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After opening a Tsumitate NISA account, users will be able to choose from about 200 types of financial products to invest in. Many people may not be able to choose the investment destination even if they open an account because there is no tax on profits and the convenience of automatic reserve investment.
In this article, after touching on the benefits of Tsumitate NISA and the new NISA system as basic knowledge, we will introduce the characteristics of investment trusts that should be selected for Tsumitate NISA and the popular ranking “eMAXIS Slim Global Equity (All Country)” ” and “eMAXIS Slim US Stocks (S&P500)” features.
table of contents- Basic knowledge of Tsumitate NISA
- Investment trusts you want to choose with Tsumitate NISA
- Popular investment trusts for Tsumitate NISA
- Utilize NISA in preparation for increased burden
1. Basic knowledge of Tsumitate NISA
First, I will explain the outline of Tsumitate NISA as a prerequisite knowledge for choosing an appropriate investment product.
1-1. Advantages of Tsumitate NISA
In the first place, NISA (Non-tax Exemption System for Small Investments) is a system established to assist people in building assets.
With a NISA account, you can purchase financial products such as stocks and investment trusts like a regular securities account, but there are significant tax advantages.
Specifically, profits earned on a regular brokerage account are taxed at about 20%, while profits earned on a NISA account are tax-free. Since you can receive profits as they are, you can efficiently form assets.
As of January 2023, there are three types of NISA:
- General NISA
- Tsumitate NISA
- Junior NISA
Among these, Tsumitate NISA is the most suitable for installment investment, which allows you to invest from a small amount easily and with reduced risk.
1-2. Difference between general NISA and Tsumitate NISA
As of January 2023, adults over the age of 18 can use either a regular NISA or a Tsumitate NISA. The general NISA and the Mitate NISA are the same in that income is tax-free, but there are some differences in terms of conditions.
| ～1.2 million yen | ~400,000 yen |
| up to 5 years | up to 20 years |
The annual tax exemption limit is the maximum amount that can be invested in a NISA account per year. The tax-exempt holding period is the period during which taxes are not imposed on investment trust gains, etc., and is calculated from the time of purchase.
Tsumitate NISA, which has a small annual tax exemption limit and a long tax exempt holding period, is ideal for investment methods that continue to invest small amounts over a long period of time. For example, it is suitable for operations such as “Investing 30,000 yen every month for 20 years”.
With an investment method that accumulates small amounts little by little, the monthly burden is small and there is no need to worry about the timing of buying and selling. Tsumitate NISA supports such investment methods, so it is a system that is easy to use even for investment beginners.
1-3. Advantages and disadvantages compared to iDeCo
“iDeCo” is a system that provides tax benefits similar to NISA. iDeCo is a system where you continue to pay premiums set in units of 5,000 to 1,000 yen each month and receive the total amount as an annuity in the future.
iDeCo supports investment trusts, time deposits and insurance products, and the maximum contribution is about 140,000 yen to about 810,000 yen. There is no upper limit on the cumulative investment amount, all contributions at the time of contribution are subject to income deduction, and when receiving old-age benefits, you can enjoy tax benefits that are more substantial than NISA.
However, it should be noted that since this is a pension system for individuals, in principle, funds cannot be withdrawn until the recipient reaches the age of 60.
1-4. Drastic Expansion and Permanence of NISA (200 characters)
In December 2022, the Cabinet decided on the “Outline of Tax Reform for 2022”, which indicated the revision policy of NISA.
We have announced the major items related to the Financial Services Agency in the 2023 Tax Reform Outline approved by the Cabinet today. Images of the drastic expansion and permanentization of NISA are posted. https://t.co/112OjHybvU pic.twitter.com/S4UfXgvX9U
— Financial Services Agency (@fsa_JAPAN) December 23, 2022
From January 2024, the following revisions may be reflected in NISA.
- Significant expansion of tax-exempt quotas
- Indefinite tax-exempt holding period
- Tsumitate NISA and general NISA can be used together
NISA is scheduled to be revised in January 2024, but there are advantages to using the pre-revision Tsumitate NISA. Specifically, the current NISA annual tax exemption quota is expected to be treated separately, so if you invest before 2024, you will be able to invest a larger amount within the tax exemption quota.
2. Investment trusts you want to choose with Tsumitate NISA
Next, let’s explain the investment trusts you want to choose with Tsumitate NISA.
To start a Tsumitate NISA, you will first select a financial product such as an investment trust. Investment trusts (funds) are one type of financial product. When you purchase a mutual fund, an investment professional entrusts your funds to invest in multiple types of stocks, including Japanese and US stocks.
Investment trusts are popular because they allow easy diversification, but there are some products that are not suitable for everyone. So, here are some things you need to know when choosing an investment trust.
2-1. Types of investment trusts
There are many types of investment trusts that you can buy, but they can be roughly divided into index funds and active funds.
An index fund is an investment trust that invests in stocks that make up an index, with the aim of tracking investment results in the Nikkei Stock Average, S&P 500, and other indices. It is characterized by the possibility of highly diversified investment and low operating costs.
An active fund is an investment trust that aims to achieve investment results that exceed the benchmark index. Fund managers make investment decisions based on their own view of the market. While the returns can be high, operating costs tend to be high.
2-2. Index funds for trust fees
An index fund would be a better and safer mutual fund for the cost.
There are several types of costs involved in investing in mutual funds, but the most important is the trust fee. Trust fees are automatically withdrawn during the period of holding the investment trust. If the trust fees paid on a regular basis are high, the profit that can be left in long-term investment will decrease.
