This is to conclude my experience with the second advisor: the name is Tyton Capital, he basically offered the exact same portfolio (Evolution) as described above. And it took 3 meetings to get there, such a waste of time.
Regarding the first advisor, these are the answers to the last 2 questions I asked by email:
do the fees we discussed include all the ETFs/funds yearly fees? ==> It is standard in the fund industry that performance you see is net of fees. So what you see is what you get, the fees have already been paid.
This does not answer my question, I think. I wanted to know if the yearly ETF/found fee of every product inside the portfolio was included in the 2% actively managed portfolio yearly fee, but he answered that the charts in those PDF show performances already including fees. Maybe my question was ambiguous, I don't know. Anyway I am not going to waste any more time on this.
would I have to declare this kind of investment here in Japan in the annual tax declaration or in any other way during the 25 years? ==> Not unless you make a withdrawal or your income exceeds JPY 20M per year.
Thank you all for your answers and support, I greatly appreciated them.
LukeTek wrote: ↑Wed Dec 23, 2020 12:19 pm
This is to conclude my experience with the second advisor: the name is Tyton Capital, he basically offered the exact same portfolio (Evolution) as described above. And it took 3 meetings to get there, such a waste of time.
Regarding the first advisor, these are the answers to the last 2 questions I asked by email:
do the fees we discussed include all the ETFs/funds yearly fees? ==> It is standard in the fund industry that performance you see is net of fees. So what you see is what you get, the fees have already been paid.
This does not answer my question, I think. I wanted to know if the yearly ETF/found fee of every product inside the portfolio was included in the 2% actively managed portfolio yearly fee, but he answered that the charts in those PDF show performances already including fees. Maybe my question was ambiguous, I don't know. Anyway I am not going to waste any more time on this.
would I have to declare this kind of investment here in Japan in the annual tax declaration or in any other way during the 25 years? ==> Not unless you make a withdrawal or your income exceeds JPY 20M per year.
Thank you all for your answers and support, I greatly appreciated them.
Thanks for following up! I think you dodged a bullet there. Funnily enough, I had a coaching client recently who had been offered the same plans, but I managed to persuade them to go DIY with cheap mutual funds in Japan instead.
For your two questions, your advisor clearly dodged the first one because you probably wouldn't have liked the answer
And the second one, you would have to declare your ownership of the investments (not pay tax) to the tax office if your overseas assets were worth 50m yen or more.
English teacher and writer. RetireJapan founder. Avid reader.
- I am sure that those funds even within the evolution world have their fees listed, so the answer is indeed strange.
- I wish I would have more definite knowledge here, but "Not unless you make a withdrawal or your income exceeds JPY 20M per year." stinks. Basically if you have more income than 20 M JPY, you need to file a 確定申告/Tax Declaration and the tax office may start looking in detail at your tax fillings, which can also include exchanging information with other countries. The Cayman islands and Japan have a tax treaty, so that may lead to exchange of information and the investment would be listed up in such an exchange and gains from selling units should be taxable. I am not the expert on tax law, nor on how this insurance wrappers are taxed, but stating that it depends on fixed amount yearly income sounds strange and is at least not the standard for other investments. For me it sounds more like "If you earn less than 20 Mil, then they will not find out, if you earn more they can find out so you should be honest". But again, I maybe wrong here.
LukeTek wrote: ↑Fri Dec 18, 2020 12:04 pm
To the question "how do you get paid" the answer has been "with the 0,5% per year for the active managing".
That's almost definitely a lie. This product pays a commission to the salesperson (this is the reason for them locking up the first few years of contributions). Not the best start to your relationship with this 'advisor'.
Well there are several ways the salesperson can think this out:
"with the 0,5% per year for the active managing"... but that's not the only income I get *tongue in cheek*,
"with the 0,5% per year for the active managing"... but I get paid for the whole 25 years of your plan the moment you sign up, using your contributions for the first X years.
Thank you everyone for the insights. I have an existing DC plan from my company and I am planning to match the amount. Meanwhile, if financial advisors are not a wise move then I will probably have to open NISA account but it looks complicated to me. I hope there is a group here dedicated for NISA Beginners.
I’ve read some of these comments here with horror as we’ve indeed signed up with one of the said advisors on the similar plan. We’ve had a pretty conservative plan and had it for 3 years without much return which I now see why. We have a pretty big chunk of our money in it and my question is, if you are already stuck with them, what do you suggest we do?
The whole fund is about 6 % up net and we do pay about 2% fee for another 5 years I believe.
I was also shocked to hear this whole “non-tax” scheme only works if we left Japan, and if we were to take any money with profits, we’d be indeed taxed as a normal income and not at CG.
It depends on how long the contract is and what your possibilities are. The early surrender fees are robbery, but it is hard to judge if you gain more in the long term if you get out, or it is better to stay. What I would probably do:
- Cut out any managament fee from the local sales (those 0.5% mentioned here), and do it by my own.
- Invest in low cost ETFS/Funds (like for example iShares) that cover a large market.
Nandeyanen wrote: ↑Fri Jan 29, 2021 12:43 am
Hi all,
I’ve read some of these comments here with horror as we’ve indeed signed up with one of the said advisors on the similar plan. We’ve had a pretty conservative plan and had it for 3 years without much return which I now see why. We have a pretty big chunk of our money in it and my question is, if you are already stuck with them, what do you suggest we do?
The whole fund is about 6 % up net and we do pay about 2% fee for another 5 years I believe.
I was also shocked to hear this whole “non-tax” scheme only works if we left Japan, and if we were to take any money with profits, we’d be indeed taxed as a normal income and not at CG.
If you are only 3 years in then to pull out now will probably mean hefty forfeit charges. Only you can decide if they are worth it. Think about if you would be better off taking that hit now and starting your own investing from scratch. I, too, had one of these plans and was in it for 10 years. It was a 15-year plan and after ten years I could cancel without the heavy forfeit charges. I ended up making about 10% on what I had put in but over 10 years of supposedly good market returns that wasn't much. Better than it would have been in the bank, though. Maybe you can reduce your payments to the minimum required and stay in it till the initial period with the hefty penalty charges is up and then cash in. Meanwhile take small steps into learning how to do your own investing? These plans are a con, but you may well end up better off than if you had not invested at all so don't be too hard on yourself.
Thanks guys. We tried to keep the minimum amount to reduce the admin charge but they basically said even if we withdarew the most of the amount and only left the minimum amount in the account, the admin charge will still be based on the original premium for the next 5 years which is a shocker. Is this even legal? Learning a hard lesson of not reading all these fine prints...
If we were to withdraw, my surrender charge would be 1.2% of the account times 5 which is a crazy amount. I’m thinking to just leave it for the next 5 years....
If the surrender fees are "only" 1.2% per year and there are no other nasty surprises then it might be worth cancelling the plan. You said the ongoing fees are 2% and then there's the opportunity cost of having your money stuck for 5 years in an underperforming investment.
