How to Invest in Japan
It has never been easier for Japan residents to organise and manage their investments. This guide covers a few financial planning basics and breaks down two tax-advantaged investment products.
Regardless of nationality or country of residence, there are three basic things that people should consider to protect themselves financially: Emergency cash reserve
Basic insurance
Pension / long-term savings
Firstly, it is prudent to build up an emergency cash reserve. This money is kept in cash in the bank. It is not invested and should be easily accessible. The purpose of the cash reserve is to meet monthly expenses in the event of loss of employment. The typical advice is to build up 3-6 months of expenses in cash before beginning to invest for the longer term. Some people may feel comfortable with a larger cash reserve.
Secondly, it is wise to consider private health insurance and income protection insurance. Company employees in Japan are enrolled in the national health insurance scheme. However, this does not cover longer-term sickness. Income protection insurance is designed to pay a portion of the policyholder's income if they become unable to work due to illness or injury.
Lastly, people should consider allocating part of their disposable income to longer-term investments to help fund their retirement. Again, company employees will likely be enrolled in the national pension scheme. They may choose to supplement these contributions by making further investments themselves.
Are you interested in setting up a credit record in Japan, but you don't know how it works? Head to our simple guide How Does Japan's Credit System Work? and learn more. Image credit: bee32 / iStock
Investors have many options, both domestically and internationally. Two Japanese investment products stand out because they offer significant tax advantages. The Nippon Individual Savings Account, or NISA, was launched in January 2014, and the offering has been significantly improved in recent years. NISA was designed to encourage residents of Japan to invest for the future.
iDeCo stands for the Individual Defined Contribution Pension. It is a self-managed retirement savings plan that can be used to supplement contributions to the national pension. Eligibility : Anyone over the age of 18 who lives in Japan can open a NISA account
: Anyone over the age of 18 who lives in Japan can open a NISA account Annual Investment Limit: Up to ¥3.6 million per year
Up to ¥3.6 million per year Contributions are divided between the regular investment allocation, which can invest in mutual funds, and the growth allocation , which is free to be invested in mutual funds, stocks and Exchange Traded Funds (ETFs)
which can invest in mutual funds, and the , which is free to be invested in mutual funds, stocks and Exchange Traded Funds (ETFs) Tax Benefits: Capital gains and income from dividends are free of the standard 20% tax charged on regular investments
Capital gains and income from dividends are free of the standard 20% tax charged on regular investments Lifetime Contribution Limit: Up to ¥18 million total
Up to ¥18 million total Holding Period: Unlimited, you can keep assets tax-free for as long as you want.
Unlimited, you can keep assets tax-free for as long as you want. Flexibility: No minimum holding period, you can sell anytime without losing tax benefits.
To summarize, individuals can invest up to ¥18 million over their lifetime, and the investments will be free of tax on capital gains and dividends. Detailed information can be found on the Financial Services Agency website. (Japanese only) Eligibility : Generally, anyone over the age of 20 who resides in Japan and contributes to the National Pension is eligible
: Generally, anyone over the age of 20 who resides in Japan and contributes to the National Pension is eligible Tax-Deductible Contributions: All contributions reduce your taxable income.
All contributions reduce your taxable income. Investment returns are tax-free
Tax deductions apply when receiving benefits
Payout Options: Benefits are available from age 60 onwards and can be received as a lump sum, an annuity, or a combination of both
Detailed information on iDeCo, including the maximum contribution limits, can be found on the iDeCo official website, which is available in English. Image credit: Tadamichi / iStock Feature NISA iDeCo Purpose Tax-free investing for general savings and wealth building Private retirement savings with tax advantages Eligibility Residents of Japan aged 18 and over Residents of Japan aged 20 and over who contribute to the National Pension Annual Contribution Limit ¥3.6 million total Varies by employment type Lifetime Contribution Limit ¥18 million No formal lifetime limit; capped by monthly/yearly contribution rules Tax Benefits – Contributions Not tax-deductible Fully tax-deductible from income Tax Benefits – Returns Tax-free returns (capital gains, dividends, etc. are not taxed) Tax-free returns (capital gains, dividends, etc. are not taxed) Tax Benefits – Withdrawals No additional tax Withdrawals may be taxed, but tax deductions apply (retirement/annuity) Withdrawal Timing Anytime — no minimum holding period After age 60 (with few exceptions) Withdrawal Method Sell assets anytime without penalties Lump sum, annuity, or both Main Advantage Flexible, tax-free investing for short- or long-term goals Strong tax incentives for long-term retirement savings
Both NISA and iDeCo are available through a range of financial institutions, including banks, insurance companies and securities firms. These days, many investors use online brokerage accounts to access these products. Rakuten Securities and SBI Securities are two of the most popular online brokerages.
