What types of financial products are eligible for investment in a NISA account?

Hello! To understand what you can buy with NISA, it's easier to imagine it as a tax-exempt "shopping basket" for your investments. The new NISA, which started in 2024, divides this large basket into two smaller compartments, and what you can put in each compartment differs slightly.

1. "Tsumitate Investment Quota" (つみたて投資枠)

This basket is designed for long-term, stable savings, much like a "regular savings" account. Its goal is to accumulate wealth steadily over time.

• What you can buy: Only investment trusts (i.e., mutual funds) and ETFs screened by Japan's Financial Services Agency (FSA) and meeting the principles of "long-term, regular investment, and diversification."

You can think of these as "nutritional meal sets" pre-arranged by the provider. These sets typically have low management fees and help you diversify your money across many companies globally or different assets, resulting in relatively lower risk. They are very suitable for investment beginners or those who don't want to spend too much time on research.

• What you cannot buy: Individual company stocks (e.g., buying Toyota or Sony shares individually) are not allowed.

2. "Growth Investment Quota" (成長投資枠)

This basket offers much greater flexibility, suitable for investors who want to select their own investments and pursue higher growth opportunities.

• What you can buy:
  • Listed stocks: Both Japanese and foreign stocks are allowed, such as Nintendo, Sony, or even US stocks like Apple and Tesla.
  • Investment trusts (funds) and ETFs: In addition to those available in the "Tsumitate Investment Quota," there are more varieties to choose from, including some more aggressive or theme-focused funds.
  • REITs (Real Estate Investment Trusts): These can be understood as "real estate funds," allowing you to indirectly invest in a portfolio of office buildings and shopping malls to collect rent and receive dividends.

What cannot be placed in either basket?

To protect ordinary investors, even the highly flexible "Growth Investment Quota" prohibits certain "high-risk products." These mainly include:

• High-risk leveraged funds (e.g., 3x long/short ETFs).
• Financial derivatives designed for ultra-short-term trading (e.g., futures, options).
• Stocks that are about to be delisted or reorganized.
• Funds with a trust period of less than 20 years (to discourage short-term speculation).
• Bonds are generally also not within the scope of NISA.

Summary & Tips

Simply put, the "Tsumitate Investment Quota" is a curated package, offering ease and convenience; the "Growth Investment Quota" is a self-selection market, allowing you to choose according to your preferences. You can use both baskets simultaneously or just one of them.

When you actually operate, you don't need to worry too much about getting confused. In the trading software of Japanese securities firms (e.g., Rakuten Securities, SBI Securities), when you want to buy a financial product, the system will usually clearly tell you whether that product can be purchased using the "Tsumitate Investment Quota" or the "Growth Investment Quota," which is very convenient.