Are you still using NISA? Rethinking the importance of long-term investment

Even though you
checked your account enthusiastically when you first started investing, lately you
might even be forgetting about the existence of NISA—

Is there anyone like that?

The newNISAsystem started in 2024, and many people began
investing, but in reality,
“keeping it up” is actually the biggest hurdle
.

In this article, we will explain in detail, from the
importance of long-term investment to
tips for continuing with NISA.

Why can't people keep up with NISA?

NISA Although they opened an account, there are
not a few people who stop their contributions along the way.

The reasons for this vary, but the most common one is

“being unable to withstand market fluctuations.”

When the market drops right after you start investing, you become
anxious about holding unrealized losses.

The psychology of “Is it okay to keep going like this?” or “Should I stop before the losses grow?” kicks in, and they

end up stopping their contributions
.

Conversely, when the market is performing well, there are also cases where people feel
“I’ve made enough profit”
and are satisfied, take their profits, and then
end up stepping away from
investing entirely.

I often hear people say that they
forgot about their investments while caught up in their daily lives, and before they knew it, they had
left their automatic investment settings untouched for months.

Investing is a series of plain and boring tasks.

Because flashy results do not appear immediately, it is
difficult to maintain motivation.

The essential reason why long-term investment is important

So, why is long-term investment important?

It is not simply a
“matter of making money if you give it time”
simple story.

■ The power of the compound interest effect

The greatest weapon of long-term investment is the
compound interest effect.

The mechanism where profits generate more profits, and
assets grow like a snowball, becomes more
powerful as time passes.

For example, if you invest at an
annual rate of 5%, a
principal of 1 million yen will become
approximately 1.63 million yen in 10 years,
approximately 2.65 million yen in 20 years, and approximately 4.32 million yen
in 30 years.

The 630,000 yen gained in the first 10 years becomes
1.02 million yen in the next 10 years, and
1.67 million yen in the 10 years after that, meaning the amount of increase itself accelerates
.

■ The effect of time diversification

Long-term investment
reduces the risk of price fluctuations by diversifying the
timing of purchases.

By practicing
dollar-cost averaging, where you invest a fixed amount every month, you can
buy less when prices are high and
buy more when prices are low, which helps
lower your average purchase price.

(The lower the average purchase price, the easier it is to generate a profit).

If you invest only for a short period and
end up buying at a market peak, you run the
risk of suffering significant losses during the subsequent
market downturn, but by continuing for the
long term, you can mitigate this risk
.

■ Reaping the rewards of economic growth

The global economy has continued to grow over the
long term.

In the short term, there have been various crises such as
wars, financial crises, and
pandemics, but humanity has
developed the economy through technological innovation and
productivity improvements.

Long-term investment is nothing less than
receiving the rewards of this
economic growth.

Rather than being swayed by short-term ups and downs, the

essence of long-term investment is
continuing to invest while believing in human progress.

The effectiveness of long-term investment shown by actual data

Looking at past data, the
effectiveness of long-term investment is clear.

The S&P 500 index, which represents the U.S. stock market, has historically shown a
negative return in
about 25% of cases when viewed over a
one-year investment period.

However, if you extend the investment period to 10 years, the
probability of a negative return drops significantly.

Furthermore, for investment periods of 20 years or more, historically,
positive returns have been recorded in
almost all periods.

Japanese stocks are the same.

Even during the period after the bubble burst, known as the
"Lost 30 Years"
, there is
data showing that if you
held long-term while reinvesting dividends, you could have
obtained positive returns in many periods.

In other words, while short-term price fluctuations are unavoidable
, by
continuing to hold for the long term, you increase the likelihood of
overcoming those fluctuations and growing your assets
.

Practical tips for continuing NISA

So, how can you
continue with NISA?

■ Thoroughly set up automatic contributions

The most important thing is to
utilize automatic contribution settings.

If you set it up to be
automatically deducted right after payday, you can continue investing without even thinking about it.

With an attitude of "I'll invest if I have extra money,"
,
you will never actually have extra money.

Secure your investment amount first, and
create a habit of living on the remaining money.

■ Don't watch the market too much

There is no need to check stock prices every day.

In fact, checking frequently can lead to emotional ups and downs, and there is a risk of
making emotional decisions.

Checking your asset status a few times a year is
more than enough.

It is just right to almost forget about
your investments.

■ Clarify your purpose

Investing "just because"
will not provide the
motivation to continue during difficult times.

For retirement funds,
for children's education funds, or
for a down payment on a home, set a concrete
goal.

By deciding on a target amount and a target date, you can also
judge whether your current savings amount is appropriate.

■ Start small and don't overdo it

The golden rule is to invest only with
surplus funds.

There is no need to
cut into your living expenses to invest.

Even starting from 10,000 yen a month is enough.

Even with small amounts, by continuing for a long period, you can
build significant assets through the power of compound interest
.

Rather than starting with an unreasonable amountand quitting halfway through,

it is far more effective to continue for a long time, even with a small amountthan that.

Conclusion: Let's restart from today

IfNISAaccumulationhas been
stopped,
let's resume from today.

You may have incurred losses in the past, but
that isa thing of the past.

What is important is
what you do from now on.

Investment successis not achieved by choosing excellent stocks, but by

holding ordinary productsfora long periodand
continuing to do so.

(For example,All Countryfunds.They have extremely low trust fees,and are suitable for long-term investment)

Market timingdoes not need to be
predicted.

Justcontinue calmly.

That is all.

The newNISAsystem has
a tax-free periodthat isindefinite,
and the annual investment limit has also expanded.

It is
a wealth-building toolthat can be used throughout your life.

To make the most of this system,
above all else, staying the course is required.

10 or 20 years from now,
to be thanked by your future self,
let's NISAstart again today.

The best gift for your future self
begins with a single step today.