Personal Finance for Residents of Japan
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Cool, thanks for this, especially the counter-intuitive result.
I have actually started to look at that (in case regular NISA is extended), but I haven't finished it yet. I didn't do it at first since regular NISA is only possible for another five years. If you start investing 2019 you won't be able to roll over the investment to a new Regular NISA in 2024.
Can you please share the file on email with me ? My email is amangoyal1@gmail.comKalas wrote: ↑Tue Oct 30, 2018 7:32 am Hi again,
I more wanted to know why you set 500,000 yen a year as a limit for when the new Nisa is better than the old.
I now did my own calculation. I tried to attach the excel file for people to check themselves, but file format was not allowed. I can e-mail it to anyone who wants it.
To summarize: Tsumitate Nisa is ALWAYS better, no matter how much you invest ASSUMING:
- You start investment year 2019
- You invest the SAME AMOUNT EVERY year for TWENTY YEARS. (see bottom for other lengths)
- Money you can not invest in Tsumitate NISA, you invest in the stock market.
- You take out ALL money on the same day after 20 years.
- Average return rate is 5% per year before tax no matter investment form (Tsumitate NISA, Regular NISA and Stocks).
- You invest all the money at once in the beginning of the year.
- Tax on stock profit is 20.315%
Extra assumptions for Regular NISA:
- The regular NISA is not extended
- You switch to Tsumitate NISA when Regular NISA disappear
- All return from Regular Nisa is invested in stocks when the accounts has to be closed (5 years after opening)
Senario 1, You can invest 400'000 JPY /year
Senario 1a, you choose Tsumitate Nisa. Return is 13,887,701 JPY after 20 Years
Senario 1b, you choose Regular Nisa, and then Tsumitate Nisa after 5 years. Return is 13,426,115 JPY after 20 Years
Summary: Tsumitate Nisa is better
Senario 2, You can invest 415'000 JPY /year
Senario 2a, you choose only Tsumitate Nisa, (400'000 JPY /year) and spend the extra 15'000 JPY. Return: 13,887,701 JPY after 20 Years
Senario 2b, you choose Regular Nisa, (415'000 JPY /year). After 5 years you switch to Tsumitate (400'000 JPY/year) and Stocks (15'000 JPY/year). Return is 13,906,260 JPY after 20 Years
Senario 2c, you choose Tsumitate Nisa (400'000 JPY /year) and stocks (15'000 JPY /year). Return is 14'363'636
Summar: Tsumitate+Stock is best, Secound is Regular Nisa, and third is Only Tsumitate Nisa.
Senario 3, You can invest 1'200'000 JPY /year
Senario 3a, you choose only Tsumitate Nisa, (400'000 JPY /year) and spend the extra 800'000 JPY. Return: 13,887,701 JPY after 20 Years
Senario 3b, you choose Regular Nisa, (1'200'000 JPY /year). After 5 years you switch to Tsumitate (400'000 JPY /year) and Stocks (800'000 JPY /year). Return is 39'033'850 JPY after 20 Years
Senario 3c, you choose Tsumitate Nisa (400'000 JPY /year) and stocks (800'000 JPY /year). Return is 39'270'929
Summar: Tsumitate+Stock is best, Secound is Regular Nisa, and third is Only Tsumitate Nisa.
Extra comment, Regular Nisa is the best alternative until (and including):
year 2023 with any investment OVER 401'000 /year
year 2024 with investment of 450'000 JPY /year
year 2028 with investment of 800'000 JPY /year
year 2032 with max for maximum investment (1'200'000 JPY)
From what I understand,zeroshiki wrote: ↑Sat Jun 26, 2021 1:05 pm I think the scenario 3 has been proven to be wrong now (the post was written in 2018) since you can rollover regular NISA to a new regular NISA. There's also no requirement for you to liquidate your NISA holdings even after the 5 years are up. Even moving it to a specific account just bumps the acquisition amount to whatever the value was at the time you moved it from NISA to specific so you can still compound it. Someone correct me if I'm wrong.
I just did some VERY basic math and compared NISA vs T-NISAKanto wrote: ↑Sat Jun 26, 2021 1:23 pmFrom what I understand,zeroshiki wrote: ↑Sat Jun 26, 2021 1:05 pm I think the scenario 3 has been proven to be wrong now (the post was written in 2018) since you can rollover regular NISA to a new regular NISA. There's also no requirement for you to liquidate your NISA holdings even after the 5 years are up. Even moving it to a specific account just bumps the acquisition amount to whatever the value was at the time you moved it from NISA to specific so you can still compound it. Someone correct me if I'm wrong.
Yes, you can roll over from Old NISA→NEW. https://media.rakuten-sec.net/articles/-/25443?page=4
Generally, if you can contribute a lump sum amount in January to a Regular/New Nisa it is probably better.
However, if you cannot but can contribute a lump sum amount to a Tsumitate (via the bonus function) and contribe the rest gradually in your taxable account, Tsumitate may be a better option.
Yep, I totally agree. However, most investors will not have 120万, ready to invest every January for five years straight.
You mention the rollover, but it might be more powerful than just an extra 5 years. Ben or someone who knows better might correct me here, but I don't think there has been any indication that rollovers will be limited to once time only (extra five years). I think the general expectation is that NISA accounts will probably be allowed to be rolled over until further notice, or until regular NISA is discontinued, in which case regular NISA will likely be allowed to be rolled over into T-NISA. No guarantees, but I think it's likely that current NISA accounts will end up giving more than 5 or even 10 years tax shelter. Somebody let me know if this is just wishful thinking!zeroshiki wrote: ↑Sat Jun 26, 2021 1:28 pm
NISA: 1.2M invested, 5 years tax free, next 15 years with tax, compunded 5% annually = ¥2,847,524.66
T-NISA 1.2M invested broken up as 400k T-NISA and 800k normal account, full 20 years = ¥1,061,319.08 tax free + ¥1,324,526.72 (after tax) = ¥2,385,845.80
In this case, just regular NISA wins because of the compounding interest on the large initial amount. This doesn't even take into consideration the extra 5 years you get from rolling over regular NISA which would make it win even more in this comparison.