Overview of the New NISA System
The new NISA (Nippon Individual Savings Account), launched in January 2024, represents a major expansion over the previous system. It offers two frames: the Tsumitate (accumulation) investment frame (1.2 million yen per year) and the Growth investment frame (2.4 million yen per year), allowing up to 3.6 million yen in annual tax-free investment. The lifetime tax-free holding limit is 18 million yen (of which the Growth frame accounts for up to 12 million yen), and the tax-free period is unlimited. Selling investments restores the tax-free allowance the following year - another significant improvement.
Under the old NISA, investors had to choose between 400,000 yen per year (Tsumitate) or 1.2 million yen per year (General), with tax-free periods limited to 20 or 5 years respectively. The new NISA is a strict upgrade in every dimension: allowance size, unlimited duration, and reusable capacity.
Simulating the Tax-Free Benefit
Let's quantify the tax-free advantage. Investing 100,000 yen per month at 5% annual return for 15 years: the principal totals 18 million yen, the final balance reaches approximately 26.72 million yen, and investment gains amount to about 8.72 million yen. In a taxable account, 20.315% tax on those gains would cost roughly 1.77 million yen. With NISA, that entire 1.77 million yen stays in your pocket.
At 7% annual return, the 15-year balance reaches approximately 31.7 million yen, with gains of about 13.7 million yen and tax savings of roughly 2.78 million yen. The tax-free benefit grows with both higher returns and longer time horizons. Filling the lifetime limit of 18 million yen should be the top priority for wealth building.
How to Allocate Between the Tsumitate and Growth Frames
The Tsumitate frame is limited to mutual funds carefully selected by Japan's Financial Services Agency - primarily low-cost index funds suited for long-term accumulation. The Growth frame allows a wider range of products including individual stocks, ETFs, and actively managed funds.
The simplest strategy is to buy the same global equity index fund in both frames. Invest 100,000 yen per month in the Tsumitate frame and 200,000 yen per month in the Growth frame - a total of 300,000 yen per month - all in the same fund, and you will use the full 3.6 million yen annual allowance. In 5 years, you reach the 18 million yen lifetime limit. NISA strategy guides provide concrete strategies for maximizing your tax-free allowance.
Prioritization When You Cannot Fill the Full 3.6 Million Yen
Not many people can invest the full 3.6 million yen per year. If your investable amount is limited, prioritize filling the Tsumitate frame first. Its eligible products are restricted to low-cost, long-term-oriented funds, minimizing the risk of poor product selection. Only after filling the Tsumitate frame should you utilize the Growth frame with any remaining capacity.
Even if you can only invest 30,000 yen per month, that is 360,000 yen per year growing tax-free. At 5% annual return over 30 years, it reaches approximately 24.97 million yen, saving roughly 3.6 million yen in taxes that would otherwise apply. Regardless of the amount, there is no reason not to use NISA. Books on choosing mutual funds cover how to read prospectuses and compare costs effectively.
Next Steps - Start Your New NISA in 3 Steps
Step 1: Open a NISA account at an online brokerage (such as SBI Securities or Rakuten Securities). Account opening is free and can be completed entirely online. Step 2: Select a global equity index fund (such as eMAXIS Slim All Country World Equity) in the Tsumitate frame and set up automatic monthly contributions. Step 3: If you have additional capacity, set up the same fund in the Growth frame as well.
Use our simulator to enter your monthly contribution and expected return rate to see your projected NISA balance and tax savings. Start with even 10,000 yen per month - the important thing is to begin.