New to Nisa - Suggestions and Guidance will be greatly appreciated

[Greg2021]

Hello to everyone! New member here and total newb with investing.

If anyone could assist me with Nisa, it would be greatly appreciated.

Background- I'm a permanent resident. I've been living in Japan a long time with my Japanese wife and kids. We do see ourselves staying here. We have a good amount of money in our (technically her) savings account that basically sits with little to no interest. We are both in our 40s and haven't invested in anything. So we decided to try Nisa to possibly get a little more out of our money.

Goal- We'd like to put 1.2 million yen (the max) into the regular Nisa each year for 5 years and see what happens. Are hopes are to keep it low-risk. So basically just let the money sit and see what happens at the end of the year. Make adjustments/learn and follow the same pattern for the next 4 years.

Nisa Details- So my Japanese wife is doing the Nisa with her name and opening it with her SMBC. She doesn't have a green card and I don't include her on any of my tax information in the States. I think this means that she will have the full range of investment options (including US) to choose from and I don't have any headaches with reporting it on my taxes in the U.S. She applied for Nisa and will be getting the information on completing the process in a few weeks.

Help- This is probably the hardest part. Basically we are trying to figure out how to put in the 1.2 million for the first year. Ideally we would like a 3 to 7 percent return on all of it (is this overly optimistic?), but would be happy if we even got a 1 percent return as it would be better than just keeping it in the bank.

Since this is a first for us and the first year, simple is best. For example, leave it for a year in something like an S&P 500 index fund. Are there similar options to choose from with Nisa?

Help2- If we are looking for low-risk and low-return, is it better to split the 1.2 million into 6 different funds/indexes at 200,000. Or would it be wiser to just keep it in 1 large size index? or something else?

Recommendations- If you've read this far and understand our situation. Could you recommend funds and indexes that would be good for newbies like us?

Thanks a lot!

[MisoSoup]

The stock market is unpredictable. After a one or five year period your investments might be 20% or more up or down.

On this website some have 100% of their cash in stocks. To lessen the risks invest some of your investments in bonds - although the return might only be a couple of percentage points a year.

[Kanto]

Hello to everyone! New member here and total newb with investing.

If anyone could assist me with Nisa, it would be greatly appreciated.

Background- I'm a permanent resident. I've been living in Japan a long time with my Japanese wife and kids. We do see ourselves staying here. We have a good amount of money in our (technically her) savings account that basically sits with little to no interest. We are both in our 40s and haven't invested in anything. So we decided to try Nisa to possibly get a little more out of our money.

Goal- We'd like to put 1.2 million yen (the max) into the regular Nisa each year for 5 years and see what happens. Are hopes are to keep it low-risk. So basically just let the money sit and see what happens at the end of the year. Make adjustments/learn and follow the same pattern for the next 4 years.

Nisa Details- So my Japanese wife is doing the Nisa with her name and opening it with her SMBC. She doesn't have a green card and I don't include her on any of my tax information in the States. I think this means that she will have the full range of investment options (including US) to choose from and I don't have any headaches with reporting it on my taxes in the U.S. She applied for Nisa and will be getting the information on completing the process in a few weeks.

Help- This is probably the hardest part. Basically we are trying to figure out how to put in the 1.2 million for the first year. Ideally we would like a 3 to 7 percent return on all of it (is this overly optimistic?), but would be happy if we even got a 1 percent return as it would be better than just keeping it in the bank.

Since this is a first for us and the first year, simple is best. For example, leave it for a year in something like an S&P 500 index fund. Are there similar options to choose from with Nisa?

Help2- If we are looking for low-risk and low-return, is it better to split the 1.2 million into 6 different funds/indexes at 200,000. Or would it be wiser to just keep it in 1 large size index? or something else?

Recommendations- If you've read this far and understand our situation. Could you recommend funds and indexes that would be good for newbies like us?

Thanks a lot!

https://www.bogleheads.org/wiki/Getting ... _investors

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Investing in a low-cost internationally diversified Index-fund creates a very diverse portfolio and helps reduce risk.

You can do this by buying A SIGNLE fund to keep it simple: Example Emaxis-Slim All Country

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When you start investing it is fine to be 100% equities (Stocks/Stock Index funds). As you approach retirement, you should start to move into bonds to some degree to lessen the risk

You can also do this buy buying a single fund to keep thing simple: (Emaxis Slim Adv Government Bond or Rakuten Total Bond Market Fund)

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Keep it simple and stress-free. By buying indexes you will outperform 95% of single stock purchasers over time.

[Greg2021]

I appreciate the feedback. I guess we had an idea that the stock market could take such big hits as MisoSoup mentioned, being down 20% over 5 years.

That might have been some of our hesitation with investing before trying this. So, if we put in 1.2 million a year for 5 years. We'd be at 6 million.

I think we need to get comfortable with the idea of losing money... So, is worst case scenario leaving us down 20% down and losing 1.2 million over 5 years. Or could it even get crazier, like dropping 30 to 50%?

