“If it becomes possible to buy
individual government bonds in NISA,
should I stop my current
S&P 500 or All Country (global stock index) accumulation and switch to government bonds?”
Following the emergence of
“consideration of tax systems related to government bonds”
in tax reform requests from the Ministry of Finance and the Financial Services Agency,
an increasing number of investors have this question.
With the interest rates on individual government bonds
rising (the fixed 5-year rate is 2.39% per annum for the October 2026 offering),
“if I can invest in government bonds that don’t lose principal tax-free,
aren’t they more attractive than stocks?”
It is understandable to feel this way.
However,
to start with the conclusion,
“there is absolutely no need to stop your current stock index accumulation
and switch to government bonds.”
From the perspective of a former institutional investor,
I will explain the three major reasons for this.
■ 1. Government bond NISA is in the “consideration stage”: Stopping accumulation for an unconfirmed system is a loss
First, what you need to keep in mind is that the request from the Financial Services Agency only contains the phrase
“consideration of tax systems related to government bonds,”
and it has not been decided that “individual government bonds will be available for purchase in NISA.”
Whether the system will be realized,
and if it is,
whether it will be incorporated into the “existing NISA quota (3.6 million yen per year / 18 million yen lifetime)”
or be a separate quota,
is all undecided.
If you stop your current accumulation investment
because of an unconfirmed system,
you will lose out on investment opportunities (market growth) during that period,
leading to an “opportunity cost.”
The golden rule is to first calmly wait for the system to be finalized.
■ 2. The decisive difference: The “blessing of tax exemption” is proportional to the yield (the size of the profit)
The essence of NISA is
a mechanism that “makes the approximately 20% tax on profits zero.”
In other words,
if the profit generated is large,
you gain a large benefit, but if the profit is small,
the amount you can save on taxes is also small.
Let’s estimate how much the tax-free benefit (tax saved) changes
depending on whether you use your limited lifetime tax-free quota (18 million yen)
for stocks or government bonds.
[Comparison of tax-free effects when investing 1 million yen for 20 years]
*Calculated at a tax rate of 20.315%.
Even if you use the same 1 million yen tax-free quota,
the tax-free benefit after 20 years
will have a gap of about 17 times,
with stocks (approx. 340,000 yen) versus government bonds (approx. 19,000 yen).
Putting in “stocks” that have the potential to grow significantly allows you to utilize the “limited box” of the tax-free quota
overwhelmingly more effectively.
■ 3. Government bonds and stocks are not “replacements” but “division of roles”
It is not that “government bonds are not suitable for NISA.”
The essential point is that
government bonds and stocks
fundamentally have different roles to play.
-
Stocks (S&P 500, All Country, etc.): The role of “growing” assets (taking on price fluctuation risk to aim for returns)
-
Individual government bonds/deposits: The role of “protecting” assets (securing principal and softening the impact of a crash)
GPIF (Government Pension Investment Fund), which manages public pensions, also achieves long-term stable management by combining defensive and growth assets with a basic portfolio of
25% domestic bonds, 25% foreign bonds, 25% domestic stocks, and 25% foreign stocks.
By combining
defensive and growth assets, they achieve long-term stable management.
In professional management, the most important thing is to decide on asset allocation based on
“how much price fluctuation you can withstand”
, and then
“which account (NISA, etc.) to hold them in”
is the order in which you should think.
■ 4. Summary: Investment Strategy That Isn’t Swayed by Rumors of Tax Reform
The key points of this article are summarized below.
-
People who should maintain their accumulation as is:
Those who have secured living defense funds or -
“defensive assets” through savings, etc.,
-
and who want to significantly increase their assets from a long-term perspective of 10 years or more.
-
People who may want to consider it if Government Bond NISA becomes a reality:
-
Those whose assets are almost entirely skewed toward stocks,
-
and who are thinking about adding “defensive assets.”
-
Tax incentives are merely a way to manage your holdings (a tax-saving technique).
-
If you already have “defensive assets” in savings or similar,
-
there is no reason to change
-
your current stock accumulation style.
-
Do not be misled by talk of systems,
-
and continue to firmly maintain
-
the core of your own asset formation.
-
[Disclaimer]
This article is a sharing of financial information based on personal experience,
and is not intended to solicit investment.
Please make actual investment decisions
at your own responsibility and judgment. -
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