Simple Q&A - NISA

[Viralriver]

Right now my portfolio is 100% eMAXISlim All Country but I want to start diversifying into bonds as well. It seems Rakuten only has single bond options (US and domestic), but I'm looking for some sort of bond index fund - do these exist on Rakuten? If they do, how can I find them, and is there any that people generally recommend similar to the All Country for stock?

Thanks!

[fools_gold]

There are lots of bond funds. You need to look for 「債券」in the「投資信」section.

The only cheap bond fund I know of that covers the whole world is 「楽天・全世界債券インデックス」.

Also, you can't buy bond funds in a Tsumitate NISA. You either have to hold your bonds separately in a taxable account or buy a mixed asset or balanced fund. These funds have a mix of stocks and bonds and sometimes REITs.

[Viralriver]

Thanks - didn't know that's where I'd find them. Seems there are some emaxis with relatively low rates, but the performance over the last year does not look good. They ironically seem more unstable than the stock funds. Wondering if now is the best time to be getting in to them or not.

[Kanto]

Thanks - didn't know that's where I'd find them. Seems there are some emaxis with relatively low rates, but the performance over the last year does not look good. They ironically seem more unstable than the stock funds. Wondering if now is the best time to be getting in to them or not.

The performance of any bond fund heavily invested in government bonds will definitely be poor considering low sovereign debt yields over the last 5-10 years. Do not look at these products for yield.

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There are two great options really.

ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス

Real cost -> 0.170%


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楽天・全世界債券インデックス（為替ヘッジ）ファンド

Rakuten fees -> 0.282%　（Vanguard .15 + Rakuten .13)

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I split my allocation between the two, as one is hedged and the other is not.

[adamu]

You can also just buy US bond ETFs such as BND or BNDX directly in a NISA.

But then you have all the problems of buying US ETFs: Currency fees, trading costs, and tax inefficient dividends...

[MisoSoup]

Currently I have a tsumitatae NISA from my bank. I intend to close it down and open a regular NISA account with Monex (I already have a trading acoount with them). I'm wondering about about timing. I'm thinking of going to bank late fall and doing the closing down paperwork then. I don't mind about missing a couple of months of investment opportunities - I'd rather make sure everything is properly sorted out before the new tax year begins. Anything I need to be aware of?

[RetireJapan]

This seems to be the process: https://info.monex.co.jp/nisa/procedure.html#tomonex

[tokyojoe]

At the end of 2025, you can either let your 2021 investments expire into a taxable account, or roll them over for another year, consuming your 2026 allowance.

Hi Adamu,
Can you (or anyone else) give any guidance on the sort of parameters that would influence one or the other of these two choices ?
I guess if your NISA is sitting at a loss at the end of the 5 years it may be better to roll over (since otherwise you would be paying tax
just for getting back to where you started)? I guess also if you didn't have enough funds to max out a whole new NISA year w/out
using the maturing NISA it would maybe again make sense to rollover, but what other considerations are relevant?
In short, when is it a good idea to rollover ?

[RetireJapan]

At the end of 2025, you can either let your 2021 investments expire into a taxable account, or roll them over for another year, consuming your 2026 allowance.

Hi Adamu,
Can you (or anyone else) give any guidance on the sort of parameters that would influence one or the other of these two choices ?
I guess if your NISA is sitting at a loss at the end of the 5 years it may be better to roll over (since otherwise you would be paying tax
just for getting back to where you started)? I guess also if you didn't have enough funds to max out a whole new NISA year w/out
using the maturing NISA it would maybe again make sense to rollover, but what other considerations are relevant?
In short, when is it a good idea to rollover ?

My 2016 NISA account was 2.5m, so I decided to roll it over this year. My 2017 account is currently 1.7m, so I am tempted to roll it over. My 2018 account is 170,000, so I am planning to switch to tsumitate NISA from 2023. Of course, you can roll over partial amounts too, choosing which shares to roll over and which to move to taxable accounts.

I'm not sure there is much in the way of criteria apart from how you feel about the investments, and how much more you could potentially invest, and in what.

Anyone else?

[adamu]

Interesting question.

If you're happy with the investments you have, good criteria seem to be:

The two tokyojoe mentioned:

1. If it's at a loss (so you have more chance to make it back before CGT is due)
2. if you are not going to have enough to invest next year, rolling over to keep your existing assets tax free makes sense.

There's also another major reason, mentioned by RetireJapan above:

3. If the value is greater than next year's allowance, it's a no-brainer.

I added these to the wiki article on NISA.

Personally I've never yet rolled over, because I changed my strategy a couple of years in - so I've either sold off the assets for the tax-free gain, or let it fall out into the taxable account. Once I'm looking at an emaxis slim snowball though, I'll probably be rolling that over (assuming there isn't a new fund everyone's after by then).