The Tokyo Stock Market Plunge and the Rise of NISA Accounts
The recent volatility in the Tokyo stock market has served as a test case for Prime Minister Fumio Kishida's efforts to transform Japan from a nation of savers to one of investors. This shift is crucial for the world's fourth-largest economy as it confronts a rapidly aging population.
Following the market's biggest fall since 1987, many Japanese citizens, including Yuri Sekiya, are considering investing in NISA accounts. These government-sponsored tax-free accounts are designed to channel dormant cash into shares and mutual funds. Sekiya, who works part-time in education, opened her NISA account earlier this year but had held off investing due to caution. However, the recent market volatility has prompted her to reconsider.
"Maybe now is a good time to start a NISA, because I think the market will go up more stably after the plunge," she said.
Kishida has made the NISA a pillar of his "new capitalism" platform aimed at boosting household wealth after years of decline. Under his administration, the NISA program was overhauled, increasing the annual investment limit to 3.6 million yen ($24,400) and making balances up to a certain level permanently tax exempt.
As a result, Japanese citizens have flocked to NISA, with the number of accounts surging by almost 2 million in the first three months of this year. Many investors, especially first-timers, favor global or U.S. mutual funds rather than domestic assets.
However, not everyone is rushing to invest. Some, like IT worker Yui Takei, are hesitant due to the recent market volatility and prefer to study thoroughly before jumping in. Others, like Sekiya's daughter, caution against investing during such volatile times.
Despite the mixed reactions, the rise of NISA accounts suggests a growing awareness among many Japanese that cash is no longer enough to ride out retirement. As Japan transitions to a society where individuals need to take more responsibility for their financial future, NISA accounts may play a significant role in helping them achieve their financial goals.