Nippon Individual Saving Accounts officially kicked off Monday
- The tax-free NISA system is designed to coax Japan’s chronic savers to put money into stocks, bonds, and other assets to spur domestic growth instead of just parking cash in regular bank accounts
- Japan boasts more than $16 trillion in household wealth, but only about 8% of that is exposed to stocks — compared with 30% for the United States
The accounts have strict limits.
- Only one account is allowed per person
- Each has a maximum limit of ¥5 million ($48,000), with only ¥1 million investable per year
- Any additions or profits over these thresholds are subject to full taxation
- Japan’s capital gains tax doubled this year to 20% from 2013, making tax-free accounts sound even more attractive to would-be investors
Doubters, too:
“Any new shift of funds to stocks and investment trusts induced by NISA will come to only about several trillion yen per year — a minuscule amount,” says Deutsche Bank Economist Mikihiro Matsuoka. “Given that the majority of cash in defined contribution plans (401k), a similar tax-free investment scheme, is invested in principal-guaranteed products, NISA will have even less of an impact.”
