Following my previous post on NISA – The Japan Individual Savings Account, here’s an update on the launch of NISA for regular savings. This new product is being rolled out by all the major securities companies and brokerages in Japan ready for a January 1st 2018 start.
You may remember that NISA allows you to save ¥1.2 million per year over five years free of the 20% tax on income from capital gains and dividends. The new “Tsumitate NISA” is designed to help people save smaller regular amounts over a longer period. In fact, SBI is advertising that you can start from as little as ¥100.
It works out that you can save up to ¥400,000 per year over a period of 20 years. That makes a maximum possible investment of ¥8 million which will be free of tax on gains / dividends.
Investment choice is limited to Mutual Funds and ETFs, but that still leaves plenty of choice so you can build your ideal asset allocation over time.
You are also able to make withdrawals any time if you need to.
As to whether the standard NISA or the Tsumitate NISA is better, that really depends on your personal preference. If you are trying to max out your tax-free savings then it’s perhaps better to use the standard NISA. That way you can save a larger amount over a shorter time period. If you have less disposable income and are saving for long term goals anyway, then the Tsumitate NISA is probably a good fit.
The account opening process will be similar to a standard NISA, so be sure to read this post on NISA if you are considering this.
Feel free to let me know how you get on!