Americans

[RetireJapan]

What can Americans invest in in Japan???

I am getting really frustrated with this. It seems that Japan-listed ETFs are considered PFICs: https://hodgen.com/what-is-a-pfic/ as are mutual funds. It seems all the brokers won't let Americans buy US-listed shares or ETFs.

So we are left with... individual Japanese stocks?

[gerdemb]

Some good information here:

https://www.bogleheads.org/wiki/Investing_in_Japan

Apparently, some Japanese brokers will allow Americans to buy US stocks and ETFs. Personally, I solved the problem by using a US based broker (Interactive Brokers).

[adamu]

That bogleheads wiki used to be one of the only search results for "Investing in Japan" that returned helpful information for residents of Japan, rather than for people looking to buy Japanese stocks from abroad.

Unfortunately it's hardly been updated since 2015, even the information it does have contradicts itself. Looking at the page history it mostly seems to be maintained by a couple of volunteers, so threads like this could be a good way to gather correct information and get that page updated.

[RetireJapan]

Personally, I solved the problem by using a US based broker (Interactive Brokers).

Thanks! That's our default advice, but I can't help wondering if there are any other options...

[gerdemb]

Interactive Brokers is the only US based brokerage that I know of that will open accounts for Americans living abroad and I spent quite a bit of time searching. My advise would be to open an account before coming to Japan and "forget" to mention that you've moved here.

[gogakuhei]

Interactive Brokers is the only US based brokerage that I know of that will open accounts for Americans living abroad and I spent quite a bit of time searching. My advise would be to open an account before coming to Japan and "forget" to mention that you've moved here.

I've read some horror stories about US brokerages freezing accounts once they figure out that a customer is abroad, based on things like IP addresses. I don't have any first-hand information, other than asking one broker how a move to Japan would affect my accounts and having them tell me rather directly that my accounts would be placed in a liquidation-only status. I could sell off assets or liquidate the accounts, but would not be able to trade or deposit funds.

I don't know if it qualifies as a brokerage, but I've been looking seriously at the State Department Federal Credit Union, since they come recommended by American Citizens Abroad, and are the only bank I've seen so far that is built on serving American citizens living abroad. Their banking products don't offer the best rates, but they're not bad. I also see that they have Roth and regular IRAs.

With Transferwise offering lower rates for JPY to USD transfers, this may be a good way to have a US-based bank account while you build up something in an IRA.

...then again, I could be wrong. I am a real newbie at all this.

[gerdemb]

I have an account at SDFCU and would recommend their banking services. They appear to offer some basic investing services too, but I have not used them.

[captainspoke]

...
I don't know if it qualifies as a brokerage, but I've been looking seriously at the State Department Federal Credit Union, since they come recommended by American Citizens Abroad, and are the only bank I've seen so far that is built on serving American citizens living abroad. Their banking products don't offer the best rates, but they're not bad. I also see that they have Roth and regular IRAs.
...

I had a look, and I can't see anything broker-like--e.g., the ability to trade ETFs/stocks.

While I think a Roth is okay, a regular/traditional IRA is pretty much "off the table" for expats. The is due to the FEIE (foreign earned income exclusion, now approx. $103,000). Since your total income is excluded, you don't have any pre-tax income from which you can make a contribution. TurboTax has told me in the past that if I do make a traditional IRA contribution, there's a pretty good tax whack--enough that it certainly makes no economic sense. (Of course, if you make over $103k, go for it...!)

For traditional IRAs, I also don't like that there are required distributions starting at 70-1/2, but that's a separate issue.

**

I haven't used them, but as mentioned above, IB seems to be the default recommendation these days.

[gogakuhei]

While I think a Roth is okay, a regular/traditional IRA is pretty much "off the table" for expats.

Good points, thanks.

I have an old (small) traditional IRA stuck at a bank in the US that won't let me do anything with it, so it's looking like moving it to SDFCU may be my best option so I can at least manage it, even if I can't put anything additional into it.

I've thought about a Roth, but wonder if there could be tax implications with Japan down the road.

It looks like I need to learn more about IB.