For those closer to retirement

[Beaglehound]

I am in the process of setting up Ideco for myself (51) and my wife (52). I am aware that with that investment timeframe, we won’t be able to withdraw until our early 60s, which is fine. I am thinking the funds will be in there for 10-15 years.

I am in a few different minds over appropriate asset allocation. We are not in a position of needing the funds to grow enormously, the main purpose is the tax savings as we both work. Having said that, it would seem to make sense to put some in riskier assets over that timeframe to take advantage of tax free gains/dividends. So I am wondering if roughly 50/50 bonds/equities with a mix of domestic and international EMaxis Slim products and,say, 5% of REITS would be sensible initially (we are going with SBI). I guess it might make sense to invest less in equities as time marches on, given the timeframe will get shorter. Am I right in thinking you can switch money between funds freely within Ideco, for example from equities to bonds/cash?

Any thoughts/advice welcome.

[Kanto]

I am in the process of setting up Ideco for myself (51) and my wife (52). I am aware that with that investment timeframe, we won’t be able to withdraw until our early 60s, which is fine. I am thinking the funds will be in there for 10-15 years.

I am in a few different minds over appropriate asset allocation. We are not in a position of needing the funds to grow enormously, the main purpose is the tax savings as we both work. Having said that, it would seem to make sense to put some in riskier assets over that timeframe to take advantage of tax free gains/dividends. So I am wondering if roughly 50/50 bonds/equities with a mix of domestic and international EMaxis Slim products and,say, 5% of REITS would be sensible initially (we are going with SBI). I guess it might make sense to invest less in equities as time marches on, given the timeframe will get shorter. Am I right in thinking you can switch money between funds freely within Ideco, for example from equities to bonds/cash?

Any thoughts/advice welcome.

50% bonds is pretty high. You can cheat by having a look at target-date funds, and seeing what their allocation would be at this stage!

I would say conservatively.
60% Emaxis Slim All Country / Ex-Japan.
8% TOPIX.
32% Bonds/Reits.

[Butterball]

Am I right in thinking you can switch money between funds freely within Ideco, for example from equities to bonds/cash?

Yes, that’s correct. So if you like, you could start off with a more growth-oriented allocation (say, 70/30) and start switching towards a 50/50 (or whatever) allocation when you get closer to retirement.

Remember you don’t *have* to cash out your iDeco account until age 70 so that gives you a bit of flexibility to wait out bad market conditions.

[Beaglehound]

I am in the process of setting up Ideco for myself (51) and my wife (52). I am aware that with that investment timeframe, we won’t be able to withdraw until our early 60s, which is fine. I am thinking the funds will be in there for 10-15 years.

I am in a few different minds over appropriate asset allocation. We are not in a position of needing the funds to grow enormously, the main purpose is the tax savings as we both work. Having said that, it would seem to make sense to put some in riskier assets over that timeframe to take advantage of tax free gains/dividends. So I am wondering if roughly 50/50 bonds/equities with a mix of domestic and international EMaxis Slim products and,say, 5% of REITS would be sensible initially (we are going with SBI). I guess it might make sense to invest less in equities as time marches on, given the timeframe will get shorter. Am I right in thinking you can switch money between funds freely within Ideco, for example from equities to bonds/cash?

Any thoughts/advice welcome.

50% bonds is pretty high. You can cheat by having a look at target-date funds, and seeing what their allocation would be at this stage!

I would say conservatively.
60% Emaxis Slim All Country / Ex-Japan.
8% TOPIX.
32% Bonds/Reits.

That’s a good idea about target funds. Will check some out. I suspect I will end up going somewhere between your figures and mine.

[Beaglehound]

Am I right in thinking you can switch money between funds freely within Ideco, for example from equities to bonds/cash?

Yes, that’s correct. So if you like, you could start off with a more growth-oriented allocation (say, 70/30) and start switching towards a 50/50 (or whatever) allocation when you get closer to retirement.

Remember you don’t *have* to cash out your iDeco account until age 70 so that gives you a bit of flexibility to wait out bad market conditions.

Yes, that’s true about 70. I guess I am viewing Ideco as more of an investment vehicle than a pension as such, but it’s obviously not something I can draw down, so am thinking through strategies whereby I can reduce risk as we get closer to retirement. Good to have it confirmed that I can do that, thanks.

[beanhead]

Am I right in thinking you can switch money between funds freely within Ideco, for example from equities to bonds/cash?

Yes, that’s correct. So if you like, you could start off with a more growth-oriented allocation (say, 70/30) and start switching towards a 50/50 (or whatever) allocation when you get closer to retirement.

`Switching` with iDeCo is really quite easy. Just a couple of clicks. Like everything related to this scheme, however, a certain amount of time is needed for the broker to register the changes with the government and the new funds to be purchased.
You just have to be patient.