Investment Timing and Account Allocations?

[chicajyo]

Hello everyone,

Thank you all for the amazing information you have provided throughout these forums! This is my first time posting and I'm hoping to tap into your extensive knowledge, since I'm still a relative beginner. I'm finally trying to set an investing portfolio after getting the painful payout from cancelling a whole life insurance plan... If only I'd known earlier how bad of an investment that was! I am planning on funding a regular NISA for 2021 (this month) & 2022 (January) in lump sums, start contributing to an iDeCo as soon as the paperwork goes through, and add the remaining cash into a taxable account. I'll be saving monthly next year as well and I am wondering if it's better to save in cash and fund a regular NISA in a lump sum in January 2023 or to put what I save monthly in 2022 into the taxable account and contribute to the 2023 NISA with monthly savings from 2023. Also in terms of tax efficiency, I'm looking at the following portfolio allocation: does it make sense to fill the iDeCo and NISA with equity and then use the taxable accounts for Bonds, REIT, and whatever equity percentage is left?

Overall Portfolio Allocation:
・75% Equity: eMAXIS Slim 全世界株式（オール・カントリー）
　　　except iDeCo where I have to do a split 90% (全世界株式 除く日本) & 10% (国内株式 TOPIX)
・15% Bonds: eMAXIS Slim 先進国債券インデックス
・10% REIT
　　　5% eMAXIS Slim 先進国リートインデックス
　　　5% eMAXIS Slim 国内リートインデックス

Thanks for any help you can provide!

[zeroshiki]

Timing is always a tricky subject but IMO its always better to just put what you can into taxable accounts (since there will likely be growth) instead of stashing it away as cash (assuming you have the appropriate 6 mo~ rainy day fund).

You could put them into a taxable account earlier and then pull them out and put them into a NISA lump sum if you really want to but I feel that approach is quite fiddly and the advantages you get from it might not be worth it (its an interesting idea though!)

[EmaxisSlim Cultist]

Overall Portfolio Allocation:
・75% Equity: eMAXIS Slim 全世界株式（オール・カントリー）
　　　except iDeCo where I have to do a split 90% (全世界株式 除く日本) & 10% (国内株式 TOPIX)
・15% Bonds: eMAXIS Slim 先進国債券インデックス
・10% REIT
　　　5% eMAXIS Slim 先進国リートインデックス
　　　5% eMAXIS Slim 国内リートインデックス

Thanks for any help you can provide!

Have you considered Tsumitate Nisa instead? Tsumitate Nisa + Ideco are all dollar-cost averaging, not lump sum.

With the extra income you could invest in your taxable. Worried about lumpsum? Invest half now, invest the rest monthly!

Your allocations seem reasonable.

#1 The bond allocation is a bit conservative. How far are you from retirement?

#2 Overweighting global REITS by 10% is not too risky, but JReits at 5% is well over-market weighting.

[chicajyo]

Have you considered Tsumitate Nisa instead? Tsumitate Nisa + Ideco are all dollar-cost averaging, not lump sum.

With the extra income you could invest in your taxable. Worried about lumpsum? Invest half now, invest the rest monthly!

That's true. I could revisit the Tsumitate vs. Regular comparison again in 2023. I was thinking that since there is a larger contribution limit on the regular NISA and for now it looks like the tax-free growth can be rolled over, I'm inclined to have larger amounts with that tax-free growth.

#1 The bond allocation is a bit conservative. How far are you from retirement?

#2 Overweighting global REITS by 10% is not too risky, but JReits at 5% is well over-market weighting.

#1 I have a long investment horizon (25 years or so), but I am a bit more risk adverse than some I've seen on these forums and I'd like to have a little bit of something to pull from that isn't stocks if I absolutely need to take out of the portfolio beyond my 6-month emergency fund.

#2 I am planning on retiring in Japan, so I was thinking that JReits could be a good way to avoid currency exchange risk and have a slight Japan lean. But perhaps 5% in REITs and 2.5% each (global and Japan) would be better.

