Switching NISA from WealthNavi to other institution

[revincentiii]

Hello,

A few years back, I decided to open my NISA account on WealthNavi. I know here people do not recommend such service due to the 1% fee which some will say it's way too high, but it's pretty simple and better than doing nothing.

Now, the reason I did that was mainly because even tho I understand the importance of investing and having a portfolio etc, I really do not like this domain at all (the investing/trading etc...) and I want to do to much on it other than the essential. Now, WealthNavi kind of do this but I started informing myself on this new year, and I think it's kind of possible to have some relatively equal performance, with minimal effort and lower fee.

I am now opening a Rakuten account in the hope to transfer my NISA and maybe start iDeco in the future. For the record, I chose this cause, even tho I have no particular preference out of SBI/Monex/Rakuten and I currently don't use any services from those providers, they are the one "I know" and might maybe use their card and service from time to time and also apparently the least ugly UI out of them all and have online process to create account and everything else.

Now, assuming this opening goes through I have a few questions.

- I need to double check with WealthNavi, but basically, I need to send them a request to transfer my Nisa, they would then kind of withdraw my money and I return to the state of "not having any NISA" so I will have to start from this new NISA 2024, and previous fund invested in the past year will "reset" ? (I don't know if I explain this one properly)

- For Rakuten, I see that a general rule would be going for the new NISA 2024, max out the 3.6 million of the first year. Now, I believe in Rakuten you can chose what you invest into, and it's not automatically handled by a robot, so I heard about eMaxis Slim Total World fund or the eMaxis Slim S&P 500 fund. So, should I basically select those funds and put my whole NISA into this?

- You should first fill the Growth Quota NISA, and if you get over the limit which I believe is 2.4M/y, then you should switch to the Tsumitate which is 1.2M/y (but with longer spawn) for a total combined of 18M?

- Yes, I definitely need to educate myself more in this regard... and I will do so in the following weeks following here and some resources online, but basically, doing the above, and maxing yearly this fund is a safe/diversified enough portfolio with some risk but not to crazy? Like I still would like to get some good interest, but I do not want to play with this to much as I really don't find interest in this.

Thank you and yes, I tried to read around and will keep doing, and I know some questions are covered over a certain extent, but just want to kinda confirm what I understood rather than apply it directly.

Thank you for your help

 

[kristhuy]

@revincentiii

I need to send them a request to transfer my Nisa

Yep. But the first thing to confirm is whether you are actually eligible to transfer your 2024 NISA account away from WealthNavi. If you held a 2023 NISA account with them, they would have automatically set up a 2024 (new) NISA account for you, and it appears from their website that they may have already made purchases within your 2024 NISA account, unless you told them not to by the end of November 2023.

If WealthNavi has already made purchases within your 2024 NISA account, you can't change your NISA institution until October 2024, and the change will apply from 2025.

If WealthNavi hasn't made any purchases within your 2024 NISA account, though, you can still change your NISA institution. According to their website, you need to log in to your account and use their inquiry form ("お問い合わせフォーム") to make the request.

What you ultimately need from them is proof that your 2024 NISA account has been deactivated (勘定廃止通知書). That is what your new brokerage (e.g., Rakuten) needs to be able to open a NISA account for you.

they would then kind of withdraw my money and I return to the state of "not having any NISA" so I will have to start from this new NISA 2024, and previous fund invested in the past year will "reset" ?

That's not how it works. A NISA account is effectively composed of a set of annual sub-accounts, and when you move your NISA from WealthNavi to Rakuten for 2024, for example, your 2022 and 2023 NISA accounts (for example) still remain at WealthNavi. The assets in those accounts can continue to grow tax-free until the expiry of the relevant NISA account (5 years for ordinary NISA and 20 years for tsumitate NISA). You can't add anything to those previous accounts, of course, but you can sell the assets in them at any time.

If you want to maximize tax-free growth and you think the assets will continue to grow, then the normal approach would be to leave your past NISA accounts alone, at least until they expire. The fact you are moving your NISA account for 2024, for example, is not itself a good reason to sell the assets in your 2022 or 2023 NISA accounts.

