The New NISA will start in January 2024. The main feature of the new NISA is that it will allow for more long-term investment, including an indefinite tax-free holding period and a permanent investment period.
The existing ‘nasate’ (savings) NISA and general NISA have been replaced by ‘susumate’ (savings) and ‘growth’ (growth) investment frameworks, and the annual and lifetime investment limits have been significantly increased. At first glance, this may seem like an improvement in convenience, but are there any caveats? We asked two money writers to discuss the new NISA.
Comparing the differences between the current NISA and the new NISA
--This time we have gathered two money writers who are well versed in NISA. Let's start with your assessment of the new NISA, which will start in 2024.
Mr A: Thank you for your time today. The current NISA will end its new investment period at the end of 2023 and the new NISA will start in 2024. The main difference between the two is that the new NISA makes the system permanent and the tax exemption period indefinite. As it is no longer a time-limited measure, individuals can start at their own timing without worrying about the system ending.
Mr B: I also appreciate that the annual investment limit and tax exemption limit have been significantly increased.
The annual limit for growth investment (equivalent to the current general NISA) is now 2.4 million yen, and the annual limit for savings investment (equivalent to the current savings NISA) is 1.2 million yen, with a limit of 18 million yen for holdings. Although the growth investment limit is only 12 million yen, it seems that tax-free investment has become considerably easier.
▶ Fresh investment limit
Growth Investment LimitThe Growth Investment Limit is the successor to the current system of ‘Tatemonate NISA’. It allows investors to invest up to 1.2 million yen per year, or 18 million yen in total, in investment trusts that meet certain requirements, such as zero sales commissions and trust fees below a certain level.
▶ Growth Investment Limit
This is the successor to the current General NISA and covers listed shares and investment trusts. Investors can invest up to ¥2.4 million per year, or ¥12 million in total. The annual investment limit can be used either in a lump sum or in instalments.
Mr A: It is also important to note that under the current system, it is not possible to combine the General NISA and the Advance NISA, but it will be possible under the new NISA.
Mr B: What concerns me there is the use of different investment trusts. Under the existing system, investment trusts suitable for long-term accumulation and diversified investment are eligible, but under the growth investment system, investment trusts are also included in addition to listed stocks. It seems a bit complicated, doesn't it?
Mr A: The purpose of the savings and investment framework is to provide long-term accumulation and diversification, so eligible products are limited to certain investment trusts approved by the Financial Services Authority. On the other hand, the growth investment framework deals with other investment trusts and will eventually number around 2,000.
A number of new funds have been set up in time for the start, but be careful when selecting them as they do not have a track record. It is not too late to check the track record and price movements before jumping in.
Mr B: It seems convenient to be able to use two investment limits at the same time, but how should I use them differently?
Mr A: For example, you can accumulate low-risk index funds for the long term in the savings account, and aim for returns with active funds in the growth account, or hold high-dividend stocks to receive dividends.
Therefore, it is important to choose a product with a clear policy and goals for the type of investment you want to make in each investment line. Incidentally, it is not possible to use the two investment limits at different financial institutions. The rule is to use one financial institution, but you can change it on an annual basis.
