Strategy for the 2025 NISA

[adamu]

Worst case:

You sell in December, occurring 20% CGT bill.
The price goes up before you can rebuy.
You are at a loss, but still have to pay the tax.

There is another one:

You sell, rebuy, and the price *drops* and doesn't recover by the time you need to sell. End-result is you paid CGT, wasted your NISA allowance, and can't offset the losses. This is true for NISA in general, but the extra CGT is unique to selling outside /rebuying inside a NISA. This happened to someone on Reddit yesterday, for example: https://www.reddit.com/r/JapanFinance/c ... sa_losses/

Not saying don't do it, just that there are risks.

[Bubblegun]

Thanks for peoples knowledge on this.
Much appreciated.

For the past 25+ years I’ve been in the s&p500, and had an all world fund. Now, I’d like to consider being a little safer.
Bonds? I guess a little bondage might be safer!
Any suggestions? On funds. I think I’d like to start buying those if I have another 6 years before retirement.
I’ve seen my few shares of crashes in my time, and I’ve just ridden the roller coaster and never bothered but now’s time to think, about more slowly.
I’m currently using Rakuten platform. And can put fresh money into it.

[Tsumitate Wrestler]

Thanks for peoples knowledge on this.
Much appreciated.

For the past 25+ years I’ve been in the s&p500, and had an all world fund. Now, I’d like to consider being a little safer.
Bonds? I guess a little bondage might be safer!
Any suggestions? On funds. I think I’d like to start buying those if I have another 6 years before retirement.
I’ve seen my few shares of crashes in my time, and I’ve just ridden the roller coaster and never bothered but now’s time to think, about more slowly.
I’m currently using Rakuten platform. And can put fresh money into it.

With foreign bonds you get all of the currency risk, without none of the volatility/growth or stocks. Whether that is safer or not depends on your feelings towards currency risk.

The Japanese index investing community tends to recommend Global equities paired with Japanese government bonds/cash holdings.

Some here have advocated for mixing a non-currency hedged bond fund, with a currency hedged bond fund.

....

There is no simple answer like there would be in the US= Buy treasuries, the UK=Buy Gilts, or Canada=Buy savings bonds.

Low interest rates mean, no substantial free yield.

[sutebayashi]

I may trick myself into not worrying about re-purchase prices by buying different assets.

I think this is a surmountable problem.

Let’s say you have 10,000 yen of free cash (feel free to pick a larger amount), and you deposit it to your securities account.

Then one day, you enter
1) a sell order worth 10,000 yen of Fund XYZ from your tokutei account, and
2) you also buy 10,000 yen worth of the same fund in your NISA.
Both sell and buy orders will be executed at the same price, if you enter then before the same order deadline.

The 10,000 yen you had already will go towards the NISA purchase, but a few days later you’ll get the 10,000 yen from the sale of the fund back.

I am ignoring the tax here, since personally I don’t have my tokutei account set to auto-collect taxes, and file a kakutei shinkoku. If one does have the tax automatically deducted then yes the amount received back will be less tax though, so it’s not for everyone.

[Tsumitate Wrestler]

I may trick myself into not worrying about re-purchase prices by buying different assets.

I think this is a surmountable problem.

Let’s say you have 10,000 yen of free cash (feel free to pick a larger amount), and you deposit it to your securities account.

Then one day, you enter
1) a sell order worth 10,000 yen of Fund XYZ from your tokutei account, and
2) you also buy 10,000 yen worth of the same fund in your NISA.
Both sell and buy orders will be executed at the same price, if you enter then before the same order deadline.

The 10,000 yen you had already will go towards the NISA purchase, but a few days later you’ll get the 10,000 yen from the sale of the fund back.

I am ignoring the tax here, since personally I don’t have my tokutei account set to auto-collect taxes, and file a kakutei shinkoku. If one does have the tax automatically deducted then yes the amount received back will be less tax though, so it’s not for everyone.

We essentially do this, but it is worth noting that this works better with ETFs. Mutual funds do not settle that quickly.

However, I do think worrying about 5 days of market time is a bit silly, when you can reduce the risk by simply splitting the amount into tranches.

Split 2.4 million into 600,000 yen segments. Sell, rebuy, repeat.

[Bubblegun]

However, I do think worrying about 5 days of market time is a bit silly, when you can reduce the risk by simply splitting the amount into tranches.

Split 2.4 million into 600,000 yen segments. Sell, rebuy, repeat.

I was kinda thinking this. Its almost like TIMING the market.Will it go up, will it go down. I did it lst year, and well this year the S&P500 and NASDAQ went ballistic.

With foreign bonds you get all of the currency risk, without none of the volatility/growth or stocks. Whether that is safer or not depends on your feelings towards currency risk.

The Japanese index investing community tends to recommend Global equities paired with Japanese government bonds/cash holdings.

Some here have advocated for mixing a non-currency hedged bond fund, with a currency hedged bond fund.

....

There is no simple answer like there would be in the US= Buy treasuries, the UK=Buy Gilts, or Canada=Buy savings bonds.

