Japan's NISA Accounts Surge Amid Market Volatility
The recent plunge in the Tokyo stock market, the biggest since 1987, 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.
In the aftermath of the market volatility, many Japanese citizens are reconsidering their investment strategies. Yuri Sekiya, a 49-year-old part-time educator, decided to attend a brokerage seminar in Tokyo's Shinjuku district to learn about NISA accounts, the government's tax-free program designed to encourage investment in shares and mutual funds.
"Maybe now is a good time to start a NISA, because I think the market will go up more stably" after the plunge, Sekiya said. "Japan is becoming a society where we can't just rely on our pension."
Kishida has made the NISA program a pillar of his "new capitalism" platform aimed at boosting household wealth after years of decline. The program was overhauled this year, 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. As of March, there were approximately 23 million NISA accounts with around $267 billion invested through them.
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 20-year-old daughter, caution against investing during such volatile times.
Despite these concerns, the recent market volatility has highlighted the growing awareness among many Japanese that cash is no longer enough to ride out retirement. The NISA program, with its tax benefits and increased investment limits, is playing a key role in encouraging a cultural shift towards investment in Japan.