A story that I badly mistook timing of selling NISA stocks
I started investing in stocks in March 2019, and I had been researching NISA (Nippon Individual Savings Account) plans in advance. NISA is Japan’s new tax exemption scheme for investment by individuals. It started from 2014.
Nevertheless, the treatment of NISA has made a fatal and irreversible mistake. Please read the information here and I hope you don’t make the same mistakes as I do.
NISA stock trading results in first year
I started investing in stocks in March 2019, So I searched the internet about the NISA system. As a result of various thoughts, I chose the General NISA Type. I will explain about advantages and disadvantages of two NISA types later.
As a result, I purchased these stocks as follows.
Probably, many people would like to say many opinions about this list. But please forgive me because it was my first stock purchase. I don’t make such portfolio right now.
I was enthusiastic at this time. I dreamed of making much money.
After 5 months, I had sold all stocks…
I had NGK insulators only just 25 days. I didn’t have a month. After the purchase, NGK insulators plunged more than 200 yen from 1,700 yen. I could not bear to sold it when the price returned to the buying price.
In just 5 months, the minus was -150,000 yen and the profit margin was -12.5%. It would be great if plus and minus were reversed.
Everyone wants to talk about stocks.
“If I had bought a little more over that time, it would have been even more profitable…”
“It was horrible nosedive, the financial results weren’t so bad. I should sell yesterday”
These thinking doesn’t make sense. But we want to say “If” “If” “If” But in this time, please let me tell ”If I continued to own this NISA stocks…”
One year later, The -147,900 yen did not turn into a plus .
I tried to check the stock price for the first time in a year because I thought it was positive.
On the contrary, The minus became bigger -161,400 yen…
If it became positive balance, I wanted to say “You should not sell NISA stock right away. It’s important to be patient!”
Well, About NISA stock, It is important to choose a stock brand that you can carry for a long time.
Pros and Cons of NISA
I would like to explain the features of NISA. It may be a little difficult and painful, but if you keep this in mind or not, your stock balance may change significantly. Let’s do our best.
As of March 2019, there were 3 types of NISA.
I chose “General NISA” in 2019. It can be changed every year and can be changed from “General NISA” to “Periodic NISA”, from “Periodic NISA” to “General NISA”.
There are many Websites that explain each NISA’s detailed features in an easy-to-understand manner. Let me explain here the strengths and weaknesses of the General NISA I chose in 2019.
Tax exemption limit is up to 1.2 million yen per year.
Tax exemption on gains on sale of shares, dividends, and distributions are for 5 years from the year of purchase.
Under not NISA system, 20% tax is deducted. If the profit on sale is 100,000 yen, tax is 20,000 yen and the actual amount received will be 80,000 yen.
However, under NISA system, if your investment was under NISA’s tax-exemption investment limit, you will receive 100,000 yen as a profit.
It’s great that you don’t have to pay taxes.
Generally, Japanese domestic internet brokerage companies will get about 0.05-0.1% for domestic stocks and about 0.5% for US stocks. For example, each time you buy or sell 100,000 yen worth of stock, domestic stock costs is about 100 yen. US stocks will be deducted about 500 yen.
Under NISA system, purchase and sales fee are free.
If the transaction was large, the total fee would become large cost. (There are differences in fees, maximum fees, and minimum fees depending on the breakage company.)
You can’t make aggregation of total profit and loss.
Under not NISA system, you got a profit of 1 million yen for ABC company and a loss of 1 million yen for XYZ company, you can make aggregation total profit and loss.
So you do not need to pay taxes because the balance is plus and minus 0.
In addition, if the profit of the year is a loss, you can carry over the loss for up to 3 years by filing a final tax return.
You can reduce taxes by offsetting this year’s positive income and expenditure by last year’s and last year’s negative income and expenditure.
Unused portion of the tax-exempt annual investment quota cannot be carried over to the next year.
For example, if you use only 1 million yen in tax-free allowance of up to 1.2 million yen per year, the remaining 200,000 yen cannot be carried over to the following year.
Selling the used portion of purchased tax-free stocks does not increase the remaining tax-free amount.
For example, even if you sell the 1 million yen purchased tax-free stocks, the 1 million yen used will not be returned. The remaining tax exemptions for the year remain 200,000 yen.
What I learned
Stocks purchased under the NISA system are a treasure that does not require tax or payment of trading fees.
You don’t have to pay 20% tax on profits for up to 5 years.
If a profit of 1 million yen is made, it will be a total profit of 1 million yen.
It’s a waste to sell such a treasure like me.
Therefore, be careful to select a stock for own it for at least 5 years.
Even if you make a mistake, please do not use the NISA stocks for day trading (buying and selling within a day) and swing trading (buying and selling for several weeks).
Please buy and sell these trades in non-NISA accounts such as specific accounts.
I’m glad you read my text for a long time.
The content of this blog is a record of the stock investment I think are good at the moment.
It’s not a criticism of other ways.
Thank you very much.