However, WealthNavi's 1% fee does make this calculation slightly more complex than it would normally be. Assuming you could achieve the same growth in both scenarios and you already have enough cash to maximize your new NISA's 3.6 million yen allowance, it is possible to make a case for selling your previous years' NISA assets and buying similar assets in a taxable account (e.g., a 特定口座 at Rakuten).

By having them in a taxable account you will pay 20.315% tax on the eventual capital gains, but by not having them at WealthNavi you will avoid losing 1% per year in fees. Depending on the expected growth rate and holding period, it is possible that this strategy would leave you better off overall. But you would need to do the specific calculations for yourself to know which option is preferable.

a general rule would be going for the new NISA 2024, max out the 3.6 million of the first year.

Sure, as long as you are buying assets that you think will increase in value, you should buy as much of them as soon as you can. There's no benefit to waiting.

I believe in Rakuten you can chose what you invest into, and it's not automatically handled by a robot

Yes, the vast majority of brokerages work this way. However, the most popular funds to invest in are actually index funds, which are somewhat "robotic", in the sense that they simply buy/sell whatever the index tells them to. They don't make investment decisions independent of the index.

I heard about eMaxis Slim Total World fund or the eMaxis Slim S&P 500 fund. So, should I basically select those funds and put my whole NISA into this?

I won't tell you which funds to buy. Only you can make that decision for yourself. However, if you want to invest in a low-fee fund based on the MSCI All-Country World Index, eMAXIS Slim All-Country is the most popular choice. And if you want to invest in a low-fee fund based on the S&P 500 index, eMAXIS Slim US (S&P 500) is a very popular choice. At the end of the day, it's largely a matter of choosing which index you want to invest in.

You should first fill the Growth Quota NISA, and if you get over the limit which I believe is 2.4M/y, then you should switch to the Tsumitate which is 1.2M/y (but with longer spawn) for a total combined of 18M?

It partly depends on what you want to buy. But if you want to invest in a highly-diversified low-fee index fund like those you mentioned above, there is no reason to focus on the "growth quota". If you have sufficient savings to buy 3.6 million yen worth of assets per year, you should aim to maximize the use of both simultaneously.

maxing yearly this fund is a safe/diversified enough portfolio with some risk but not to crazy?

It's hard to say, because I don't know your risk tolerance. The purpose of NISA is to encourage people to take risks that they wouldn't otherwise have taken. Accordingly, every product that you can buy within NISA comes with risk attached. They are not comparable to cash deposits that are guaranteed by the government or insurance policies that promise fixed returns regardless of stock market performance. These are risky products in the sense that their value could theoretically go to zero.

However, most people would argue that index funds (such as a fund based on MSCI ACWI or even the S&P500) are sufficiently diversified so as to make the risk/reward equation tolerable for everyone who is not on the verge of retirement. If you care a lot about 3-5 year returns, you could argue that these funds are too risky for you. But if you care about 15-20 year returns, it becomes much, much harder to argue that these kinds of funds are too risky.

 

[revincentiii]

@kristhuy Thank you SO MUCH for the very detailed answer !

I didn't had enough to max out my account, so I only have currently maxed 2 year (2021/2022) and only a few "mans" in summer 2023. From what I understand on your message if a NISA is `A NISA account is effectively composed of a set of annual sub-accounts` Then I believe the transfer should be doable as nothing has been invested on this 2024 subaccount, is it correct ?

Then, I would close my account on WealthNavi, and let these current investments expire in 3/4/5 years, while opening the new NISA 2024 on Rakuten with monthly transfer. Does this seems doable ? (I will anyway ask WealthNavi)

 

[kristhuy]

@revincentiii

I believe the transfer should be doable as nothing has been invested on this 2024 subaccount, is it correct ?

Yes.

I would close my account on WealthNavi, and let these current investments expire in 3/4/5 years, while opening the new NISA 2024 on Rakuten with monthly transfer. Does this seems doable ?

Sure.

 

[revincentiii]

@kristhuy Thank you

 

[shyguy1813]

@revincentiii It seems like even with the 2 years of investments in WealrhNavi , you might not have enough to fill the 2024 NISA limit. So in that case you might as well close WealthNavi and stick everything in your new provider.