Rollover, rollover, so they all rolled over and one fell out..

[Akatani]

Hey gang,
I have a question about rolling over a NISA account. I did a search but nothing came up, and this could/should probably be in the dummies section.
At the end of last year I received notice that my first year of NISA investments were eligible to be rolled over. I skimmed the info, pushed what I thought were the right buttons and it seemed to work. Everything was rolled over. Great.

This year though, I found that my NISA allowance was full already. OK, it's full from the rollover. I can understand this.
What I'm having trouble understanding is, if I keep rolling over my investments for the next 4 years, I can only invest using taxable accounts, right?
Isn't this contrary to the idea of incentivizing people to invest every year? I mean, I'm sure there are people who would see their allowance is full, and think 'great! I don't need to do anything more this year'.

As I've been typing this out, it's starting to make sense, but I just wanted to make sure I'm not missing something obvious.

It's the regular NISA, not the tsumitate. And I've been putting money into emaxis slim advanced countries(?) this year so I'm still investing.

[TokyoBoglehead]

Hey gang,
I have a question about rolling over a NISA account. I did a search but nothing came up, and this could/should probably be in the dummies section.
At the end of last year I received notice that my first year of NISA investments were eligible to be rolled over. I skimmed the info, pushed what I thought were the right buttons and it seemed to work. Everything was rolled over. Great.

This year though, I found that my NISA allowance was full already. OK, it's full from the rollover. I can understand this.
What I'm having trouble understanding is, if I keep rolling over my investments for the next 4 years, I can only invest using taxable accounts, right?
Isn't this contrary to the idea of incentivizing people to invest every year? I mean, I'm sure there are people who would see their allowance is full, and think 'great! I don't need to do anything more this year'.

As I've been typing this out, it's starting to make sense, but I just wanted to make sure I'm not missing something obvious.

It's the regular NISA, not the tsumitate. And I've been putting money into emaxis slim advanced countries(?) this year so I'm still investing.

The time-limits on the Nisa are a very annoying. With the regular Nisa you get 5 year, + 5 rollover year.

When one chooses between the T-Nisa, and Regular Nisa, you need to weight these options. It is not just about the amount, but the tax-free timeframe.

The T-Nisa is arguably the safer route, as a 20 year period is likely to see multiple market cycles.

A 5/10 year Regular Nisa cycle in an extended bear market, could risk your forcing to take loses. When the purchase price is reset after the NISA period, you would be forced to pay tax on the difference between the new purchase price and the original purchase price.

No fun to at all...

[RetireJapan]

Isn't this contrary to the idea of incentivizing people to invest every year? I mean, I'm sure there are people who would see their allowance is full, and think 'great! I don't need to do anything more this year'.

If you roll over a NISA year, the value of the investments can be greater than 1.2m yen. I had a few good years and was able to roll over almost 2m yen into a new NISA account a couple of times.

Obviously a 2m tax-free allowance (from rollovers) is better than a 1.2m yen tax-free allowance (if you don't roll over and just buy new investments in your new NISA year).

My preference would be for Japan to follow the UK model, where there is an annual limit but once funds are in the NISA account they can grow indefinitely until you choose to sell them, and each year you get a new allowance. We can but hope the government will create something like this.

[Akatani]

Sounds like the UK model is a lot more reasonable!

You made a great point about getting stuck in an extended bear market. hmmm that puts t-nisa in a new light.

Also good point about being able to rollover more than 1.2 -> I was able to do that.

[Roger Van Zant]

Hey gang,
I have a question about rolling over a NISA account. I did a search but nothing came up, and this could/should probably be in the dummies section.
At the end of last year I received notice that my first year of NISA investments were eligible to be rolled over. I skimmed the info, pushed what I thought were the right buttons and it seemed to work. Everything was rolled over. Great.

This year though, I found that my NISA allowance was full already. OK, it's full from the rollover. I can understand this.
What I'm having trouble understanding is, if I keep rolling over my investments for the next 4 years, I can only invest using taxable accounts, right?
Isn't this contrary to the idea of incentivizing people to invest every year? I mean, I'm sure there are people who would see their allowance is full, and think 'great! I don't need to do anything more this year'.

As I've been typing this out, it's starting to make sense, but I just wanted to make sure I'm not missing something obvious.

It's the regular NISA, not the tsumitate. And I've been putting money into emaxis slim advanced countries(?) this year so I'm still investing.

The time-limits on the Nisa are a very annoying. With the regular Nisa you get 5 year, + 5 rollover year.

When one chooses between the T-Nisa, and Regular Nisa, you need to weight these options. It is not just about the amount, but the tax-free timeframe.

The T-Nisa is arguably the safer route, as a 20 year period is likely to see multiple market cycles.

A 5/10 year Regular Nisa cycle in an extended bear market, could risk your forcing to take loses. When the purchase price is reset after the NISA period, you would be forced to pay tax on the difference between the new purchase price and the original purchase price.

No fun to at all...

That last sentence is not correct.
When the NISA period ends, the funds go into a taxable account at the new purchase price. When you then sell in the future, you pay tax on any gains made when compared to this new purchase price.

[TokyoBoglehead]

Hey gang,
I have a question about rolling over a NISA account. I did a search but nothing came up, and this could/should probably be in the dummies section.
At the end of last year I received notice that my first year of NISA investments were eligible to be rolled over. I skimmed the info, pushed what I thought were the right buttons and it seemed to work. Everything was rolled over. Great.

This year though, I found that my NISA allowance was full already. OK, it's full from the rollover. I can understand this.
What I'm having trouble understanding is, if I keep rolling over my investments for the next 4 years, I can only invest using taxable accounts, right?
Isn't this contrary to the idea of incentivizing people to invest every year? I mean, I'm sure there are people who would see their allowance is full, and think 'great! I don't need to do anything more this year'.

As I've been typing this out, it's starting to make sense, but I just wanted to make sure I'm not missing something obvious.

It's the regular NISA, not the tsumitate. And I've been putting money into emaxis slim advanced countries(?) this year so I'm still investing.

The time-limits on the Nisa are a very annoying. With the regular Nisa you get 5 year, + 5 rollover year.

When one chooses between the T-Nisa, and Regular Nisa, you need to weight these options. It is not just about the amount, but the tax-free timeframe.

The T-Nisa is arguably the safer route, as a 20 year period is likely to see multiple market cycles.

A 5/10 year Regular Nisa cycle in an extended bear market, could risk your forcing to take loses. When the purchase price is reset after the NISA period, you would be forced to pay tax on the difference between the new purchase price and the original purchase price.

No fun to at all...

That last sentence is not correct.
When the NISA period ends, the funds go into a taxable account at the new purchase price. When you then sell in the future, you pay tax on any gains made when compared to this new purchase price.

That's what i said though...

Imagine you bought Stock A @ $100, and when the Nisa expires the prices is $80. It will enter your taxable account with a purchase price of $80.

If it eventual recovers to 100, that $20 gain is taxable.

This is very possible over 5/10 years with single shares. (Nisa)

This extremely uniquely with an index fund over 20 years (T-Nisa)

[Roger Van Zant]

Ah, I see what you mean.
My bad!