IDeco - An Annoyance

[TokyoBoglehead]

Rakuten's high fee for their global equities fund gets my goat.

I pay 68,000 monthly into iDeco, and will for the next 30 years if I can.

The .2% fee is brutal but I cannot go through the pain of switching providers, as it takes months and you loose the ability to contribute.

I'm considering switching to Towara's MSCI kokusai fund (.1 vs .2 % fee + no triple taxation). It's very similar but (ex Japan/EM). My thought is that my Nisa and Taxable will be global, so it will be just a small underweight of EM and Japan in my total portfolio.

Rakuten fund
https://dc.rakuten-sec.co.jp/dc/apps/pr ... 0030&pre=0

Tawara fund
https://member.rakuten-sec.co.jp/app/dc ... &lmn=&fmn=

Tax drag with 2.5 million invested, adding 68,000 monthly for 30 year (not factoring triple taxation with Rakuten, as I cannot get the math right. So it'll be actual worse than this).

A .2 % fee vs a .1% fee

[TBS]

You are paying trivial monthly fees amounting to over 60k yen.
To be honest 20k over 30yrs does not sound too outrageous in comparison….

TokyoBogglehead is not talking about the 171 yen monthly fee for paying into iDeco. It's about the difference between the fund management fees of the two funds.

The effect of a difference between 0.2% and 0.1% fee over 30 years is $13,000 (¥1.7 million) at the end. In fact, worse than this because of the tax inefficiencies of the Rakuten fund.

TokyoBogglehead: I'd switch in this circumstance.

[RetireJapan]

Great point! I'll have to think about it (my iDeCo is invested in the VT wrap fund).

[5lions]

So assuming that I had my Ideco with Rakuten and am investing exclusively in their all-world wrapper, would it be the smart play to switch future investments to the tawara, or would it be better to switch to the no load and not leave any of the higher fee rakuten fund?

[beanhead]

I'm considering switching to Towara's MSCI kokusai fund (.1 vs .2 % fee + no triple taxation). It's very similar but (ex Japan/EM). My thought is that my Nisa and Taxable will be global, so it will be just a small underweight of EM and Japan in my total portfolio.

I already did this for me and my wife.
As you said, as long as you are balanced in your overall portfolio, no issue.
In mine, I chose 90/10 the Tawara No-load and that emerging markets equity fund. For the good lady wife, just 100% Tawara developed.
Our amounts are smaller so iDeCo is not such a significant part of my overall planning. It will be a nice extra to have, rather than the core retirement pile.

I have left the Vanguard wrap funds where they are for now. May sell them and re-buy later if I think that makes sense.

[TokyoBoglehead]

I applied for 100% switch and 100% future allocation with the Tawara Kokusai fund.

I'll be 12% underweight EM and 5% under weight Japan.

However, these percentage should be less meaningful as my portfolio in taxable and NIsa will be 100% Global equities.

[SOT]

Am interested in this thread as currently my wife and I both have our ideco allotments set 100% with the Rakuten VT wrap.

(NISA mostly Emaxis All country. Plus a bit of S&P 500.)

Seems like the sensible thing to do is to change the ideco to the Tawara MSCI fund. Can anyone think of any reason not to do this?

And what would be the wisest strategy moving forward?

Change to Tawara 100%? Do a 50/50 split with the VT wrap? Just stick with the VT wrap?

Would love to hear your thoughts...

[TokyoBoglehead]

Am interested in this thread as currently my wife and I both have our ideco allotments set 100% with the Rakuten VT wrap.

(NISA mostly Emaxis All country. Plus a bit of S&P 500.)

Seems like the sensible thing to do is to change the ideco to the Towara MSCI fund. Can anyone think of any reason not to do this?

And what would be the wisest strategy moving forward?

Change to Towara 100%? Do a 50/50 split with the VT wrap? Just stick with the VT wrap?

Would love to hear your thoughts...

I think I made a pretty good case for switching, but I'm focused on optimization.

Don't feel pressured, if you're not contributing 68,000 a month like me the fee and drag won't be so impactful.

[SOT]

Yeah, you definitely made a good case for it!

Pretty sure I'm going to switch, especially considering it's for both me and my wife.

Just wondered if there were any arguments for not doing so... Doesn't seem like it

[adamu]

An argument against would be that the Tawara fund is orders of magnitude smaller. I don't know if that's a relevant point or not, but considering we're buying the market, the popularity of the fund might have something to say about confidence in its fundamentals.

Another one is I still don't know how big the triple tax issue really is, as as far as I know there is no info about it from the providers and no decent comparison between funds subject to triple taxation and equivalent funds that aren't (at least, I've not seen one but I've not looked very hard recently).