Latest news with #NipponIndividualSavingsAccount
Metropolis Japan
21-05-2025
- Business
- Metropolis Japan
How to Invest in Japan
Image credit: takasuu / iStock 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.
Yomiuri Shimbun
11-05-2025
- General
- Yomiuri Shimbun
As a Homemaker, I'm Fed Up with Having No Financial Freedom
The Japan News Dear Troubleshooter: I'm a homemaker in my 30s and have a 1-year-old child. My husband gives me ¥80,000 in allowance every month and says to keep half in the individual-type defined contribution pension plan (iDeCo) and the Nippon Individual Savings Account small-lot investment system, known as NISA. He also says I should discuss with him what to use the rest of the money for before spending it. I had a fight with him last year when I told him I want to buy a ¥7,000 set of commemorative stamps featuring a well-known athlete. He told me I should not spend money on such things, saying, 'It's a waste of money to buy something that can't be sold later.' But I disagree because I would feel happy just by owning them. I bought the stamps with savings I accrued before we got married. But we fought again when I told him about the purchase. He told me to cancel the NISA account immediately. 'Give me back everything accrued on the account as my money was used,' he said. I became a homemaker because he wanted me to stay home for our child. I rarely buy things for myself. I'm fed up with having to be financially dependent on him and having no financial freedom. R, Tokyo Dear Ms. R: People perceive the value of money according to the era and environment in which they grew up, so it is natural for even a wife and a husband to have opposing views. You cannot judge which is better between a wife who finds happiness in commemorative stamps of heroes, and a husband who views value according to resale prices at a recycling market, since they navigate the world differently. That said, you seem to have far greater financial literacy than your husband, who demanded that you cancel an investment account that only serves a purpose if active long-term. For you, I think the real issue is not about money. You think you are financially dependent on your husband, but he is also, if I were to use the same expression, dependent on you for chores and child-rearing. You should confirm your respective roles first, instead of talking about dependence, since a husband and a wife are equal. If he refuses to do so and continues to one-sidedly restrict your spending and deprive you of your freedom, which could mentally drive you into a corner, this could constitute abuse. You can contact the Japan Legal Support Center for assistance. I believe the work of a homemaker cannot be translated into financial value; the homemaker's existence itself is meaningful. Your husband can work without concern because you are at home taking care of the child. There is no question that wives also need days off, and things to treat themselves with. Hazuki Saisho, writer
Yomiuri Shimbun
10-05-2025
- Business
- Yomiuri Shimbun
Securities Accounts: Measures to Prevent Account Hacking Are Urgently Needed
There has been a sharp increase in crimes in which accounts opened with securities companies are hacked by unknown persons and stocks are traded without the account holders' knowledge. Individual investors must be feeling very uneasy. With renewal of the Nippon Individual Savings Account (NISA) investment program in January last year, the base of individual investors has expanded. The securities industry must urgently implement measures to prevent accounts from being hacked. Law enforcement authorities must also devote their full efforts to cracking down on such crimes. The Financial Services Agency has announced the extent of the damage caused by the online hacking of securities accounts and stock trades. The number of cases of illegal trades was in the double digits in January and February but surged to 687 cases in March and 2,746 in April. A total of 3,505 cases were reported over the four-month period. This is a serious situation. Incidents were confirmed at nine securities firms, including Rakuten Securities, Inc., SBI Securities Co. and Nomura Securities Co. The FSA said the amount of illegal trading in this way has exceeded ¥300 billion. The method used to hack accounts involves first sending emails with titles such as 'Urgent/Important' to investors. Recipients are directed to websites imitating those of the securities companies mentioned in the emails, where they are then prompted to enter their ID and password, which are then stolen. Criminal groups use the stolen IDs and passwords to take control of legitimate securities accounts. They are believed to purchase large quantities of stocks in China and Japan that are typically traded at low prices and low trading volumes. After inflating the stock prices, they then sell the stocks to profit from the increased prices. This is a malicious criminal act. Investigative authorities should identify the sources of the emails, trace the flow of funds obtained through illegal means and uncover the full extent of the crimes. Preventive measures by securities companies are also crucial. They have reportedly implemented safety measures such as requiring investors to enter one-time passwords sent to their smartphones when logging into their accounts. It is essential to thoroughly inform investors of these measures. Investors should also confirm their own protective measures. It is important not to open links displayed in scam emails, but to instead access legitimate websites. Securities companies have said that they would compensate damages of accounts affected by the incident to a certain extent. While their terms and conditions previously stated that damages incurred by cases of unauthorized access would not be compensated, they have revised their policy in response to the expanded scope of the damages. Investors are growing increasingly anxious, and swift responses are required. It is surely necessary for each major securities company to make efforts to provide appropriate information, such as holding individual press conferences, regarding the spate of incidents and their response measures. The Japan Securities Dealers Association, an industry group of securities firms, has begun discussions on measures to prevent illegal accesses. It should come up with effective countermeasures. (From The Yomiuri Shimbun, May 10, 2025)
Business Times
27-04-2025
- Business
- Business Times
Nikkei 225 poised for rebound amid tariff de-escalation signals
