RetireJapan

VanMark wrote: ↑Tue Jul 30, 2024 12:17 pm Hi all,

I just wanted to confirm something. If we invest in a fund which pays dividends, I know we have the option to have the dividends automatically reinvested.

But my understanding is that if the fund is in NISA, this reinvestment will "cost" you some of your investment limit for the year. In other words, it's as if you accepted the dividend and reinvested it as a new investment. Presumably, once you have filled your yearly or lifetime limit, the dividends will be automatically paid out even if you selected the reinvestment option?

And if you have the fund in your taxable account, you can choose to automatically reinvest dividends, but the dividends will be taxed before being automatically reinvested.

Is this correct?

Thanks!

VanMark wrote: ↑Wed Jul 31, 2024 12:00 am Sorry, I'm a bit confused. I was interested in this fund:

Tracers 日経平均高配当株50インデックス（奇数月分配型）

Because it's got 奇数月分配型 in the title, I thought that it would pay dividends. And if it did, I wasn't sure if they would be reinvested internally or not. It's not an ETF. But when I checked the fund's data, it has the dividends paid listed as zero.

So I'm not entirely sure what's going on there.

Make good use of dividends using the new NISA
The fund aims to settle its accounts and pay dividends on the 30th of each odd-numbered month (or the next business day if that day falls on a holiday).

Although dividends are a partial withdrawal of principal, you can receive cash on a regular basis, just like dividends from stock investments.

On the other hand, if you would like to reinvest your dividends to grow your assets, you can purchase this fund using the growth investment limit of the new NISA, which will allow you to reinvest your dividends tax-free, allowing you to efficiently build up your assets.

VanMark wrote: ↑Wed Jul 31, 2024 1:17 am Thanks for checking!

I actually did read the prospectus - someone on here recommended doing that, so I did. But I somehow missed the line. I found it now though:

一方、分配金を再投資して資産成長に充てたいという場合には、新NISAの成長投資枠を活用して当ファンドを購入することで、非課税で分配金を再投資することができるため、効率よく資産形成を目指すこともできます

So that makes sense. Thanks again!

VanMark wrote: ↑Wed Jul 31, 2024 1:42 am

VanMark wrote: ↑Wed Jul 31, 2024 1:17 am Thanks for checking!

I actually did read the prospectus - someone on here recommended doing that, so I did. But I somehow missed the line. I found it now though:

一方、分配金を再投資して資産成長に充てたいという場合には、新NISAの成長投資枠を活用して当ファンドを購入することで、非課税で分配金を再投資することができるため、効率よく資産形成を目指すこともできます

So that makes sense. Thanks again!

Although, on second thought, I think from this it's still not clear (at least to me) whether the reinvested dividends take up some of your yearly NISA limit or not. Hmmmm....

adamu wrote: ↑Wed Jul 31, 2024 4:30 am That will use your allowance for each reinvestment.

I'd stay away from Tracers as they use accountancy tricks to make the fund price appear lower than it really is.

zeroshiki wrote: ↑Wed Jul 31, 2024 6:00 am

VanMark wrote: ↑Wed Jul 31, 2024 1:42 am

VanMark wrote: ↑Wed Jul 31, 2024 1:17 am Thanks for checking!

I actually did read the prospectus - someone on here recommended doing that, so I did. But I somehow missed the line. I found it now though:

一方、分配金を再投資して資産成長に充てたいという場合には、新NISAの成長投資枠を活用して当ファンドを購入することで、非課税で分配金を再投資することができるため、効率よく資産形成を目指すこともできます

So that makes sense. Thanks again!

Although, on second thought, I think from this it's still not clear (at least to me) whether the reinvested dividends take up some of your yearly NISA limit or not. Hmmmm....

It does. If you reinvest it in growth NISA, it will take the "dividends" and buy more units of the same fund while also eating up your allowance. If you want the dividend, don't choose the reinvestment option.