How will the new NISA change the Japanese economy? February 8th 7:20pm

NISA is a preferential tax system for individual investors. This is a system that exempts profits earned from investments from tax within a certain range, but it has been significantly expanded from 2024.

The key points are to significantly expand the amount of money that can be invested tax-free and to make the system permanent.

What changes will the new NISA bring to our household finances and the Japanese economy? We spoke to Haruhiro Nakano, former vice chairman of the Investment Trusts Association of Japan, who was also involved in the design of the NISA system.

(Akari Toyoshima, Director of Politics, Economics and International Programs Department)

New NISA “Long-term investment journey”

After graduating from university, Nakano joined a credit card company.

After working in a financial subsidiary within the group, where he was involved in fund management operations focusing on overseas bonds, he started an in-house business and established an asset management company. He became president and chairman.

In 2023, he will retire as chairman of the asset management company. In September, he launched a new asset management company. This is in line with the launch of the new NISA system nearing the beginning of the year.

What I have consistently emphasized is the importance of long-term, cumulative, and diversified investing.

Haruhiro Nakano, former vice chairman of the Investment Trusts Association of Japan and president of Nakano Asset Management, said

, ``I have been actively involved in the NISA system myself.I would like to offer new management to everyone as soon as possible and travel with them.'' Well, I like to call it a ``long-term investment journey.''

What is the new NISA?

The NISA system was established in 2014.

Normally, if you make a profit by investing in stocks or mutual funds, you will be taxed at about 20% on the profit, but if you invest using a NISA account, you will not be taxed and can receive the profit as is. It's possible.

On the other hand, Mr. Nakano also felt that there were issues with the NISA system up until now.

The investment period is limited to 5 years and 20 years, and the amount that can be invested per year is capped at 400,000 yen and 1.2 million yen. This is because I thought that some people might not be able to take full advantage of it.

On the other hand, with the new NISA, the tax exemption period is indefinite. The tax-free investment limit, which was previously up to 8 million yen, has now been increased to 18 million yen.

Mr. Nakano served as vice chairman of the Investment Trusts Association for two years until June 2023. As an association, he has also been involved in system design, such as requesting the government to abolish or relax NISA investment deadlines and investment limits. The results are said to have far exceeded expectations.

Haruhiro Nakano

: ``What has been overwhelmingly better with this reform and system revision is that there is no time limit, and the scale (of the tax-exempt holding limit).For example, if you are a young person, to put it in an extreme way, , you can accumulate it over 50 to 60 years.On the other hand, if you are a senior and regret that you have only been saving money (until now), you can invest a large amount every year. This makes it extremely easy to use, as it is a system that can be used freely by all citizens according to their own circumstances, values, and life plans.''

On the other hand, investing comes with risks. Mr. Nakano says that "long term," "accumulation," and "diversification" are important in order to reduce risk.

Haruhiro Nakano

: ``One message to reduce risk is the investment behavior of ``long-term,'' ``accumulation,'' and ``diversification.'' I think that long-term is especially important, and I believe that the market This changes randomly every day, but over the long term, if the added value of the investment increases, the price will converge to a level that corresponds to that value, so it is important to invest over a long period of time. By continuing to do this, you can steadily reduce the possibility of loss.I want people to be very conscious of this."

Will personal asset formation change the Japanese economy?

What Mr. Nakano is currently promoting through his daily lectures and other activities is that "our savings and savings hold the key to Japan's revitalization."

When household assets are used for investment, personal consumption increases due to investment profits. The idea is that this will encourage corporate growth and lead to economic growth for Japan as a whole.

Haruhiro Nakano: ``

Depositing money does not generate new money, meaning it does not earn interest.This has been going on for nearly 30 years.At the same time, all 125 million people are now worried about their future. Therefore, individuals put their money to work in economic activities, and as a result of the so-called growth of that economic activity, the money grows and returns to them. This is a splendid income. As this income accumulates, one becomes optimistic, positive, and cheerful about one's future. This is already a very effective means of influencing the Japanese economic macroeconomics. That means it is.”

New NISA brings change to the industry

On the other hand, the asset management industry is also required to transform.

One of the issues pointed out by the Financial Services Agency is the concern of "conflicts of interest."

Since many asset management companies are affiliated with major financial groups that sell products, it has been pointed out that it is easy to create a situation where they try to create products that are more in line with the wishes of the selling company than the customers.

Additionally, in recent years, Mr. Nakano has become increasingly concerned about the concentration of popularity in index funds, which aim to track specific stock indexes.

We believe that if index funds become extremely over-emphasized, the ability to select promising stocks will be lost, and the asset management industry will no longer be able to fulfill its mission.

For this reason, Mr. Nakano's new company started as an independent asset management company without a parent company.

Additionally, we aim to establish an ``Japanese Stock Active Fund'' that will discover and selectively invest in promising Japanese companies and encourage them to improve their corporate value through dialogue, with the aim of starting operations in the spring.

In addition to disclosing the names and management experience of our own personnel who manage funds, we also aim to disclose all stocks in which we invest.

We aim to achieve high investment performance while addressing issues in the asset management industry, where it has been pointed out that information disclosure to customers is insufficient.

Haruhiro Nakano

: ``First of all, what we in the asset management industry need to do is provide long-term management that supports legitimate Japanese companies.Also, we need to provide the technology and services that will drive Japan's future. The will of the people to support each other and make ourselves stronger flows through money to the capital market.It is important that this kind of mentality becomes common, and this in itself will make Japan's industry even better. I think this will be the first step towards making Japan stronger.We will work together towards the future development of Japan.We will express this trend in our investment trusts.This is my future vision. I believe this is our social mission.”

For those of us who are new to investing and want to start investing, I think there are many things we should learn, such as the characteristics and risks of investment targets.

When investing, it is also essential to carefully assess how much risk you can tolerate.

Through this interview with Mr. Nakano, I also learned that he has a viewpoint of ``What kind of Japan do you want to aim for through investment?''

I hope that the start of the new NISA will give you an opportunity to stop and think about yourself and the future of Japan.

Akari Toyoshima,

Director of Politics, Economics and International Programming Department

Joined the station in 2013 after working as a freelance program director, etc.

After working at Shizuoka Broadcasting Station, Metropolitan Area Station, and News Watch 9, she assumed her current position.