THE Nikkei 225 Index Futures contract, available in standard, mini, and micro sizes, tracks the Nikkei 225 Index which includes top constituents such as Fast Retailing (Uniqlo), Tokyo Electron (semiconductor equipment), and Advantest (semiconductor testing solutions). Japanese equities have seen a correction over the past month, weighed down by US tariffs that disproportionately affected export-oriented firms such as Toyota, Tokyo Electron, and Fast Retailing. However, the Nikkei 225 appears to have stabalised around the April low of 30,650. While tariffs remain a significant challenge, especially with the US being Japan's largest export market, there is optimism for upside potential if bilateral negotiations progress and trade deals are inked. US officials have hinted at prioritising Japan in upcoming trade talks, raising the likelihood of targeted tariff relief or exemptions. If such a scenario materialises, Japanese equities may lead a regional rebound. In addition, recent developments also indicate a possible softening of US trade rhetoric. Treasury Secretary Scott Bessent said that the tariff standoff between US and China is 'unsustainable' and that tensions could de-escalate in the coming months, though a comprehensive agreement may take two to three years. Separately, Trump also hinted at reducing tariffs significantly from current levels. While formal negotiations are pending, markets are likely to begin pricing in the potential for near-term relief. On the macro front, rising real wages in Japan are fuelling hopes for a sustainable wage-price spiral, which could drive consumer spending and demand-led inflation. At the corporate level, structural reforms and increased shareholder activism have led to higher dividends and record share buybacks, which could offset some of the impact from tariffs. However, a stronger Japanese yen due to safe-haven demand and the Bank of Japan's policy normalisation could cap near-term upside. The historically negative correlation between USD/JPY and the Nikkei 225 remains a key dynamic to watch as a stronger yen tends to weigh on export-oriented equities. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Despite the market turbulence over the past month, the structural bull case for Japan equities remains intact. Key drivers include improving corporate profits, corporate governance reform, shareholder activism, unwinding of crossholdings, tax-free investing via the Nippon Individual Savings Account which is meant to help residents in Japan save money with tax-exempt benefits, and the return of healthy inflation and real wage growth. Nikkei 225 technical outlook In our view, we believe Japanese equities are well-positioned to benefit from a potential easing of tariff risks, accompanied by strong domestic fundamentals. If momentum holds and tariff risks are repriced lower, the Nikkei 225 could emerge as one of the early leaders in a broader Asia-Pacific recovery. From a technical standpoint, there is presence of a rebound from the Apr 7 low of 30,650 as shown on the daily chart of the Osaka Nikkei 225 Mini Futures contract. Based on a Fibonacci Extension drawn from the August 2024 low to the January 2025 high, and April 2025 low, the index is currently set to test the 50 per cent extension level near 35,767.50. The 14-day Relative Strength Index indicator sits near 49, indicating neutral momentum. A downside break below the 33,065 level may open a path towards retesting 30,650. Conversely, resistance may be encountered around 35,767; a break above could trigger a move towards the next resistance level at around 36,975. The writer is senior investment analyst at Phillip Nova
Yomiuri Shimbun
24-04-2025
- Business
- Yomiuri Shimbun
LDP Proposes Lowering NISA Age Limit; Aims to Leverage Funds Gifted from Grandparents to Younger Generation
The Yomiuri Shimbun Former Prime Minister Fumio Kishida, the head of the Liberal Democratic Party's parliamentary league on promoting investment, left, speaks with Prime Minister Shigeru Ishiba at the Prime Minister's Office in Tokyo on Wednesday. The Liberal Democratic Party's parliamentary league on promoting investment has submitted a proposal to Prime Minister Shigeru Ishiba that calls for expanding the Nippon Individual Savings Account (NISA) system to allow minors to open accounts. With a focus on expanding NISA accounts to minors and seniors, the league, which is led by former Prime Minister Fumio Kishida, urged the government on Wednesday to formulate the Policy Plan for Promoting Japan as a Leading Asset Management Center 2.0. Kishida developed the Policy Plan for Promoting Japan as a Leading Asset Management Center when he was prime minister. Its flagship policy was the new NISA, which was launched in January 2024, that increased investment allowances over the previous NISA. The proposal includes the introduction of the 'supporting children NISA,' which would abolish the current minimum age of 18 for the 'Tsumitate NISA' (installment-type NISA), which allows monthly investments into certain trusts and holds them tax-free for 20 years. The support children NISA envisions leveraging funds gifted from grandparents to promote asset formation among younger generations. This initiative aims to channel the significant savings of the elderly toward growth investments in Japanese companies, while also addressing the declining birth rate and supporting child-rearing. Targeting seniors, the proposal introduces the 'platinum NISA,' which is designed to facilitate the purchase of investment trusts offering monthly income from their investment gains. These types of investment trusts are typically not recommended for long-term wealth accumulation and are therefore currently ineligible under NISA. However, this proposal was put forth in response to requests from people who want to utilize their accumulated assets as a regular income stream, similar to a pension, to cover living costs. Considering that individuals' desired investment products can shift around the time of retirement, the proposal further advocates for the deregulation of switching, thus allowing investors to move the funds from their original investments into alternative products. The proposal also aims to enhance the selection of products available under NISA's Tsumitate investment framework. Taking into account the emergence of new indices like the Yomiuri Stock Index (Yomiuri 333) and their linked products, the secretariat of the parliamentary league said this will create more investment options and has the potential to increase domestic investment.
