“If you don’t find a way to make money while you sleep, you will work until you die.”-Warren Buffett


Nippon individual savings account

Nippon (Japan) Individual Savings Account, a tax exemption scheme for investment by individuals, which was launched in January 2014.

NISA is intended for any residents of Japan aged 20 or more. With the NISA account, all individuals are eligible for an exemption of the 20% levy on income from capital gains and dividends from annual investments of up to 1.2 million yen (approximately US $10,000) made over a five-year period as long as they reside in Japan. Under the current legislation, tax-exempted investment can be made through NISA up to 10 years starting in 2014 for a cumulative investment of 5 million yen (approximately US$50,000). The main features of NISA are listed in Appendix 1 and a graphic illustration of its tax exemption structure is shown in Appendix 2.


Money comes only to those who know the Business”

normally if you buy a stock and the price goes up, you can sell it for a profit. This is called a capital gain, and is subject to taxation. In a normal account, if you have a stock where the price has fallen you can sell it at a loss and write off the loss against the gain on the first stock. For example, if you make a 10,000 yen profit (capital gain) from selling stock A, and you sell stock B at a loss of 8,000 yen, you only have to pay capital gains tax on 2,000 yen. This process is not allowed in a NISA account.
the way assets in NISA account avoid paying capital gains tax is that the price is reset when the five years is up or when you sell the assets. For example, if you buy a stock in your NISA account for 1,000 yen and five years later it is worth 3,000 yen, the government will consider 3,000 yen as the purchase price. You will only have to pay capital gains tax on any subsequent rises in the price. On the other hand, if the stock price falls to 600 yen five years later that will be considered the purchase price, and you would have to pay capital gains tax if it went back up to 1,000 yen and you sold it.