Okay, regarding the annual investment limits for NISA, let me break it down for you. Starting from 2024, Japan has launched a new NISA system, with significant and more convenient changes to its rules.
Simply put, under the new NISA system, the annual investment limit is 3.6 million JPY.
However, this 3.6 million JPY limit isn't just a simple number; it's divided into two parts, which you can think of as two different "wallets" for different purposes:
1. Tsumitate Investment Quota (つみたて投資枠)
This "wallet" primarily encourages long-term, stable accumulation investing, such as regularly buying index funds on a monthly basis.
- Annual Limit: 1.2 million JPY
2. Growth Investment Quota (成長投資枠)
This "wallet" is more flexible. You can use it to purchase individual stocks or a wider variety of investment funds, suitable for more active investing.
- Annual Limit: 2.4 million JPY
How to understand the relationship between these two "wallets"?
You can imagine them as two pockets within a large backpack:
- You can use both wallets simultaneously: For example, this year you could invest 1.2 million JPY in the "Tsumitate Investment Quota" and another 2.4 million JPY in the "Growth Investment Quota," perfectly utilizing the annual 3.6 million JPY limit.
- Total cannot be exceeded: The combined total of both wallets cannot exceed 3.6 million JPY in a year. You can also choose to use only one of them, or combine them freely. For instance, if this year you only invested 1 million JPY in the "Growth Investment Quota," then your NISA investment amount for the year would be 1 million JPY.
- High flexibility: You can allocate the limits of these two wallets according to your investment plan. If you prefer a more conservative approach, use more of the "Tsumitate Investment Quota"; if you want to be more proactive, use more of the "Growth Investment Quota."
There's also a very important concept: the Lifetime Investment Limit
In addition to the annual limit, the new NISA also has a "lifetime tax-exempt investment limit":
- Total Limit: 18 million JPY
- Feature: This quota is reusable! For example, if you sell assets invested in your NISA account, the principal amount of the sold assets that occupied the quota will "revive" in the following year, allowing you to reuse it to invest in new products.
To summarize
- Annually: You can invest a maximum of 3.6 million JPY.
- Lifetime: The total tax-exempt investment principal limit is 18 million JPY.
I hope this explanation clarifies things for you. The new NISA system is indeed a very good tool for ordinary people who want to make long-term investments.