NISA - portfolio for the longest term

[ChapInTokyo]

Going to depend on your situation (of course). I'm planning to have a barbell like allocation: large chunk of cash and world stock fund. But also hoping to have far more money than we need, which will give us a lot of flexibility (we should be able to live off our pensions more or less).

You would probably want something in your NISA that is going to grow though -is a Nikkei 225 fund going to be the best part of your portfolio for that?

Woo hoo! My Monex NISA account is now online! After thinking about this and that, I decided that filling my NISA account with Nikkei 225 is perhaps not the best option and decided to go with Blackrock's Tsumitate iShares S&P500 IVV wrap fund (thinking about maybe filling the growth part of NISA with VXUS...)

One glitch I need to work around is that I can only buy 100,000 yen per month without any option to buy more in 'bonus' months because I set it up to buy the funds using my Monex credit card. Should I simply do additional purchases when I see the fund prices dip in the coming months? Or is it perhaps possible to set up an additional 100,000 yen credit card tsumitate for the same funds, or failing that for a similar one like the eMaxis Slim S&P500 fund...? I guess either would work?

[beanhead]

Basics on NISA are covered here:

https://www.retirejapan.com/nisa/

and on the Wiki

https://retirewiki.jp/wiki/NISA

Tsumitate portion is as you describe. There is the growth portion as well.

[ChapInTokyo]

Basics on NISA are covered here:

https://www.retirejapan.com/nisa/

and on the Wiki

https://retirewiki.jp/wiki/NISA

Tsumitate portion is as you describe. There is the growth portion as well.

Thanks. It's a pretty convoluted system! I had to jump through quite a few hoops to set up the tsumitate portion at Monex so I'd be able to use up the 1,200,000 yen quota in the remaining 6 months of 2024 because the Kreka Tsumitate via Monex Card doesn't allow bonus months to be set up.

[ChapInTokyo]

I'd go with the balanced fund for stability and ease of management in your NISA account.

Thanks. I’ll have another think about maybe going the with a balanced fund in the NISA.

One idea I had this morning was to go with a more fragmented portfolio across NISA, taxable Monex and taxable Firstrade accounts, and then as I start withdrawing more and more from the taxable accounts and rebalancing with the NISA becomes more fiddly, repopulate the NISA with a balanced fund for the final stretch. The problem with this of course is that it’ll take five years to change the funds in the NISA account to the balanced fund. Hmmm. Maybe less of a headache to start off with a balanced fund and stay the course?

[captainspoke]

Looks like a lot of minutiae to me.

Simplify to one fund, and go do (think about) something else.

[ChapInTokyo]

So true! Simplifying to a balanced fund definitely seems to be the way to go, especially since what you buy in a NISA account becomes somewhat sticky (since there's a quota limit that can be bought in any given year not only in the accumulation phase but further down the line during the draw down phase.)

That being the case, the Rakuten Index Balanced Fund (a wrap of Vanguard VT and BNDW) seems to be good for my needs. Considering that I'd probably be pushing 80 by the time I'd need to start drawing down from the NISA account, I decided in the end to go with the 50:50 VT-BNDW allocation which pretty much equates to the allocation of the Saison Global Balanced Fund which has performed well for me over the past decade and more, but with the Rakuten offering substantially lower fees.

I chose to go with the 50:50 allocation on the basis of backtesting the Rakuten Index Balanced Fund allocations using portfoliovisualizer.com (chart below), in inflation adjusted terms, using the MSCI All Country World Index as a benchmark.

Although the most conservative allocation would have kept pace with inflation with the least risk, and the MSCI ACWI would have got the most gains with the greatest risk, I decided to allow for a bit of growth with moderate risk with the 50:50 since this NISA stash is for the longest term (during my lifetime).

So that's my NISA one fund portfolio done!