Applications can be made on the website. Foreign residents will be asked to send copies of their residence card and My Number card by mail following the initial application.
A word of caution: U.S. citizens are subject to global taxation, and NISA and iDecCo are generally not considered suitable for them due to the onerous tax reporting requirements on Passive Foreign Income Companies (PFIC). With careful planning, it is possible to avoid PFICs in the growth part of NISA, however, people unsure of the tax situation should seek professional advice.
To conclude, Japan has excellent tax-advantaged investment options available to residents. Unfortunately, the online brokerage accounts still require users to navigate in Japanese, although online translation tools make that easier.
Last summer Bank of Japan issued new designs of the ¥1,000, ¥5,000 and ¥10,000 banknotes. Read about the new notes in our article Bank of Japan Introduces New Banknotes.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yomiuri Shimbun
an hour ago
- Yomiuri Shimbun
Trump Administration Vying to Own a Big Stake in Intel after SoftBank's $2 Billion Bet on Company
SAN FRANCISCO (AP) — U.S. Commerce Secretary Howard Lutnick on Tuesday confirmed the U.S. government is vying for a 10% stake in Silicon Valley pioneer Intel in an unusual deal that would deepen the Trump administration's financial ties with major computer chip manufacturers and punctuate a dramatic about-face from the president's recent push to oust the company's CEO. The ambitions that Lutnick confirmed in a televised interview with CNBC came the day after various news outlets reported on the negotiations between the Trump administration and Intel. The investment would be made by converting federal government grants previously pledged under President Joe Biden's administration into a bushel of Intel stock that would turn the U.S. government into one of the company's largest shareholders. 'We think America should get the benefit of the bargain,' Lutnick told CNBC as he explained why President Donald Trump is pushing for the deal. 'It's obvious that it's the right move to make.' Intel declined to comment on the negotiations with the Trump administration. The notion of the U.S. government holding a huge stake in Intel would have seemed inconceivable back in the company's heyday when its processors were powering a personal computer boom that began in the mid-1970s. But Intel has been mired in tough times after missing mobile computing era unleashed by the iPhone's 2007 debut. Intel has fall even farther behind in recent years during an artificial intelligence craze that has been a boon for two of its once-smaller rivals, Nvidia and Advanced Micro Devices. The Trump administration is hitching a ride on their success by imposing a 15% commission on their sales of their chip sales in China in exchange for their export licenses. Those fees are expected to translate into billions of dollars in additional government revenue. The U.S. government's negotiations to become a major Intel shareholder are coming on a heels of a $2 billion investment Japanese technology giant SoftBank Group disclosed late Monday that it plans to make in the Santa Clara, California, company. Softbank is accumulating its 2% stake in Intel at $23 per share — a slight discount from the stock's price when its investment was announced. Intel's shares surged nearly 7% to close at $25.31 on the news of Softbank's big bet on Intel, coupled with Trump's designs on the company. SoftBank invests in an array of companies that it sees as holding long-term potential. It has been stepping up investments in the United States since Trump returned to the White House. In February, its chairman Masayoshi Son joined Trump, Sam Altman of OpenAI and Larry Ellison of Oracle in announcing a major investment of up to $500 billion in a project to develop artificial intelligence called Stargate. 'Semiconductors are the foundation of every industry, Son said in a statement. 'This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role.' Trump's interest in Intel is also being driven by his desire to boost chip production in the U.S., which has been a focal point of the trade war that he has been waging throughout the world since he returned to the White House earlier this year for his second term in office. 'We want Intel to be successful in America,' Lutnick said during his CNBC interview. Boosting domestic production of computer chips also ranked high on the Biden administration's agenda, which resulted in the 2022 passage of the CHIPS and Science Act. Intel was among the biggest beneficiaries of the program, but it hasn't been able to revive its fortunes while falling behind on construction projects spawned by the CHIPS program. The company has received about $2.2 billion of the $7.8 billion pledged under the incentives program — money that Lutnick derided as a 'giveaway' that would better serve U.S. taxpayers if it's turned into Intel stock, which he said would be in the form of non-voting shares so the government wouldn't be able to use the stake to sway how the company is managed. But Intel's ongoing struggles also means the U.S. government is taking on a risky investment. The