Japan Pushes for Shift from Savings to Investments

Yomiuri Shimbun file photo
An employee of Mitsubishi UFJ Morgan Stanley Securities Co. explains the NISA investment program.

TOKYO (Jiji Press) — Japan’s securities industry is working to attract new investors by taking advantage of the planned expansion of a tax-exempt investment program known as NISA, beginning in 2024.

Roughly 20 years after the Japanese government first put up the banner of “from savings to investments,” young people are showing a keen interest in investments, probably out of concern for their post-retirement funds, but deep-rooted wariness about investment losses remains an impediment to a greater embrace of risk assets.

The focus will be on whether the government initiative can inspire the largely conservative public to pivot away from bank deposits.

In a video message at an event held by the Japan Securities Dealers Association and other organizations in February, Prime Minister Fumio Kishida said, “With this year as the first year of my ‘asset income doubling plan,’ we will promote, boldly and fundamentally, the shift from savings to investments.”

Under a plan drawn up last year, the government aims to double the number of NISA accounts to 34 million and the size of investment through them to ¥56 trillion over five years.

Under NISA, or the Nippon Individual Savings Account, some proceeds from the sale of stocks and investment trusts are exempted from taxes.

The NISA program, originally introduced in 2014 as a limited-time measure, will become permanent in January 2024, with caps on the duration for tax-free securities ownership removed.

The maximum amount of investment in a single NISA account will be raised to ¥1.2 million per year for installment-type accounts designed for investment trusts and ¥2.4 million for “growth investment” accounts for individual stocks. Investors can use both types. The lifetime investment limit for a NISA account will be boosted to ¥18 million.

The securities industry welcomes the expansion of the NISA program.

JSDA Chairman Toshio Morita said the expansion is “commensurate with the asset income doubling plan.” Seiji Nakata, president of Daiwa Securities Group Inc., said, “The program will now be user-friendly for all generations.”

Rakuten Securities Inc. and SBI Securities Co., which have many NISA users among their customers, have begun campaigns to give cash and reward points to those who open new accounts. “We are making an all-out effort to build strategies” for next year, Yuji Kusunoki, president of Rakuten Securities, said.

Almost 40 people attended a seminar held in Tokyo in mid-February by Fan Co., an asset management adviser based in the central Japan city of Toyama. Mizuki Abe, head of the company’s Tokyo branch, said, “The number of visitors to our offices and seminar participants has been increasing.”

A woman in her 50s who took part in the company’s event said, “I didn’t understand investment well, but I now want to start investing in stocks as the [tax-exempt] limit will be raised.”

Yusuke Shimoda, a senior researcher at Japan Research Institute Ltd., believes that an estimated 14.8 million people think they need to invest in securities but have not used NISA. In addition to the potential demand, the industry needs to gain more than two million new accounts in order to achieve the government’s target. This seems “difficult to achieve in five years,” Shimoda said.

In the past two decades, despite encouragement by the government, the proportions of stocks and investment funds in household financial assets have shown little growth, leaving more than half of total assets in the form of cash and bank deposits.