Looking at the list of investment trusts handled by SBI SECURITIES, you can compare the top-selling index funds and active funds in terms of trust fees. The comparison results as of January 2023 are as follows.
- Index funds: approximately 0.15% to 0.1% per annum
- Active Funds: Approximately 0.25% to 1.1% per annum
As you can see, index funds have lower trust fees. In addition, most of the investment trusts with the highest sales are index funds, so it can be said that the majority of people choose index funds.
3. Popular investment trusts for Tsumitate NISA
I understand that index funds are more popular, but which index funds are more popular? In this chapter, we will introduce fund names highly rated by investors based on their popularity rankings at SBI SECURITIES.
3-1. Popularity Ranking
We will introduce the monthly reserve setting amount ranking of investment trusts compatible with Tsumitate NISA. The top 5 most popular as of December 2022 are as follows.
| eMAXIS Slim Global Equity (All Country) | Mitsubishi UFJ Kokusai Asset Management Co., Ltd. |
| SBI・V・S&P500 Index Fund | SBI Asset Management Co., Ltd. |
| eMAXIS Slim US Stocks (S&P500) | Mitsubishi UFJ Kokusai Asset Management Co., Ltd. |
| SBI V National Equity Index Fund | SBI Asset Management Co., Ltd. |
| SBI V Global Equity Index Fund | SBI Asset Management Co., Ltd. |
As a reference, we will also introduce the monthly sales amount ranking for all investment trusts handled by SBI SECURITIES. The top 5 popular in December 2022 are as follows.
| SBI・V・S&P500 Index Fund | SBI Asset Management Co., Ltd. |
| eMAXIS Slim Global Equity (All Country) | Mitsubishi UFJ Kokusai Asset Management Co., Ltd. |
| eMAXIS Slim US Stocks (S&P500) | Mitsubishi UFJ Kokusai Asset Management Co., Ltd. |
| SBI Japan shares 4.3 bulls | SBI Asset Management Co., Ltd. |
| SBI V Global Equity Index Fund | SBI Asset Management Co., Ltd. |
The types of funds in the top three are the same in both rankings, indicating that the top three products are particularly popular. So what are the differences between these three types of funds?
3-2. What is eMAXIS Slim Global Equity (All Country)?
eMAXIS Slim Global Equity (All Country) is an investment trust managed by Mitsubishi UFJ Kokusai Asset Management Co., Ltd. It seeks to track the MSCI All Country World Index (MSCI ACWI Index), an international stock index.
The MSCI ACWI Index is designed to represent the performance of stocks in 23 developed and 24 emerging market stocks that are categorized as large and mid-cap by market capitalization. Market capitalization and regional conditions are taken into consideration when determining the composition ratio.
In addition to the low trust fee of within 0.1144% per year, the high degree of diversification is also the appeal of eMAXIS Slim Global Equity (All Country). In addition, stocks with high risk such as low liquidity are excluded.
The MSCI ACWI Index has recorded gains over the long term, although underperforming stocks can be a drag due to its broad coverage. The price of eMAXIS Slim Global Stock (All Country) is also rising moderately.
The total return for each investment period that can be confirmed as of January 2023 is as follows.
- 6 months: 2.80%
- 1 year: 3.98%
- 3 years: 14.42%
3-3. What is eMAXIS Slim US Stocks (S&P500)?
eMAXIS Slim US Equity (S&P500) is an investment trust that aims to track the US stock index called S&P500. Managed by Mitsubishi UFJ Kokusai Asset Management Co., Ltd.
The S&P is a large-capitalization US stock index that targets the stocks of 500 companies that represent the United States at the time. A method called market capitalization weighting is adopted, and the composition ratio of stocks with large market capitalization is high. In the December 2022 material, the following companies are listed as high-weight components.
- Apple Inc. (AAPL)
- Microsoft Corporation (MSFT)
- Johnson & Johnson Company (JNJ)
Since its creation in 1957, the S&P 500 has continued to rise over the long term. At the moment, the United States is a country that boasts high growth and economic strength. Therefore, it is expected that it will continue to rise in the future. The price of the eMAXIS Slim US stock (S&P500), which tracks the S&P500, has also increased recently.
Below is a graph comparing the above two products. Since January 2019, the eMAXIS Slim US Equity (S&P500) (blue line) outperforms the eMAXIS Slim Global Equity (All Country) (green line). Of course, it is quite possible that the latter will outperform the former in the future.
Finally, we will introduce the total return for each investment period that can be confirmed as of January 2023. In addition, the “SBI V S&P500 Index Fund”, which was ranked high in the above ranking, is also an investment trust that aims to be linked to the S&P500, so it will be listed together.
| 3.81% | 3.77% |
| 5.14% | 5.07% |
| 18.28% | 18.10% |
As far as comparing the above, there is no big difference in the performance of the two mutual funds. Regarding trust fees, eMAXIS Slim US Equity (S&P500) is within 0.0968% per year, and SBI V S&P500 Index Fund is about 0.0938% per year, which is almost the same. At this point, it doesn’t matter which one you choose, so it’s best to choose the one that you feel has more potential in the future.
4. Utilize NISA to prepare for increased burden
In Japan, it is difficult to raise salaries, and the increase in burden due to increases in social insurance premiums is viewed as a problem. Asset formation using NISA can be an effective countermeasure against this situation.
Tsumitate NISA can be started by opening a NISA account with SBI Securities etc. and setting the products and conditions to operate. It is possible to change the brand or stop the operation, and there are no major disadvantages, so if you have surplus funds, it is a system that you definitely want to use.
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