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The three big online brokers in Japan

For most people (US citizens see the note at the end of this post), the best option for opening investment accounts is going to be online. Banks and full service broker offices tend to have higher fees, more limited product availability, and lots of pushy salespeople who would be delighted to steer you to expensive and profitable (for them) options.

Finally I got around to opening an account at each of the three big online brokers: Rakuten (楽天証券), SBI (SBI証券), and Monex (マネックス証券). Been meaning to do so for a while now, mainly in order to be able to log in and look at the interfaces so we can help people navigate them.

Originally I had my taxable account, NISA account, and iDeCo account at Rakuten, along with my wife’s taxable account and NISA account.

While it is convenient to have all your accounts with the same company (you only have to remember one login and learn one interface), there is a tiny amount of institutional risk. Your account could be hacked or the broker could run into technical or financial difficulties.

The actual chances of something bad happening to an account at one of the big three is probably miniscule, but I am a strange person who feels better when small esoteric risks have been considered and dealt with.

Accordingly I now have a taxable account at Monex and my wife’s iDeCo account is going to move to SBI (from Iwate Bank, which used to be a competitive provider but no longer is). We’re also considering moving some of my wife’s investing to SBI from Rakuten.

My first impression is that all three companies are pretty similar. They all offer domestic stocks, ETFs and mutual funds, US stocks and ETFs, and a bunch of other services I am not interested in (frequent trading, FX, margin trading, futures, etc.).

They all offer iDeCo and all three types of NISA accounts. They all offer reporting taxable accounts (that calculate and pay your taxes for you).

I think Monex has more stocks available, SBI has more funds available in its iDeCo account, and I am not sure what Rakutes is good at (but I’ve been fairly happy with them so far).

* US citizens may have trouble opening and using investment accounts in Japan (due to US regulations and reporting requirements). There are also some types of investments (foreign domiciled mutual funds, etc.) that might be best avoided because of the way the IRS treats them. For these reasons many Americans prefer to invest in existing accounts in the US or open an account with Interactive Brokers. American Citizens Abroad is a group that shares information and lobbies to change US tax laws on expats.

We’re planning to make some simple user guides to the big three sometime soon. Please post any questions in the comments!

12 Responses

  1. Hi Ben, thanks for this! One of my gripes about Rakuten is that it does not offer stocks/etfs listed on the Toronto Stock Exchange or the London Stock Exchange (or any European stock exchange for that matter). Do you happen to know if SBI or Monex offer these markets?
    FYI, Rakuten offers: NYSE, NASDAQ, HK, Shanghai, Singapore and, weirdly, Thailand Indonesia and Malaysia. Obviously Tokyo also. So it is very Asia and US-centric.

  2. [quote]While it is convenient to have all your accounts with the same company (you only have to remember one login and learn one interface), there is a tiny amount of institutional risk. Your account could be hacked or the broker could run into technical or financial difficulties.
    The actual chances of something bad happening to an account at one of the big three is probably miniscule, but I am a strange person who feels better when small esoteric risks have been considered and dealt with.[/quote]
    So, show me just one instance of something bad happening. Go back to well before the bubble burst and check. Anything?
    This is a try-all-the-brokers version of over-diversification. (over-complification?)
    Like buying three different S&P500 ETFs on the off chance that one of them might get hacked or go bankrupt?
    If you’re just testing/evaluating them, then okay. But after that, please choose one, two if [i]absolutely[/i] necessary.
    If you’re suggesting three brokerages are somehow necessary, I’d like to see some actual reasoning, not that “I am a strange person who feels better when small esoteric risks have been considered and dealt with.”

    1. Well, my primary motivation is having access to all three systems (it is extremely difficult to help someone learn to use the interface if you don’t have access to it yourself).
      However, there is no *reason* to have all your accounts with one broker. Particularly for iDeCo, which can (should?) be set and forget, and NISA, which can (should?) be log in once or twice a year and buy stuff, there is not much friction in having different accounts with different brokers.
      Opening the accounts is a bit of a hassle, but I just opened two in a couple of hours so not that bad.
      The chance of my account being hacked, or frozen, or of a broker having technical or financial difficulties is minimal, but it does exist. The chance of having that happen at two different companies at the same time is basically zero.
      So if you care more about convenience there is no problem with having all your accounts with one broker, but spreading them out really doesn’t take that much more time either 🙂

  3. [quote]The chance of my account being hacked, or frozen, or of a broker having technical or financial difficulties is minimal, but it does exist.[/quote]
    Sure, and these accounts you have opened in just a couple of hours, since you’re worried about being hacked–[b]they’re using 2FA, right?[/b]
    Again, if you’ve just opened the accounts for review purposes, then fine.
    YMMV

  4. U.S. citizens can definitely do NISA. The paperwork gets really bad if you invest regularly and have more than 25K USD. But if you only do NISA investing once or twice a year, it’s relatively simple to calculate. Once you understand the rules. The paperwork looks super scary tho, so don’t rush into it.

  5. Oh, they can definitely open NISA accounts, but what can they buy in them?
    It seems like the only option might be individual Japanese stocks?
    Would love to hear more about what US citizens are doing in Japan 🙂

  6. These online brokerages are indeed among the best in the industry right now, and what I too would personally recommend to friends over the big brand names.
    If I were to break the down further for their specific strengths, it would be Monex for purchasing stocks directly from US, SBI for NISA and Rakuten for iDeCo respectively.
    FYI. One good loophole with brokerages in Japan is that they will transfer money out from the brokerage account into a pre-specified bank account. Free of charge.
    Usually happens on the second business day though, so best if one is not in a hurry or can plan in advance on how to move money around. That reason alone is how I came to own 17 brokerage accounts to move money between my own bank accounts without incurring any charges 😉