company is in the midst of its latest turnaround attempt under CEO Lip-Bu Tan, who was hired in March to shake things up. Tan's turnaround effort so far has been focused on a cost-cutting spree that is gutting the company's workforce and further delaying construction on a chip plant in Ohio that has been in the works since 2022. Intel's market value is hovering around $110 billion, only a slight uptick from where it was when Tan arrived and leaving it more than 60% below its peak reached about a quarter-century ago during the early phase of the internet boom. In another strange twist to the new alliance, President Donald Trump had demanded that Tan resign in an August 7 post spurred by concerns about investments that Tan had made in China chipmakers while he was working as a venture capitalist. But Trump backed off after the Malyasia-born Tan professed his allegiance to the U.S. in a public letter to Intel employees and went to the White House to meet with the president, who applauded the Intel CEO for having an 'amazing story.' That truce apparently sparked the negotiations that may culminate in the U.S. government owning a chunk of Intel. Although rare, it's not unprecedented for the U.S. government to become a significant shareholder in a prominent company. One of the most notable instances occurred during the Great Recession in 2008 when the government injected nearly $50 billion into General Motors in return for a roughly 60% stake in the automaker at a time it was on the verge of bankruptcy. The government ended up with a roughly $10 billion loss after it sold its stock in GM.
an hour ago
Japan-U.S. Tariff Document to Be Released Weeks Away: Lutnick
News from Japan Aug 20, 2025 11:17 (JST) Washington, Aug. 19 (Jiji Press)--U.S. Commerce Secretary Howard Lutnick said Tuesday that a document on the recent deal on U.S. tariffs on imports from Japan will likely be released "weeks away." The release of tariff agreement-related documents is "kind of weeks away for the Japan and (South) Korea model," he said in an interview with U.S. broadcaster CNBC. The administration of U.S. President Donald Trump plans to change the way it applies the 15 pct reciprocal tariffs on Japan to accurately reflect an agreement reached between Tokyo and Washington in July, meaning that a relevant executive order will need to be revised. Another executive order, for cutting the U.S. automobile tariffs on Japanese vehicles from 27.5 pct to 15 pct, is expected to be issued at the same time. Among other trading partners of the United States, Britain agreed on a low-tariff quota of 10 pct for up to 100,000 vehicles exported to the U.S. market a year. It took slightly less than two months for the tariff measure to go into effect. [Copyright The Jiji Press, Ltd.] Jiji Press
The Mainichi
an hour ago
- The Mainichi
Leaders of Japan, Africa to push for stable supply chains of key minerals
TOKYO (Kyodo) -- The leaders of Japan and Africa will call for stable supply chains for critical minerals by developing inland transport routes in a joint declaration at an international meeting on the continent later this week, a government source said Tuesday. The declaration will be adopted at the three-day Tokyo International Conference on African Development from Wednesday and will also stress the importance of appropriate debt management and the rule of law, the source said, apparently with China's growing economic and military clout in mind. With U.S. President Donald Trump's high tariff policy jolting the global economy, the leaders are also expected to pledge to promote free trade by removing levies and standardizing regulations within the bloc, the source said. The outcome document will be issued on the final day of the ninth TICAD talks, with about 50 African states and international bodies slated to take part. Despite the Japanese capital being part of the conference's title, the event will be held in the nearby port city of Yokohama. In its push for stable supply chains for critical minerals, Japan will support the development of highways and railways and help improve access from inland Africa to Indian Ocean coastal areas, the source said. The Japanese government will focus on the Nacala Corridor, which links Zambia, a major copper ore producer in central Africa, with the port of Nacala in Mozambique on the continent's east coast, the source said. Africa is rich in natural resources and rare earths, but China has been expanding its influence there through its economic power. With China holding a large share of global rare earth production, Japan has sought to diversify its suppliers. Beijing has also faced criticism for alleged "debt-trap diplomacy" toward developing countries, using loans as leverage to gain concessions from borrowers. The declaration is also expected to include pledges to accelerate digitalization and the use of artificial intelligence, as well as to cooperate on U.N. Security Council reforms, including expanding both permanent and nonpermanent members, the source said. The TICAD gathering was held every five years from its launch in 1993 until the fifth session in 2013 in Yokohama. It has since taken place every three years, with the previous one held in Tunisia in 2022.
