NISA open January 2014

The world's oldest population by age is taking drastic measures under the leadership of Prime Minister Abe to stimulate the economy, which is sinking under the weight of a national debt twice the size of its already massive GDP. This time, the initiative is called NISA (Nippon Individual Savings Account). The selling point of this strategy, which is basically an investment account, is that all income gained from money invested into this account, up to 1 million yen per year, will be tax exempt for a five year period, every year, for five consecutive years beginning 2014.

This strategy directly seek to tap into liquidising the closely guarded savings of one of the world's best savers. According to the Japan times,

Japanese households held ¥1.645 quadrillion in financial assets as of the end of 2013, according to data from the Bank of Japan. Fifty-three percent of that, or ¥874 trillion, was in cash and bank deposits, while 9.4 percent was in stocks and 4.8 percent in investment trusts.

The aim is to encourage a large number of people to put forward a little bit of cash back into the economy.

Although all revenue gained from the stocks themselves are tax free, the price paid in getting your share of the stocks pie is not. You still have to pay the brokerage fees. This is where the investment companies and banks spring to action.

All the finance companies are competing for customers. They need to offer an incentive to prospective new account holders to open an account with them. The best offer I've come across so far, is to have the entire sum of brokerage fee, refunded back to you. This is where it caught my attention.

I was on the slow end in terms of jumping on the bandwagon, but before the year ended, I managed to get on board (yes even non-Japanese residing in Japan qualify). I opened an account with Aeon Bank, owned by Aeon group. Aeon returns the entire sum of brokerage fees paid, in the form of points that can be used as cash at any of their stores, which I frequent anyway.

From a consumer's point of view, I reckon NISA is a great initiative. From the government's point of view, the more stagnant money is liquidated, the better for Japan as a whole. So I thought I'd spread the word.

One disclaimer. Returns are not guaranteed. This is an investment, after all, and all investments carry risks, so do so being prepared to lose it all. However, very few things in life come with no uncertainties, and to me, this is a great way to increase my capital with controlled risk.