IDeCo vs Ordinary fund investment.

[Bubblegun]

So this popped into my mind after looking at my funds.

I have a vanguard global balanced fund which I've had for about 10 + years and has been performing quite well and it was before IDeCo and NISA products.

I now have a IDeCo fund on top of that, again a vanguard fund.

Now, if there is a tax benefit to the Ideco, in regards to Resident tax/income tax, it got me thinking was there any Tax benefit to the other funds?
Are we loosing out?

The only reason it came to mind was because I was looking at the saison site, and right next to the fund I have, there was an IDeCo button too.

So it got me thinking that from a resident tax perspective, are we loosing out on that small perk which over the decades can turn into a large amount.

The only advantage I can see with the saison global fund now is I can get access to it NOW, if needed, whereas the IDeCo is locked up until retirement.

The main purpose of the saison fund was to help save for the future anyway but it also brings into question of the saison fund is any better than say a NISA? which I can get access to right away too.

Do the funds we started say 15 years ago receive the same benefits, as the NISA,IDeco,? Especially the IDeCo
Is it financially better to stop those old funds, and move to the IDeCo for any possible extra tax benefits? highlighted below.

I am right about the NISA in that we have to leave it invested in the product for 5 years to get the tax benefit, but I wonder if that applies to the find I have had for the past 15 years.
It seems as thought the ordinary investment and the IDeCo investment need a bit more explaining to compare and contrast.

If you pay 10,000 yen per month, the full amount is eligible for tax reductions. If you pay 10% income tax and 10% resident tax, that reduces your tax bill by 24,000 yen per year.

Procedures for calculating your income tax deduction differ depending on how you pay your contributions and your participant category. Be sure to learn as much as you can about your situation.

or is this just a marketing thing with the NISA just being a more customer friendly cover, instead of saying, your investing in the stock market which years ago may have scared people off.

[goodandbadjapan]

I might be misunderstanding what you are saying, but NISA and ideco are just wrappers for funds, aren't they? Gains on investments are taxed ordinarily, but if you put them in those wrappers, they are not. Not sure it is much more complex than that. Also, I don't think you have to leave funds in a Nisa for five years to get the tax benefit - as far as I know you can sell them anytime. It is just that after 5 years (under current regulations) you may have to either sell or move them into a regular non-tax-advantaged account.

[Bubblegun]

I might be misunderstanding what you are saying, but NISA and ideco are just wrappers for funds, aren't they? Gains on investments are taxed ordinarily, but if you put them in those wrappers, they are not. Not sure it is much more complex than that. Also, I don't think you have to leave funds in a Nisa for five years to get the tax benefit - as far as I know you can sell them anytime. It is just that after 5 years (under current regulations) you may have to either sell or move them into a regular non-tax-advantaged account.

Yes they are just wrappers for a fund, but no matter what language we use,a wrapper, or modern marketing, I just wondered if they were basically the same thing or are we loosing out on say the IDeCo 24,000 yen pointed out below if we have an ordinary fund?
Of course the extra 24000 tax benefit is to encourage people to save for retirement that they can't touch, whereas the ordinary fund, I can get access right away.
For me, it would be possibly better to move as the original fund was to save for retirement because I was unable to gain enough qualifying years for a Japanese pension. Now the qualifying years pension law has been changed to 10 years, so I'm wondering if I should stop the original fund, and move to the IDeCo? because i can can all the investment tax benefits, plus that extra city, income tax benefit?

It just appears more complicated due to the IDeCo tax benefit, city tax, when compared to the ordinary funds set up years ago.

If you pay 10,000 yen per month, the full amount is eligible for tax reductions. If you pay 10% income tax and 10% resident tax, that reduces your tax bill by 24,000 yen per year.

[goodandbadjapan]

Well, yes, obviously any fund that is not in a tax-advantaged wrapper is not as beneficial as it would be if it were in a tax-advantaged wrapper, so in that sense you are losing out.I can't say if it is worth moving your already existing stuff into an ideco or NISA but if you are still investing, then going forwards it would be worth filling those accounts to the max and then investing any left over money in regular fund accounts.

[Bubblegun]

Well, yes, obviously any fund that is not in a tax-advantaged wrapper is not as beneficial as it would be if it were in a tax-advantaged wrapper, so in that sense you are losing out.I can't say if it is worth moving your already existing stuff into an ideco or NISA but if you are still investing, then going forwards it would be worth filling those accounts to the max and then investing any left over money in regular fund accounts.

I was thinking exactly that, change the way the same amount of money is reinvested. I can increase the vanguard IDeCo to 15,000 yen, then reduce the normal fund from 15,000 down to 5,000 yen. This would allow me to have access to an emergency fund in the "basic regular fund", but at the same time put that rest to what's it was originally intended for and take advantage of that little tax break.

10,000 yen per month, the full amount is eligible for tax reductions. If you pay 10% income tax and 10% resident tax, that reduces your tax bill by 24,000 yen per year..

I just wonder why said company never contacted us about this really. Well, to be honest I think I do understand.