Investing in Japan as a Foreigner — NISA, iDeCo, and beyond

Why invest in Japan?

If you're working in Japan, your salary is paid in JPY and your daily expenses are in JPY. Holding investments in your home country in your home-country brokerage means a constant FX exposure that can wipe out gains. Investing in Japan's tax-advantaged accounts lets you:

• Match JPY income with JPY-denominated investments (or globally diversified funds bought in JPY)
• Pay zero tax on gains inside NISA (vs. 20.315% in a taxable account)
• Deduct iDeCo contributions from your taxable income (effective return = your marginal tax rate, often 30–50%)
• Avoid the complexity of declaring foreign brokerage gains on a Japanese tax return

NISA: Tax-free brokerage

NISA (Nippon Individual Savings Account) is Japan's answer to the UK ISA or US Roth IRA. The 2024 reform made it permanently better:

• Tax-free forever: dividends and capital gains are 0% (vs. 20.315% in a taxable account)
• Annual cap: ¥1.2M in the "tsumitate" (regular-investment) sleeve + ¥2.4M in the "growth" sleeve = ¥3.6M/year
• Lifetime cap: ¥18M total contributions (of which ¥12M for the growth sleeve)
• No withdrawal restrictions: sell anytime; lifetime cap is restored the year after a sale
• Eligibility: any Japan resident (jusho), regardless of nationality

iDeCo: Tax-deductible pension

iDeCo (individual-type Defined Contribution pension) is a separate scheme with three tax benefits:

1. Contributions are 100% deductible from taxable income (income tax + 10% local tax saved every year)
2. Gains inside the account are not taxed
3. At withdrawal (after 60), payments are taxed favorably (lump-sum: retirement-deduction; annuity: pension-deduction)

Monthly contribution limits depend on your category:

• Self-employed (kokumin nenkin only): ¥68,000/month (¥816K/year)
• Employee with no company DB/DC: ¥23,000/month
• Employee with company DC: ¥20,000/month
• Government employee: ¥20,000/month
• Dependent spouse (Category 3): ¥23,000/month — but deduction effect is zero if you have no taxable income

Choosing a broker as a foreigner

The four major online brokers in Japan all support foreign residents with a valid My Number and Zairyu Card. Account-opening forms exist in Japanese only (with very limited English support):

• SBI Securities: largest, lowest cost, widest product range. Credit-card-recurring purchase with Mitsui Sumitomo Card gets up to 5% points.
• Rakuten Securities: tight integration with Rakuten ecosystem (Rakuten Card, Rakuten Bank). English UI available for the basic dashboard.
• Monex Securities: better US-stock support; broader access to fractional shares.
• Matsui Securities: long-established, simple platform; less aggressive on credit-card points.

Avoid major banks (MUFG, SMBC, Mizuho) for investing — fees on the same product are 5–10× higher than online brokers.

What to invest in

For most foreign residents who plan to invest passively, two index funds dominate:

• eMAXIS Slim All-Country (オールカントリー) — global market cap-weighted, ~0.05% expense ratio. The "default" choice for most Japanese DIY investors.
• eMAXIS Slim US (S&P 500) — US large-cap, also ~0.09% expense. Higher concentration in tech and growth.

Individual US stocks (Apple, Microsoft, etc.) are available but are denominated in USD and incur 1.5–2% conversion fees. For most NISA/iDeCo users, JPY-denominated low-cost index funds are mechanically simpler and tax-equivalent.

What happens when you leave Japan

When you become a non-resident of Japan, your NISA and brokerage accounts must generally be closed or transitioned. Major considerations:

• NISA account: must be closed. Holdings are typically transferred to a regular taxable account before you leave (at which point unrealized gains become taxable on future sale). Some brokers allow continued holding in a special non-resident account, but new purchases are forbidden.
• iDeCo: contributions stop. Funds remain invested until age 60 when you become eligible for payout regardless of residency. Maintain a Japanese postal address or appoint a tax representative for paperwork.
• Exit Tax (Article 60-2): If you held a jusho in Japan ≥5 of past 10 years AND your covered financial assets (incl. NISA, stocks) exceed ¥100M, deemed-sale tax applies upon departure. See our Exit Tax calculator.
• Lump-sum pension withdrawal: separate from iDeCo. Refund of 36 months of kokumin/kosei nenkin contributions is available upon permanent departure. See our calculator.