Goal of your NISA

[Adun]

After much reading of the blog, I'm looking at setting up my NISA with Rakuten Securities (also looking at setting up an iDeCo), but I'm curious to know what are some people's goals of using the NISA? Recently I've been thinking about my personal finances and as well as saving for a house deposit. So I was thinking of using the NISA as a means to save money somewhere rather than leaving it in the bank.

Thoughts and opinions?

[RetireJapan]

Hi Adun

NISA is just a wrapper to put your investments in so that you don't have to pay capital gains and dividend taxes. What you put in it is going to depend on your goals and knowledge.

If you're going to be here for a long time and you are not a younger US citizen I would recommend iDeCo over NISA for the income tax reduction.

Then I would say that you might not want to invest money you are going to need in the short-medium term. If you are saving for a house deposit in a year or two I would be inclined to keep it in cash.

Personally I use my NISA account to put some stocks and ETFs from my portfolio in to save on taxes for the five-year duration. My goal is to grow my net worth and dividend income over the long term and NISA helps do that.

Anyone else?

[adamu]

A NISA is an investment account. The risk of any investment is that it could decrease in value. What if you invested your money and then the invested value halved? That could happen, especially with stocks, so if that would ruin your plans it's probably better to keep your money in cash, despite the non-existent interest rate. For buying a house you need to hand over a specific amount of money that you don't want to lose, investments are only for when you can afford to lose money in the short term.

I'm the same as RetireJapan, I use the NISA for long-term savings (retirement / FU fund). In this case (theoretically, at least), even in a crash we have time for the market to recover without selling at the bottom because we don't need to cash-in on the investments.

[Adun]

I do plan to be here for the long term, so retirement fund-wise, I will have my iDeCo for that, once it is all setup. Unfortunately my company won't take it out of my pre-tax income, so I will have to rely on post-tax and receive the tax refund at the end of financial year. Of course I plan to use the refund to invest into my NISA.

Then I would say that you might not want to invest money you are going to need in the short-medium term. If you are saving for a house deposit in a year or two I would be inclined to keep it in cash.

Probably be a little while until I can look at purchasing property. Maybe at least 5 years. That's why I was thinking of utilising the NISA.

For buying a house you need to hand over a specific amount of money that you don't want to lose, investments are only for when you can afford to lose money in the short term.

I see, I didn't think about it that way. Just thinking of what I can use my NISA for along with the iDeCo, but if I won't maximise the 1.2m yen per year, would it still be worth using a NISA?

[RetireJapan]

I see, I didn't think about it that way. Just thinking of what I can use my NISA for along with the iDeCo, but if I won't maximise the 1.2m yen per year, would it still be worth using a NISA?

NISA just means anything in it doesn't pay tax on capital gains or dividends, so it's useful whatever or how much you decide to put into it

[StockBeard]

Same as the other folks, we use NISA as an investment account to fund our retirement.

We also plan to buy a house, but for the down payment we intend to keep some money in cash. As others have stated, money on the stock market (which is what we chose to use for NISA) can go up and down over short amounts of time, so I would not use that as a "savings" tool for some money I need soon for a house.

Because NISA's benefit is no tax on capital gain/dividend, I think using it to save for the short term (i.e. downpayment for a house) is counter intuitive: If you use NISA the "efficient" way, it means you want capital gains and dividends. So it means investing in bonds and stock, which means risk. Which means it's not appropriate for a down payment in a few years.

Unless your plan is to buy the house in 15 years or something