New NISA and Subordinated Bonds What is the environment surrounding stocks and what should we pay attention to?

The new NISA, which will start next January, will stimulate investment demand among the Japanese.

As if to support this trend, major companies have been splitting their shares in recent years, and some have even decided to increase their dividends.

For investors with a certain amount of money to invest, the new NISA is sure to accelerate their individual stock investments. On the other hand, more people who do not have a lot of money to start investing in savings accounts, such as putting a portion of their monthly salary into an investment trust savings account, are likely to start doing so.

Will the investment environment in 2024 be any worse?

In response to the demand for investment trust savings, the number of investment trusts eligible for the new NISA's growth investment framework (corresponding to the current general NISA) will be approximately 1,400 as of August of this year, and will eventually be expanded to a lineup of 2,000.

The environment surrounding the general public is extremely severe, with high prices and tax hikes. Because they are struggling to make ends meet on a daily basis, they have no choice but to become more serious about asset building. While keeping a certain amount in savings, the number of people who invest their surplus funds is sure to increase.

The desire to invest is growing, especially among the younger generation, and the new NISA will spur this trend. In this light, the investment environment in 2024 may not be so bad.

What are subordinated bonds?

Some may choose government bonds or corporate bonds as a place to invest. Currently, U.S. and other foreign bonds are very popular due to their high yields. Some Japanese investors buy them directly from securities companies or through mutual funds that invest in U.S. Treasuries.

These bonds are issued by national and local governments and corporations to raise funds, and there are several types of bonds. One type is “subordinated bonds. One type is “subordinated bonds,” which are bonds with lower principal and interest payments than straight corporate bonds. In the event of the issuer's bankruptcy, once the holders of straight bonds (general creditors) have been paid, the remaining assets are transferred to the holders of subordinated bonds. The characteristic feature of this type of bond is that it is a corporate bond but has characteristics similar to those of a stock.

On the other hand, the yield is relatively high because repayment is postponed to a later date. Subordinated bonds issued by financial institutions are allowed to be included in equity capital, albeit with some restrictions, and there are examples of financial institutions issuing them as a means of increasing their equity capital.