[fools_gold]

#1 I have a long investment horizon (25 years or so), but I am a bit more risk adverse than some I've seen on these forums and I'd like to have a little bit of something to pull from that isn't stocks if I absolutely need to take out of the portfolio beyond my 6-month emergency fund.

#2 I am planning on retiring in Japan, so I was thinking that JReits could be a good way to avoid currency exchange risk and have a slight Japan lean. But perhaps 5% in REITs and 2.5% each (global and Japan) would be better.

I've got a similar asset allocation to you and for similar reasons. Personally, I don't see anything wrong with having 5% in Japanese REITS and I think your current allocation is fine. US stocks have had a great run over the past 10 years or so and the yen has been pretty stable. There's no guarantee that will continue long term. Everyone here is an amateur and you'll hear different opinions, but ultimately it's up to you to settle on an asset allocation you're comfortable with.

[EmaxisSlim Cultist]

#1 I have a long investment horizon (25 years or so), but I am a bit more risk adverse than some I've seen on these forums and I'd like to have a little bit of something to pull from that isn't stocks if I absolutely need to take out of the portfolio beyond my 6-month emergency fund.

#2 I am planning on retiring in Japan, so I was thinking that JReits could be a good way to avoid currency exchange risk and have a slight Japan lean. But perhaps 5% in REITs and 2.5% each (global and Japan) would be better.

I've got a similar asset allocation to you and for similar reasons. Personally, I don't see anything wrong with having 5% in Japanese REITS and I think your current allocation is fine. US stocks have had a great run over the past 10 years or so and the yen has been pretty stable. There's no guarantee that will continue long term. Everyone here is an amateur and you'll hear different opinions, but ultimately it's up to you to settle on an asset allocation you're comfortable with.

I agree with everything you said generally, but when it comes to J-Reits it is worth pointing out this is a 2500% overweight compared to the index.

As op seems to be mostly investing in passive, market-cap-weighted indexes this is worth pointing out.

Here is the data from FTSE (All-Cap is the competitor to MSCI ACWI, OPs main fund (Emaxis All-country)). Look at the J-Reit percentage.

[adamu]

FTSE (All-Cap is the competitor to MSCI ACWI

True, but ACWI doesn't include small cap. The real equivalent is MSCI ACWI All Cap, but I'm not aware of any funds that use that index.

[EmaxisSlim Cultist]

FTSE (All-Cap is the competitor to MSCI ACWI

True, but ACWI doesn't include small cap. The real equivalent is MSCI ACWI All Cap, but I'm not aware of any funds that use that index.

Okay, if you are going to be that way....

MSCI ACWI ETF (NYSE) -> https://www.ishares.com/us/products/23 ... i-acwi-etf
Detailed holding excel-> https://www.ishares.com/us/products/239 ... aType=fund

Japan Realestate holdings -> Total .012% I think my point stands, but perhaps someone could check my math.

[adamu]

That is following the ACWI, same as eMaxis Slim All Country, not ACWI All Cap.

But sorry, not really relevant to your point. I wasn't disputing the REIT comment, just that FTSE All cap and MSCI ACWI are equivalent.

[EmaxisSlim Cultist]

That is following the ACWI, same as eMaxis Slim All Country, not ACWI All Cap.

But sorry, not really relevant to your point. I wasn't disputing the REIT comment, just that FTSE All cap and MSCI ACWI are equivalent.

I did say, competitor...

I think it is all relative, but it seems like a large unnecessary concentration.

Also, both the bond fund and the REIT fund are Ex-Japan, but no one is in a rush to add back JGBs.

As Adamu said you're underexposed to Small-caps.

You could fix this with
ＥＸＥ‐ｉ グローバル中小型株式ファンド
http://www.morningstar.co.jp/FundData/S ... 2013051303.


70 % All Country
10% Small Cap
15% Advanced Bonds
5% Advanced Reits

When your holdings get significant you could add back in J-reits at 1% or so.



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