Low interest rates mean, no substantial free yield.

This seems more like a damned if you do and damned if you don't. Damned if you Dom cause the Yen might strengthen, so foreign bonds, get less yen when sold. And damned if i stay in the stock market cause the S&P500 could sink too. And JAPANESE BONDS, with a return on a 10 year JP BOND being 0.93% is still a loss as its lower than inflation.

Japanese government bonds/cash holdings.

Both would appear to be money loss makers. 0.93% on JP bonds.and cash holdings appear to be even worse in a bank with basically 0.something interest.

There is no simple answer like there would be in the US= Buy treasuries, the UK=Buy Gilts, or Canada=Buy savings bonds.

So does anyone know the amount of risk? Are we talking Zimbabwean,Reich currency levels of risk?
Is the risk less than say staying in stocks and shares?

[Tsumitate Wrestler]

So does anyone know the amount of risk? Are we talking Zimbabwean,Reich currency levels of risk?
Is the risk less than say staying in stocks and shares?

It depends on what you buy. Let us assume a simple case where you log onto Rakuten and buy US treasury strips or notes directly.

The yield and coupon is then exactly what is stipulated on the strip or note. The investment risk is basically non-existent as it is US government debt.

The risk then is pure USD <==> YEN currency risk.

If you can map that out, you will never need to work a day in your life again.

[Bubblegun]

So does anyone know the amount of risk? Are we talking Zimbabwean,Reich currency levels of risk?
Is the risk less than say staying in stocks and shares?

It depends on what you buy. Let us assume a simple case where you log onto Rakuten and buy US treasury strips or notes directly.

The yield and coupon is then exactly what is stipulated on the strip or note. The investment risk is basically non-existent as it is US government debt.

The risk then is pure USD <==> YEN currency risk.

If you can map that out, you will never need to work a day in your life again.

I'f my understanding is correct, this currency risk is also apparent in our S&P500 funds/Global funds too? So, if the S&P500 has a currency risk, and a stock crash risk, we might be reducing our risks by half. Because the bonds would provide their return if 4.5% no matter if the stock went up or crashed.
So, If I was to buy an ETF with US bonds/Guilts/, and say the stock market crashes ...what happens to the japanese currency? I mean basically everyone says buy bonds of we want to protect ourselves nearer retirement.and if it's so risky, why do we bother?

[Tsumitate Wrestler]

So does anyone know the amount of risk? Are we talking Zimbabwean,Reich currency levels of risk?
Is the risk less than say staying in stocks and shares?

It depends on what you buy. Let us assume a simple case where you log onto Rakuten and buy US treasury strips or notes directly.

The yield and coupon is then exactly what is stipulated on the strip or note. The investment risk is basically non-existent as it is US government debt.

The risk then is pure USD <==> YEN currency risk.

If you can map that out, you will never need to work a day in your life again.

I mean basically everyone says buy bonds of we want to protect ourselves nearer retirement.and if it's so risky, why do we bother?

If the Japanese yen strengthens against the dollar, returns on U.S. bonds held by a yen-based investor could decline once converted back to yen.

That is the risk.

As far as *everyone* saying to invest in bonds. That is dubious. It makes sense for American with access to I-bonds, and risk free-treasuries. Because..there is no currency risk. That is the plus they get for having high inflation and 6.5% 30 year mortgages.

In Japan we have 1.5% 30 year mortgages, and only 2-3% yearly {averaged} over the the last few years. As a result we have very little risk free yield.

[Bubblegun]

It depends on what you buy. Let us assume a simple case where you log onto Rakuten and buy US treasury strips or notes directly.

The yield and coupon is then exactly what is stipulated on the strip or note. The investment risk is basically non-existent as it is US government debt.

The risk then is pure USD <==> YEN currency risk.

If you can map that out, you will never need to work a day in your life again.

I mean basically everyone says buy bonds of we want to protect ourselves nearer retirement.and if it's so risky, why do we bother?

If the Japanese yen strengthens against the dollar, returns on U.S. bonds held by a yen-based investor could decline once converted back to yen.

That is the risk.

As far as *everyone* saying to invest in bonds. That is dubious. It makes sense for American with access to I-bonds, and risk free-treasuries. Because..there is no currency risk. That is the plus they get for having high inflation and 6.5% 30 year mortgages.

In Japan we have 1.5% 30 year mortgages, and only 2-3% yearly {averaged} over the the last few years. As a result we have very little risk free yield.

Sorry ! I kinda misspoke when I said “everyone says we should invest in bonds. I thought everyone was saying have some as part of a broader portfolio to reduce risk.
But it seems everything has risk and there is the possible gain. One thing is for sure stocks and shares or bonds/guilts are going to deal with currencies.
Are Japanese bonds really worth it?


I’m wondering what peoples portfolio’s consist of?
I am all in stocks at the moment.
Not sure where to diversify now!
I’m legally 10 years out from getting my pension but I’d like to reduce my work in a few years.