leagacy nisa maturing this yr-bad timing!

[banders]

My 2021 legacy nisa holdings are still looking pretty good.

This.
They are of course down compared to a few months ago, but mine are also up a decent amount since purchase in early 2021.

Between now and December, who knows what will happen. Anyone worried that the gains will go down to 0 could sell now, or hedge their bets and sell half, I suppose.

New NISA is of course much better than 'old', but the loss of the rollover for these legacy years is annoying. Over 10 years including the rollover I was always confident that we would make a bit of money.

Not sure I understand your concern. The concern is surely that stocks never recover long-term (which they always have and no reason to believe they won’t this time). The rollover takes place over a week or so and stocks could go up or down in that short space of time, regardless of how the stock market is trending medium-term. I don’t see how December’s rollover will be cause for concern. Whatever the rate at year end, all we need is for the new year’s rate to be the same price or lower so we have at least the same number of stocks/units ready for the future.

[beanhead]

Not sure I understand your concern.

Just simply that we had a max of 10 years before, when the rollover existed. Now it is only 5 years for those 'regular' years. So the chance of a loss at the end of that 5-year period is higher, I believe, than the probability of a loss after 10 years.

Not a huge deal. Fingers crossed everything will still be up compared to when we bought in 2021. We are up a fair bit, even after the recent shenanigans.

[banders]

I still don't get why you're concerned. You're talking about the rollover, not the terminal value of your stock.

[beanhead]

I still don't get why you're concerned. You're talking about the rollover, not the terminal value of your stock.

I am not sure why you can't understand.
There is no rollover now. They took that away. Not a huge deal, but slightly annoying.

Example: invested 1.2M in something in 2021. At the end of 2025, let's say it is down to 1M. It doesn't roll over, so the loss of 200k is locked in. Your new purchase price is 1M.
Then it moves to the taxable account. If it then rises to 1.2M and you sell, to put it in the new NISA, for example, you pay tax of around 20%.

So, invested 1.2M --> 1M --> 1.2M. I owe 40,000yen of tax on what was supposed to be a tax-free account.
All theoretical, of course. But the chance of this happening over the relatively short period of 5 years is higher, I believe, than over 10 years with a rollover.

[banders]

You’re moving it to the taxable account because you have ¥3.6m to invest next year? Congrats. I assumed you were moving it to the new NISA.

[beanhead]

It automatically goes into the taxable on Jan 1st unless you sell it before the end of the year.
You have to re-buy in NISA either way.
Which leaves this risk, however slight, that the timing could go against you, so you have to be a bit careful around selling or just keeping/allowing to go to taxable.

[Moneymatters]

It automatically goes into the taxable on Jan 1st unless you sell it before the end of the year.
You have to re-buy in NISA either way.
Which leaves this risk, however slight, that the timing could go against you, so you have to be a bit careful around selling or just keeping/allowing to go to taxable.

Ok. I’ve been confused too.
Surely that timing risk exists no matter the value of the old nisa when it expires.

And in terms of “bad timing” if you are in the accumulation phase isn’t a lower unit cost actually good timing?

It’s possibly just too nuanced for me..

[beanhead]

Ok. I’ve been confused too.
Surely that timing risk exists no matter the value of the old nisa when it expires.

Yes, the risk at expiration exists.
The point is, when we bought the funds in these old NISA accounts, the period they could be held tax-free was maximum 10 years.
5 years plus another 5 with the rollover. That changed when the new NISA was introduced.

It is of course possible for the value of your 1.2M to be lower in 2031 when the rollover is up, so no tax-free benefit.
Likelihood is higher with the shorter period of only 5 years, though.

That's all.

[Hanimal]

Example: invested 1.2M in something in 2021. At the end of 2025, let's say it is down to 1M. It doesn't roll over, so the loss of 200k is locked in. Your new purchase price is 1M.
Then it moves to the taxable account. If it then rises to 1.2M and you sell, to put it in the new NISA, for example, you pay tax of around 20%.

Your scenario where the 1.2 million becomes 1 million would be beneficial for most investors in the long run, unless they have 3.6 million to feed their new NISA. No losses are 'locked in' if you immediately rebuy the investment in the new NISA.

What's more if they sell and rebuy the investment in the new NISA they would only use 1 million of the lifetime allocation, instead of 1.2 million. Hopefully, then the investment grows before the investor needs to sell it in the years that follow.

[Moneymatters]

Ok. I’ve been confused too.
Surely that timing risk exists no matter the value of the old nisa when it expires.

Yes, the risk at expiration exists.
The point is, when we bought the funds in these old NISA accounts, the period they could be held tax-free was maximum 10 years.
5 years plus another 5 with the rollover. That changed when the new NISA was introduced.

It is of course possible for the value of your 1.2M to be lower in 2031 when the rollover is up, so no tax-free benefit.
Likelihood is higher with the shorter period of only 5 years, though.

That's all.

Firstly. .Thanks for replying. I mention this as I'm about to make you regret it with my stunningly poor comprehension skills.

in you scenario you must have fully funded and have funds ready to fully fund next years NISA allowance. (Well done but please correct my if wrong.).

so a lowered value of fund, assuming you are in the accumulation phase and again please correct me if I'm wrong, means you are buying more funds for your new 3.6 mil in Jan or whenever.
So surely that offset any, let's call it "impact" of a lowered valuation as you are forced to sell your expiring NISA.
if your expiring NISA was back at it's peak you'd need to fill that new NISA with your new money buying assets at a higher value..

so I'm still at a loss of this "bad timing" comment.

I think I've mentioned this on a few threads (although frankly it's implied at this point). I am far more annoying in person..

I'm treating the reduction in term from 10 to 5 years as a misnomer. I don't see any relevance to the topic in hand..

do feel free to ignore me completely. It's the stance my family often takes..