Late 30’s, monthly income of 280,000 yen” started NISA for the future, but… 3 “Common Misconceptions | FRIDAY DIGITAL

Late 30’s, monthly income of 280,000 yen” started NISA for the future, but… 3 “Common Misconceptions

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NISA first? Or iDeCo?

At a recent money seminar for 30-somethings held in Osaka City, I often heard comments like this.

“Investing? I am doing it. I’m worried about my retirement, so I’m using NISA. It’s said to be very tax-efficient.

“Investing? I started NISA for now. I think it’s the best way to grow my money in the future.

What am I doing wrong? If asked, the answer would be, “Nothing is wrong. This is because the right answer to an investment is not known until the results are obtained. However, there is certainly something “strange” about it.

A financial planner points out a common misconception: “I am worried about my retirement, so I decided to invest in NISA” (PHOTO: AFLO).

If your goal is to “fund your retirement,” then…

If you consider retirement to be after the age of 65, iDeCo is more suitable than NISA for efficiently increasing your retirement living fund. iDeCo is more tax-efficient, as all contributions are income tax-deductible.

For example, if a monthly contribution of 22,000 yen is made, the monthly tax saving is 4,400 yen at a 20% income tax rate. iDeCo (Individual Defined Contribution Pension Plan) is a pension plan and cannot be withdrawn until age 60. It is suitable for the purpose of preparing funds for retirement.

Of course, it is also acceptable to prepare funds for retirement through a general NISA or a savings NISA. However, the iDeCo should be given priority. Investment is a means to an end. It is important to choose the most appropriate means to achieve your goals and objectives. Perhaps because the public is so vocal about NISA, I often meet people in their 30s who are not aware of their objectives and are just going with NISA for the time being.

The current NISA does not allow you to “let loose.

If the first point is “purpose,” the second point is “investment period.

If you are 35 years old, you have 30 years until the age of 65. The tax exemption period for the current general NISA is 5 years, while the same period for the “Tsumitate NISA” is 20 years. When we talked to them, we got the impression that they think “once you buy, you’re safe” or “it works even if you leave it alone. Although it depends on the type of product chosen, the current NISA, which has an expiration date for the tax-exempt period, cannot be left alone. Incidentally, it is easy to understand if you think of the investment period as the period until the time when you need the money.

You may think that “future” or “retirement” is too specific, but you are mistaken.

In many cases, the objectives are unclear, and as a result, the target period is ambiguous. It would be a waste to make it impossible to select the most appropriate means. The new NISA, which will be launched in January 2012, will have an indefinite tax exemption period. We are grateful for the expanded usage.

The goal is 50,000 to 60,000 yen per month”! …Misconception by inflating the image on its own.

The third point is to set a target amount.

It is not a good idea to raise the hurdle too high, saying, “iDeCo is an investment. In cases where people say, “I want to make my investment debut, but it’s not easy,” they are often told that the reason is “I don’t have the money to invest. When asked, “How much are you expecting to invest? the answer is “50,000 to 60,000 yen.

When I tell them that iDeCo allows contributions from as little as ¥5,000 and that if their employer does not have a company pension plan, the maximum monthly contribution is ¥23,000, they are surprised that the hurdle is lower than they thought, and suddenly become more positive, saying, “Well, I guess I can do it then.

This is a good example of a person’s self-inflated and misunderstood image of investment, which acts as a brake. In investment, it is important to know yourself and the other party. By “you,” we mean your objectives, goals, risk tolerance, etc., and by “the other party,” we mean the financial product or system.

iDeCo allows you to contribute as little as ¥5,000, and if your employer does not have a company pension plan, the maximum monthly contribution is ¥23,000.

20 million yen by retirement at age 65… “not quite enough” with iDeCo alone

If 23,000 yen is accumulated monthly for 30 years starting at age 35, the principal portion will be 8.28 million yen. 13.31 million yen if invested at 3% compound interest. 10 million yen at age 65 is sufficient if the goal is to hold 10 million yen in assets, but if the goal is 20 million yen, it will not be achieved. In order to achieve the goal, it is necessary to combine iDeCo with other means such as NISA, and to increase the investment yield.

It is important to make calculations based on the objectives and goals and select the most appropriate means. In addition, it is important to keep in mind that if the investment is not made at or above the rate of price increases, the investment will be reduced in real terms.

The new NISA, which will be launched in 2012, will allow for one financial institution and one account. The lifetime investment limit is 18 million yen. It is not surprising that competition for customers is fierce. In addition to iDeCo and NISA, there are other ways to prepare money for the future while saving for taxes, such as matching contributions to corporate DC plans and small-scale mutual aid if the conditions and environment are right. Know the means available to you, and use them according to your objectives and goals.

The three key points of investment are for what purpose (purpose), when (when needed), and how much (target amount). Don’t be misled by assumptions or superficial advertising, but be aware of what is the case for you, compare and consider, and act accordingly.

  • Text Izumi Oishi

    Certified Senior Financial Planner CFPⓇ by the Japan FP Association. Career consultant. After graduating from university, joined Recruit Co. Ltd. for about 15 years before establishing his own FP firm in 2001. He has been offering lectures and training courses on economic education, career design, and asset building to universities and companies, using familiar newspapers for men and women of all ages. For individuals, he provides objective financial planning and life and career planning. For his financial literacy activities, he was recognized by the Financial Services Agency and the Bank of Japan as a 2014 Financial Knowledge Dissemination Achiever.

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