nisa lumpsum or tsumitate nisa

[Kanto]

Of course the market could move against you and investing more early could backfire. It's statistically less likely, but not unlikely. So attitude to risk should also be considered in addition to potential gains.

I generally agree.


A. The Tsumitate NISA does hedge against the NISA greatest weakness, the price resetting to a lower cost forcing you to pay tax on the recovery.

B. With the Tsumitate you are not required to commit to investing a large amount of capital upfront. (If you are for instance saving for a down payment on a house.

C. Over a 20 year period, you will need to pay 10 years of capital gains tax on a regular nisa further profits, which offsets the difference somewhat.

Thoughts?

[Jansen]

I also generally agree, but I think one could simply use the tsumitate option inside a normal NISA account buying the same tsumtiate funds and should you have spare cash at the end of the year, invest more.

[adamu]

Over a 20 year period, you will need to pay 10 years of capital gains tax on a regular nisa further profits, which offsets the difference somewhat.

I'd like to see the numbers. It's easy to postulate, like I did for ages over the 6M/8M thing, but actually running the numbers led to a completely different conclusion. CGT is going to take 20% of the gain (IF NISA is discontinued), but that is at the point of sale. So you still get the compounding benefit. My suspicion is that NISA will still win.

I also generally agree, but I think one could simply use the tsumitate option inside a normal NISA account buying the same tsumtiate funds and should you have spare cash at the end of the year, invest more.

That works, but you're only guaranteed to be covered for 5 years. If you don't invest more, you'd have been better sticking with Tsumitate.

[Kanto]

I'd like to see the numbers. It's easy to postulate, like I did for ages over the 6M/8M thing, but actually running the numbers led to a completely different conclusion. CGT is going to take 20% of the gain (IF NISA is discontinued), but that is at the point of sale. So you still get the compounding benefit. My suspicion is that NISA will still win.

I am not sure I follow the IF part of this.

The maximum NISA allowance is 5 years + 5 years of rollover correct? Isn`t 10 years the absolute maximum tax-free period per person regardless of the program ending or not?

What am I missing?

[adamu]

The maximum NISA allowance is 5 years + 5 years of rollover correct?

I don't think so. The allowance is 5 years of 5 year investments, but there is no limit on the number of rollovers. So my understanding is that you can have 5 years of tax free investments invested at any one time, as long as the system lasts.

Definitely not sure about that though. Need to do some more reading...

[Kanto]

The maximum NISA allowance is 5 years + 5 years of rollover correct?

Definitely not sure about that though. Need to do some more reading...

現在のNISA制度は、2014年から2023年までの10年間限定の制度です。例えば、2014年にNISA枠で購入した金融商品は、2018年まで非課税で保有した後にロールオーバーをすれば、2019年から2023年までの5年間は非課税で保有できます。しかし、2024年からは新しい制度になるので、現在のNISA制度を使って非課税のまま運用できるのは最大10年間となります。

https://www.boy.co.jp/kojin/nisa/article/rollover.html

It seems that it is indeed limited to 10 years.

[adamu]

https://www.boy.co.jp/kojin/nisa/article/rollover.html

It seems that it is indeed limited to 10 years.

I think it's more nuanced than that. It says in typical Japanese style that 10 years is the max under the "current NISA system". But you can also roll over to the new system. Here's another quote from the same page:

現行のNISAを利用している人は、保有している金融商品を、新NISAにロールオーバーできます。そのときには2階部分の枠が先に埋まります。例えば105万円をロールオーバーする場合、最初に102万円分が2階部分にロールオーバーされ、残りの3万円分が、1階部分を使ってロールオーバーされます。その結果1階部分に残った17万円分の枠内で、つみたてNISA対象商品を購入することができます。

And they still have 3 years to change the rules

[Jansen]

That works, but you're only guaranteed to be covered for 5 years. If you don't invest more, you'd have been better sticking with Tsumitate.

Yeah but the same holds whether you're in NISA or tsumitate NISA.

Hold your NISA for as long as you're allowed to, roll them over every year, then on the 11th year switch to tsumitate NISA.

Actually, wouldn't you also be able to do 20 years of tsumitate NISA once the regular NISA periods and rollovers are done?
Why only 10?
Looking at the FSA website, it seems like you're only able buy funds in the tsumitate NISA account until 2037, which is 16 years from now. So assuming you start now, you'd be able to do regular NISA until 2029, roll over till 2034, then buy 3 rounds tsumitate funds till 2037 which will compound till 2057 for 20 years.



Initial NISA allotment $12,000 per year at 8% for 5 years yields a balance of $76,031.15
https://www.interestcalc.org/?initial_i ... requency=5

5 years of continous rollover with no new investments yields $111,714.70
https://www.interestcalc.org/?initial_i ... requency=5

3 rounds of tsumitate at $4,000 each year yields $154,752.80
https://www.interestcalc.org/?initial_i ... requency=5

then let them compound for another 20 years for a final total of $721,296.17
https://www.interestcalc.org/?initial_i ... requency=5

$721,296.17 over a 30 year period out of $72,000 initial investment.

[Kanto]

I think it's more nuanced than that. It says in typical Japanese style that 10 years is the max under the "current NISA system". But you can also roll over to the new system. Here's another quote from the same page:

Does that not suggest that

If you have not rolled over your NISA you can roll it over into the New-Nisa, ONCE. Not that it renews your allotted rollovers?

>>>>

To Jansens`s point, my understanding is that your tax-free contribution was capped.

Is it not one of the other (A) 600 man for NISa or (b) 800 man for Tsumitate

Can you really use both in sequence?

[Jansen]

To Jansens`s point, my understanding is that your tax-free contribution was capped.

Is it not one of the other (A) 600 man for NISa or (b) 800 man for Tsumitate

Can you really use both in sequence?

I've tried searching but all results for NISA切り替え only mention what happens to the funds you're currently holding, but no mention of whether the period overlap or if there's a cap.