And thank you Kanto for your recommendations! I'm wondering if what MisoSoup is talking about is for individual stock investing or if this also applies to your recommendations of one low-cost internationally diversified index- fund?

My last question is: Would it help to reduce risk by splitting the 1.2 million up into 6 different index funds or bonds? or is that a bad idea because you have to pay some costs associated with getting into those?

Sorry for all of my questions. I imagine these are all very simple. This is completely new to me.

[Kanto]

I appreciate the feedback. I guess we had an idea that the stock market could take such big hits as MisoSoup mentioned, being down 20% over 5 years.

That might have been some of our hesitation with investing before trying this. So, if we put in 1.2 million a year for 5 years. We'd be at 6 million.

I think we need to get comfortable with the idea of losing money... So, is worst case scenario leaving us down 20% down and losing 1.2 million over 5 years. Or could it even get crazier, like dropping 30 to 50%?

And thank you Kanto for your recommendations! I'm wondering if what MisoSoup is talking about is for individual stock investing or if this also applies to your recommendations of one low-cost internationally diversified index- fund?

My last question is: Would it help to reduce risk by splitting the 1.2 million up into 6 different index funds or bonds? or is that a bad idea because you have to pay some costs associated with getting into those?

Sorry for all of my questions. I imagine these are all very simple. This is completely new to me.

Emaxis Slim All Country and Rakuten Total Bond Market represents the entire Stock and Bond market internationally.

Adding more funds would not diversify, rather overweight a different sector.

You just need to decide on the percentage of each.


The stock market will decline, but it will always eventually rebound. You just need to not sell and stay the course. If you do not have the stomach for that I suggest you buy US treasuries, Japanese bonds, or annuity products.

[adamu]

Greg, have you read any investment books? An intro guide that explains the risks and trade-offs involved with investing, and how to judge what sort of risk you're willing to take sounds like it would be a good staring point for you.

There's always a risk of loss with investing, that's the price of higher returns. It's just a question of managing that risk.

[Greg2021]

Thanks again Kanto! I think I got it now. So basically just put the whole 1.2 million in 1 index and 1 total bond market because that consists of several stocks/bonds that will diversify our risk. Sweet and Simple. That's exactly the type of thing we would like.

So I'm guessing the Emaxis Slim All Country would be similar to something like the S&P 500 index fund? The one thing I've been coming across over the years is the recommendation to get your money into that if you plan on staying the course, as you mentioned.

Also you said, as we get older we could move a larger percentage into the bonds for piece of mind and lower risk. That makes sense.

So I will run it by the wife, but maybe we can do the 1st year at 800,000 in the Emaxis Slim All Country and 400,000 in the Rakuten Total Bond Market.

And of course I'm not putting you on the spot with your recommendations. We will do our homework and read up about those. I definitely think as a beginner this idea of 1 big index and 1 total bond will help us get our feet wet with investing.

[MisoSoup]

Historically, over almost any given 10-year time period stocks (which includes mutual funds) will be in positive territory. However, some people panic when stocks go down and sell them at a low point and lose money. So, depending on your character and risk profile should dictate the percentage of stocks and bonds you buy. More bonds, less stocks equals lower potential gains and lower potential losses.

[Kanto]

Thanks again Kanto! I think I got it now. So basically just put the whole 1.2 million in 1 index and 1 total bond market because that consists of several stocks/bonds that will diversify our risk. Sweet and Simple. That's exactly the type of thing we would like.

So I'm guessing the Emaxis Slim All Country would be similar to something like the S&P 500 index fund? The one thing I've been coming across over the years is the recommendation to get your money into that if you plan on staying the course, as you mentioned.

Also you said, as we get older we could move a larger percentage into the bonds for piece of mind and lower risk. That makes sense.

So I will run it by the wife, but maybe we can do the 1st year at 800,000 in the Emaxis Slim All Country and 400,000 in the Rakuten Total Bond Market.

And of course I'm not putting you on the spot with your recommendations. We will do our homework and read up about those. I definitely think as a beginner this idea of 1 big index and 1 total bond will help us get our feet wet with investing.

Index funds track indexes such as the S&p500 (only American).

The two funds I mention do as follows.

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Emaxis Slim All Country tracks the MSCI ACWI (YEN basis).

Read more here in English on what it tracks -> https://www.msci.com/acwi

It tracks all the big global stocks in the world.

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Rakuten total bond market, is actually a Vanguard Fund. It tracks Vanguard BNDW (Yen-hedged)

Which is actually two funds in one!

Read more here - https://investor.vanguard.com/etf/profile/BNDW

Hedged you say? Being Hedged means it is safer from currency fluctuation, but will probably return slightly less.

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2/3 stocks / 1/3 Bond is Conservative and sounds appropriate for your risk levels.

As you approach retirement, allocate more to bonds and less to stock.

Do not expect much return from Bonds in the current market however.