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Nippon individual savings account

A Nippon individual savings account (NISA) is an account that is meant to help residents in Japan save money with tax-exempt benefits. It is modeled after the Individual Savings Account in the United Kingdom.[citation needed] There are two types of NISA accounts: a general NISA and a tsumitate (savings) NISA. The savings NISA is primarily for mutual funds and long-term investments, whereas the general NISA includes domestic and foreign equities, exchange traded funds (ETF) and real-estate investment trusts (REITs).[1]

History

NISA was created in 2014 as a way to encourage more people to save for retirement with investments. This was mainly spurred by the studies showing that the majority of Japanese residents had little to no savings for retirement and most of that savings being cash rather than investments. NISA was revamped in January 2024 in order to encourage Japanese households to shift their cash household savings into stocks and mutual funds.[2]

Features

The account earns tax-free growth up until five years and resets every cycle. Each account is only allowed to invest ¥1,200,000 each year with a total maximum limit of ¥6,000,000 after which anything contributed and any capital gains over the limit is fully taxed.[3][4] Unlike other retirement tax-deferred accounts, a NISA is only allowed to hold stocks, ETFs, and trusts.[5] Bonds are not permitted in the accounts.[6] This account is meant to be a mid-term investment option for those who don't have iDeCo.[7]

Reserve積立NISA

A new type of NISA account that was introduced in 2018 that has a 20-year tax-exempt with a yearly contribution limit of ¥400,000. Unlike the regular NISA account, this one only allows mutual funds for investments.[8]

Junior NISA

Introduced in 2016, a Junior NISA is modeled after the Junior ISA in the United Kingdom and is meant to help parents and guardians save money for anyone under 20. A Junior NISA has a yearly limit of ¥800,000.[9][10]

See also

Non-pension products:

Pensions:

References

  1. ^ Riley, Brigid. "What is Japan's NISA tax-free investment scheme?".
  2. ^ "Japan's revamped NISA program seen benefiting U.S., Indian stocks". Nikkei Asia. Retrieved 2024-06-23.
  3. ^ "Japan: Trying To Kindle An Equity Culture | Seeking Alpha". seekingalpha.com.
  4. ^ "NISA: Nippon Individual Saving Accounts".
  5. ^ "NRI Conducts Nippon Individual Savings Account (NISA) Usage Survey, Findings Project 8.65M NISA Holders/Applicants by Year-End". Bobsguide. February 13, 2014.
  6. ^ Otake, Tomoko (October 15, 2013). "Tax-free account seeks to spur investment". The Japan Times.
  7. ^ "NISA:Japan's new tax exemption scheme for investment by individuals | Japan Securities Dealers Association". www.jsda.or.jp.
  8. ^ "NISA". November 2, 2018.
  9. ^ "FSA looks to bolster unpopular NISA accounts with children's version". The Japan Times. August 22, 2014.
  10. ^ "Archived copy" (PDF). Archived from the original (PDF) on 2019-01-19. Retrieved 2019-01-19.{{cite web}}: CS1 maint: archived copy as title (link)


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