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Re: Switching from tsumitate NISA and if it's worth it
Posted: Tue Oct 05, 2021 8:08 am
by zeroshiki
Viralriver wrote: ↑Tue Oct 05, 2021 7:53 am
adamu wrote: ↑Tue Oct 05, 2021 5:41 am
Viralriver wrote: ↑Tue Oct 05, 2021 4:47 am
Could you explain the rollover concept?
I could, but I already wrote it on the wiki, so I'll just link you there
https://retirewiki.jp/wiki/NISA#Rollove ... ear_period
The quick version is that funds in a NISA are only tax-free for 5 years.
Rolling over allows you to roll over the full amount for another 5 years, which has two benefits: it allows you to defer capital gains, and if the balance is greater than the following years allowance, you can still roll over the full amount - so better than investing new cash.
Thanks for the explanation and link (and @zeroshiki - doesn't seem like I can multiquote in a single reply). This explains it for me, and looks like I don't need to worry about it just now anyway which is nice to know.
So looks my schedule would be:
2020-2021 - tsumitate - 400k x 2 = 800k
2022-2023 - 一般NISA - 1.2m x 2 = 2.4m (only stopping here since the service ends in 2023)
2024-2026 - 新NISA - 1.22m x 3 = 3.66m
2027 - You suggested rolling over 2022 NISA into this, but I assume it's also possible to have another year of 1.2m if I wanted to?
2028 - Same as above but for 2023 NISA
2029 - I have now used up 5 years of the new NISA, and the old NISA has gone so I resort to tsumitate. Can either choose to invest 1.2m in new assets or roll over eligible from my 2024 new NISA
2030 - Same as above, but from 2025 new NISA
2031 - Same as above but from 2026 new NISA
2032 - Can I continue to roll-over after another 5 years has ended? If not, tsumitate
2032-2039 - Same as above (tsumitate)
2040 - This is the first year I would be eligible for rolling over, from my 2020 tsumitate
2041 - Roll over from 2021 tsumitate or new 1.2m purchase
2042 - Continue rolling over from the tsumitate payments in 2031?
2043+ who knows.
Does this look somewhat correct?
It seems through this that on my schedule I am 'allowed' 2 years of the current NISA, a possible 5 years of the new NISA, and (with the assumption that the tsumitate gets continued indefinitely), 20 years of that. Is that correct? Or is there a total cap for switching between the standard and tsumitate NISA?
Apologies if my questions are confusing.. ^^'
In 2027, your allocation will be used by your 2022 NISA (that's the disadvantage of rollover, it uses up your NISA allowance for the rollover year). You have 20,000 yen left in your allowance in this case.
I actually did alot of calculations for this in a previous post. Doing all this complicated maneuvering actually just barely edges out doing 400k T-NISA and then investing 800k in a taxable account for a 20 year span (anything less and NISA rollover's advantage grows).
Re: Switching from tsumitate NISA and if it's worth it
Posted: Tue Oct 05, 2021 9:46 am
by beanhead
Viralriver wrote: ↑Tue Oct 05, 2021 7:53 am
2029 - I have now used up 5 years of the new NISA, and the old NISA has gone so I resort to tsumitate. Can either choose to invest 1.2m in new assets or roll over eligible from my 2024 new NISA
1.2M in new assets is not possible within NISA from 2029, I believe.
There is no decision on the new NISA going beyond 2028. If it is not renewed or extended, your only option for 'new' money in 2029 will be 400k in tsumitate. (in which case rollover is usually going to be the better option...)
Correct, anyone?
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 4:41 am
by Bubblegun
Sorry to jump in.
I’ve a tsumetate NISA, and that’s for 20 years for tax benefits
But I’m 50+ish. So if I decide in 13 years, to take out the cash….. would I loose all the benefits gained? Because I didn’t reach the 20 years!
Or should I change to the big standard NISA?
I prefer the long term approach and let it set and forget.
Too many NISA’s Japan sometimes really knows how to complicate things.
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 5:49 am
by adamu
Bubblegun wrote: ↑Mon Oct 11, 2021 4:41 am
would I loose all the benefits gained? Because I didn’t reach the 20 years!
No, you don't lose the tax benefits if withdrawing early. If the value when you withdraw in 13 years time is higher than it is now, those capital gains are tax-free. What you are sacrificing by withdrawing early is 7 more years of potential future tax-free gains on those funds.
