen invested in a specific fund will have the same return, regardless of which account it is in.

If you have legacy NISA accounts, there is no reason not to hold them to maturity while putting new money into the new NISA. Once the legacy NISA's tax-free periods expire, you can then sell the investments and rebuy within new NISA.

[Gulliver]

Wouldn’t it make sense to buy the new general (2.4 million) Nisa with that money? Vs. having two different $1.2 million accounts?

Why? The returns you'll get will be exactly the same, regardless of whether the money is in two NISAs or one. This assumes that you'll be investing in the same fund of course, e.g. eMAXIS Slim All World in both. If you don't believe this then have a play with a compound interest calculator such as this one:

http://www.moneychimp.com/calculator/co ... ulator.htm

Oh wow, you’re right!

That one has been hurting my brain for a while now. Not having to move the money around will make life much easier. Thanks for that.

[Roger Van Zant]

All things being equal, it would be better to have your investments in a tax-free account.

So if you can't fill the New NISA with new money, it might be worth selling investments in taxable accounts in order to fill NISA.

I'll probably do that if I can't get enough new cash to fill in 2024.

Hmmm. Not sure if we’re going over each other’s heads.

I’m only talking about the three different tax free Nisa types we now have to deal with, and how to get the best return next year.

Like I said, let’s create a hypothetical scenario where you have 1.2 million in a legacy Nisa and suddenly have 1.2 million to invest for 2024. Also, I want to get the best potential return.

Wouldn’t it make sense to buy the new general (2.4 million) Nisa with that money? Vs. having two different $1.2 million accounts?

Why would you take money out of a legacy NISA only to invest it in the new NISA from 2024? I don't understand?
Just leave the money in the legacy NISA for either five years or twenty years (depending on whether you have a standard NISA or the つみたてNISA).