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New NISA strategy -GO!
Posted: Wed May 03, 2023 9:12 am
by RetireJapan
Alright, it seems people are starting to think about the New NISA and it's juicy juicy 3.6m yen a year contribution limit. How are you planning to use it?
My provisional plan for now is to put 100,000 yen a year into the tsumitate portion for my wife and I with new money, and then either pay in the extra 2.4m each with new money (if our businesses do well) or by selling investments from our taxable accounts (if our businesses do not do well).
How about you?
Re: New NISA strategy -GO!
Posted: Wed May 03, 2023 10:24 am
by TokyoBoglehead
RetireJapan wrote: ↑Wed May 03, 2023 9:12 am
Alright, it seems people are starting to think about the New NISA and it's juicy juicy 3.6m yen a year contribution limit. How are you planning to use it?
My provisional plan for now is to put 100,000 yen a year into the tsumitate portion for my wife and I with new money, and then either pay in the extra 2.4m each with new money (if our businesses do well) or by selling investments from our taxable accounts (if our businesses do not do well).
How about you?
I answered "I will fund my New NISA by selling existing investments" but that is only going to cover the first 2-3 years.
Then I will use new assets.
,....
Selling in a taxable and re-buying in New Nisa immediately in January seems the most logical approach to me personally.
I'm curious as to why others favor a different approach.
(*I'm just dealing with broad, liquid, index funds)
Re: New NISA strategy -GO!
Posted: Wed May 03, 2023 1:54 pm
by sutebayashi
I am tending to think I want to tax protect my taxable account holdings in future, so selling those down by 2.4 million a year and buying back in NISA seems a sensible ide…. Sell and buy mutual funds on the same day to avoid time out of the market.
But then it depends… if the market roars, then I might prefer to buy in NISA with fresh funds, and avoid a capital gains tax on the taxable account sales.
If the market crashes, protecting the investments from the taxable account in NISA seems nicer option… but then what am I gonna do with my fresh money, other than invest it in a taxable account again anyway?
I hope to try to not waste much time thinking about it, but that would be easier if the tax rate were 5 or 10% rather than 20%.
Re: New NISA strategy -GO!
Posted: Thu May 04, 2023 9:34 am
by adamu
adamu wrote: ↑Tue May 02, 2023 4:14 pm
I think although the growth allowance causes hobbyists to want to play games selling taxable assets in order to max out the allowance as soon as possible, the simplest way to use this NISA, and the one I'll recommend to friends, is to simply Tsumitate every month (a max of ¥100k) until you reach the lifetime limit (takes 15 years at ¥100k/mo). Of course people with more to invest can also make use of the growth portion.
Reusing my earlier post, which in hindsight might have been worded too harshly... I must have worn myself out digesting the Japanese for the wiki article
I think the current situation: where people already have taxable savings and want to take maximum advantage of the new NISA, while the most topical, is probably the least relevant situation in the long term. More likely, people will be starting out and want to know how to most effectively use the NISA. I think that is: Invest up to ¥300k/mo into low-cost diversified mutual funds.
Personally I'm going to KISS and focus on new investments, leaving taxable holdings alone, even if it's not the most efficient. I think less tinkering and focusing on increasing the savings rate if possible it probably more valuable long term (in terms of good habits and increased savings rate) than making use of every last yen of the NISA allowance from day one.
Re: New NISA strategy -GO!
Posted: Thu May 04, 2023 10:02 am
by RetireJapan
adamu wrote: ↑Thu May 04, 2023 9:34 am
I think the current situation: where people already have taxable savings and want to take maximum advantage of the new NISA, while the most topical, is probably the least relevant situation in the long term. More likely, people will be starting out and want to know how to most effectively use the NISA. I think that is: Invest up to ¥300k/mo into low-cost diversified mutual funds.
That works if you
have fifteen years. For people closer to retirement who have assets in taxable accounts, it might make sense to move those assets to a taxi free account as soon as possible.
Don't think there are any bad options here though.
Re: New NISA strategy -GO!
Posted: Thu May 04, 2023 10:08 am
by adamu
RetireJapan wrote: ↑Thu May 04, 2023 10:02 am
That works if you
have fifteen years.
5 years if you can afford 300k/mo
Re: New NISA strategy -GO!
Posted: Thu May 04, 2023 10:13 am
by RetireJapan
adamu wrote: ↑Thu May 04, 2023 10:08 am
RetireJapan wrote: ↑Thu May 04, 2023 10:02 am
That works if you
have fifteen years.
5 years if you can afford 300k/mo
Yeah, of course, but we're talking about people who can't (like me)
Re: New NISA strategy -GO!
Posted: Thu May 04, 2023 12:25 pm
by TokyoBoglehead
adamu wrote: ↑Thu May 04, 2023 9:34 am
adamu wrote: ↑Tue May 02, 2023 4:14 pm
I think although the growth allowance causes hobbyists to want to play games selling taxable assets in order to max out the allowance as soon as possible, the simplest way to use this NISA, and the one I'll recommend to friends, is to simply Tsumitate every month (a max of ¥100k) until you reach the lifetime limit (takes 15 years at ¥100k/mo). Of course people with more to invest can also make use of the growth portion.
Reusing my earlier post, which in hindsight might have been worded too harshly... I must have worn myself out digesting the Japanese for the wiki article
I think the current situation: where people already have taxable savings and want to take maximum advantage of the new NISA, while the most topical, is probably the least relevant situation in the long term. More likely, people will be starting out and want to know how to most effectively use the NISA. I think that is: Invest up to ¥300k/mo into low-cost diversified mutual funds.
Personally I'm going to KISS and focus on new investments, leaving taxable holdings alone, even if it's not the most efficient. I think less tinkering and focusing on increasing the savings rate if possible it probably more valuable long term (in terms of good habits and increased savings rate) than making use of every last yen of the NISA allowance from day one.
I'm not sure I follow your logic here.
Moving assets into the NISA takes a few minutes of work. Requiring one to make two simple transactions over a 5-10 day period.
Leaving everyone lots of time to enjoy their avocado toast and muse about their savings rates.
Re: New NISA strategy -GO!
Posted: Thu May 04, 2023 3:04 pm
by Roger Van Zant
RetireJapan wrote: ↑Wed May 03, 2023 9:12 am
Alright, it seems people are starting to think about the New NISA and it's juicy juicy 3.6m yen a year contribution limit. How are you planning to use it?
My provisional plan for now is to put 100,000 yen a year into the tsumitate portion for my wife and I with new money, and then either pay in the extra 2.4m each with new money (if our businesses do well) or by selling investments from our taxable accounts (if our businesses do not do well).
How about you?
The maximum you can put in in any one month is 100,000 yen?
I have 3.6m ready to invest in 2024, and want to just dump it all in in one go (in January 2024).
Not possible?
Re: New NISA strategy -GO!
Posted: Thu May 04, 2023 8:50 pm
by sutebayashi
Roger Van Zant wrote: ↑Thu May 04, 2023 3:04 pm
The maximum you can put in in any one month is 100,000 yen?
I have 3.6m ready to invest in 2024, and want to just dump it all in in one go (in January 2024).
Not possible?
I suppose the tsumitate part is 100,000 per month, so 1.2 million a year.
As for the other 2.4 million per year limit, I think it should be possible to dump it in there one a single day like the vanilla legacy nisa.
