Concerns are mounting over the potential for the global economy to slide backward due to the impact of "mutual tariffs" imposed by the Trump administration. On April 3, 2025, the Nikkei average plummeted by 989 yen in the Tokyo market, falling below the critical threshold of 35,000 yen.
In light of these economic challenges, companies in Japan are reigniting the trend of offering shareholder benefits. After a five-year hiatus, the number of newly established shareholder benefits has surpassed those that were abolished in 2024. This shift is largely attributed to the expansion of the Small-Amount Investment Non-Taxable System (NISA), which aims to attract individual investors as long-term stable shareholders.
Shareholder benefits, a system where companies provide goods or services to shareholders who hold a certain number of shares on the record date, have a long history in Japan. The practice dates back to the Meiji era when railway companies began offering discount tickets. Today, popular examples of shareholder benefits include airline vouchers, restaurant meal coupons, and product bundles from food companies. Such initiatives are designed to deepen shareholders' understanding of the business through the use of their products and services, ultimately encouraging long-term investment.
According to a survey conducted by the Japan Securities Dealers Association in July 2024, 31% of individual investors expressed that shareholder benefits were a significant reason for their interest in securities, following NISA at 39% and increased income at 31%. This highlights the importance of these benefits in motivating investment among Japanese individuals.
As the new fiscal year begins in April 2025, many companies are also considering the tax advantages of NISA and iDeCo. NISA allows for tax-free investment gains with a high degree of flexibility, while iDeCo contributions are eligible for income deductions but cannot be withdrawn until the age of 60. Financial planner Taishi Fujikawa explains that contributions made to iDeCo can significantly reduce taxable income. For instance, if an individual saves 10,000 yen per month through iDeCo, they can deduct 120,000 yen from their income, leading to lower income and resident taxes.
There are three types of iDeCo benefits: lump-sum payment, pension, and a combination of both. For a 35-year-old employee with an annual income of 5 million yen contributing 10,000 yen monthly, the total savings after 30 years would reach 3.6 million yen, with estimated tax savings of 720,000 yen over that period. This demonstrates the substantial tax benefits that can be achieved through diligent contributions to iDeCo.
While NISA is restricted to risky assets like stocks and investment trusts, iDeCo allows for investment in more secure products, including savings and insurance. This difference is crucial for investors looking for stability in their portfolios. Additionally, the article emphasizes the importance of considering the "exit" tax implications when utilizing iDeCo, as the tax treatment upon withdrawal can vary based on the method chosen.
As the financial landscape evolves, many individuals are questioning whether continuing to invest in NISA is still a wise decision. A listener from Meguro Ward, a 52-year-old woman named Chakochachan, expressed concerns about the impact of the Trump administration on her NISA investments. In response, the article discusses the benefits of dollar-cost averaging, a strategy where a fixed amount is invested regularly, allowing investors to buy more shares when prices are low and fewer when prices are high.
Experts advise that once an investment strategy is set, it’s best to avoid constantly checking the market. This long-term perspective can help investors remain focused on their goals rather than reacting to short-term market fluctuations. Additionally, with rising interest rates, prepaying housing loans is recommended as a more secure investment strategy compared to seeking higher returns in the stock market.
In conclusion, as Japan navigates these economic uncertainties, the growing interest in shareholder benefits and the strategic use of NISA and iDeCo highlight the importance of informed investment decisions. With the right approach, individuals can effectively manage their assets and prepare for a more stable financial future.