I'm not sure how it would work out for you if you went with regular NISA first for 7 years and switched to Tsumitate later as described
above - you might want to run the numbers if you're concerned about maximising tax benefits. But if you want to set it and forget it, I think Tsumitate is probably the right choice for you anyway.
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 7:10 am
by zeroshiki
Assuming you put in 1.2M a year, a NISA will earn more money over a 13 year period. Even more if you rollover. The 7 years of TNISA not being tax free, quite significantly moves the needle in the other direction.
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 7:26 am
by RetireJapan
zeroshiki wrote: ↑Mon Oct 11, 2021 7:10 am
Assuming you put in 1.2M a year, a NISA will earn more money over a 13 year period. Even more if you rollover. The 7 years of TNISA not being tax free, quite significantly moves the needle in the other direction.
In reality, the results will depend on what the markets do.
Impossible to say which would actually be better without the gift of prescience granted by the spice melange.
(can you tell I am looking forward to seeing Dune on Friday?)
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 8:14 am
by adamu
zeroshiki wrote: ↑Mon Oct 11, 2021 7:10 am
Assuming you put in 1.2M a year, a NISA will earn more money over a 13 year period. Even more if you rollover. The 7 years of TNISA not being tax free, quite significantly moves the needle in the other direction.
Can you back that up with numbers? I suspect, but could be wrong, that if you also invest in a taxable account at the same time as Tsumitate, it's not much difference. You have to consider that the Tsumitate stays tax-free for a longer period, too. Last time I saw somebody discuss 20 year Tsumitate + taxable vs Full NISA, it worked out about the same.
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 10:24 am
by Bubblegun
If all things being equal, why do they have the two separate NISA’s?
Now I get having the kids NISA, even a uk style cash NISA or “A help to buy NISA”.
But if the 5 year NISA and 20 year NISA are the same why not just go with 5 years and, then the Gov just saying they’re rolling it over so that in 13 years I can with draw it or atleast draw down from it.?
Sometime I think they make things more difficult than it really needs to be.
Personally I’m rather shocked they’re getting rid of the junior NISA as it’s a great way to save for their future but I guess some people are scamming the system, by taking the money out instead of the kids.
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 1:50 pm
by zeroshiki
adamu wrote: ↑Mon Oct 11, 2021 8:14 am
zeroshiki wrote: ↑Mon Oct 11, 2021 7:10 am
Assuming you put in 1.2M a year, a NISA will earn more money over a 13 year period. Even more if you rollover. The 7 years of TNISA not being tax free, quite significantly moves the needle in the other direction.
Can you back that up with numbers? I suspect, but could be wrong, that if you also invest in a taxable account at the same time as Tsumitate, it's not much difference. You have to consider that the Tsumitate stays tax-free for a longer period, too. Last time I saw somebody discuss 20 year Tsumitate + taxable vs Full NISA, it worked out about the same.
Assuming 1.2M all the time (400k TNISA + 800k tokutei) and 5% growth over a 13 year period:
My spreadsheet has 5 different patterns:
1. Infinite NISA rollovers (we don't know if this is possible)
2. 1 time NISA, tokutei afterwards
3. TNISA
4. NISA rollover to TNISA
5. NISA with a rollver then rollover to TNISA
Of these 5, the just TNISA option gives you the least return
Re: Switching from tsumitate NISA and if it's worth it
Posted: Mon Oct 11, 2021 11:49 pm
by EmaxisSlim Cultist
zeroshiki wrote: ↑Mon Oct 11, 2021 1:50 pm
My spreadsheet has 5 different patterns:
1. Infinite NISA rollovers (we don't know if this is possible)
2. 1 time NISA, tokutei afterwards
3. TNISA
4. NISA rollover to TNISA
5. NISA with a rollver then rollover to TNISA
Of these 5, the just TNISA option gives you the least return
I am not disagreeing with your math, but this is all assuming a 1,200,000 yen lump sum investment in January?
I think NISA (regular) has always been considered the best option in that scenario.
However, the vast majority of users cannot achieve this. That is why T-NOSA + Tokutei is usually suggested as a default.
That math certainly shows that it`s not worth losing too much sleep over either way.
