Case studies

[RetireJapan]

This forum is for people to post their financial situation, their investment plan, or similar longer form posts.

Please just post one single post per case study, and update/edit that post with extra information to answer questions etc.

[danhougham]

Hello,

I recently started Tsumitate NISA and IDECO accounts and plan to maximize contributions for these accounts using Rakuten online brokerage this year, thankfully. The bulk of these investments are in E-Maxis Slim All-Country and E-Maxis Slim S&P 500 mutual funds. I also invested some of these funds in Invesco QQQ ETF, which is one of the 15 U.S.-listed ETFs completely free of purchase commissions offered by Rakuten (see the full list here https://www.rakuten-sec.co.jp/web/forei ... 0-etf.html)

I have some additional funds to invest in a Tokutei (taxable) account but I want to invest them somewhere that pays a reasonable rate of return but is easy to access in case I need the funds to invest in other more attractive opportunities in the near future (e.g., there are likely to be some major dips (i.e., buying opportunities) in many valuable stocks (e.g. Amazon, TESLA) over the coming months).

I'm considering putting the additional funds into E-Maxis Slim mutual funds but I wonder how easy/expensive it would be to sell/redeem the mutual funds in the near future. Having no experience in selling/redeeming my mutual funds, I'd like to ask for advice from experienced folks in this forum.
Are there fees involved when you sell your mutual funds and does it take a long time to get access to the proceeds of the sale?

Please let me know if you have any other suggestions that may provide more liquidity yet still offer a reasonable rate of return in the short term. Are E-Maxis Slim mutual funds fairly liquid investments? Would you recommend investing in something more liquid, like gold, or something like that?

Any advice or suggestions would be greatly appreciated.

Kind regards
Dan

[TokyoWart]

You can sell mutual fund shares with the click of a button online but it takes several days for the funds to be available to you after sale.

[danhougham]

Thank you very much for your reply! I will probably go all in with mutual funds, as they seem to be liquid enough (several days may not be too long to wait). Greatly appreciate your help!

[danhougham]

Hello again
I have a follow-up question regarding the e-Maxis Slim series of mutual funds. I'm considering depositing fairly large lump sums into both the e-Maxis Slim S&P 500 fund and the e-Maxis Slim All Country fund. Considering current market conditions, however, I wonder whether now is a good time to invest large lump sums into these mutual funds. Having looked at comparative charts of these funds, both of them look attractive in terms of annual returns (the 3-year average returns are 84.96% and 69.95% respectively, if I'm reading these charts correctly, see attached screenshots). However, the first half of this year saw a strong bull market (spurred on largely by the AI revolution). Many of the top-performing US stocks (e.g., Nvidia, TESLA, etc.) now seem rather overpriced and ready to fall off a cliff and many commentators are predicting an impending crash and recession.
I just wonder, if the US stock market suddenly crashes, would the value of these e-Maxis Slim funds ever recover to their current levels?

e-Maxis Slim funds seem less risky than most other mutual funds, ETFs and individual stocks, so seem like a relatively safe bet while still offering good returns over the long term. I'm thinking of keeping the funds invested for at least 3 years but likely much longer (say 10 to 20 years).

There is considerable uncertainty and volatility given current market conditions, though, so I wonder whether I'd better hold my funds in cash in the short term or perhaps invest them in a safe haven such as a gold ETF.

If anyone would advise me against depositing lump sums into these mutual funds given current market conditions, kindly let me know.
Any advice, ideas, or information would be greatly appreciated.
Thank you.

[Beaglehound]

If not now, when? What makes now any more volatile and uncertain than other times? Do you have the knowledge and skills to time the market?

Experts will have varying opinions, and some (perhaps most) will inevitably be wrong. Buying stocks inevitably involves risk, especially over the shorter end of your time horizon (3 years). The longer you hang on to them, the less chance you will lose money.

[RetireJapan]

I wonder whether now is a good time to invest large lump sums into these mutual funds.

It's not the specific funds, but rather the underlying assets that are worth thinking about.

You are asking whether it is worth investing in the world stock market, or the US stock market (which makes up 60%+ of the world market at the moment).

Anyone without a financial incentive will probably recommend one of these for the average investor. Buying a diversified cheap index fund is the default sensible investment, particularly over the long term.

The investment thesis is that the world economy will grow over time as companies innovate to make a profit. I think that seems fairly plausible.

If you are only planning to invest for three years that is much riskier than if you were planning to invest for thirty.

[danhougham]

Thank you both for the thoughtful replies!!
I don't have the knowledge or skills to time the market. So now would seem to be a good time to invest in e-Maxis Slim mutual funds.
I truly appreciate all of the advice and information on this forum and the RetireJapan YouTube videos are helpful too!

[adamu]

Only thing to add is that I wouldn’t just buy at once, but spread the purchases over the next 12 months or so to spread out the risk, so if the market drops you can buy in at these cheaper rates.
That’s what I did for my nisa over 6 months, though I had the cash to buy the whole year’s allowance.

Obligatory reply that this is the statistically inferior approach (investing the lump sum is statistically better). However, statistics are one thing but you might end up being one of the outliers. If that's a significant worry, then dollar cost averaging over a few installments is a fine strategy for piece of mind, even if it's the statistically inferior choice.

[northSaver]

The USD.JPY exchange rate is an important factor too, since the majority of the stocks you'll be buying are priced in USD. As a guide:

If you think USD.JPY will break above 150 and keep on rising, then lump sum is best.
If you think USD.JPY will hang around the 140-150 level for some time, then lump sum is probably best.
If you think USD.JPY will drop from here, then DCA is best.
If you have no idea, then flip a coin; or consider a mixed approach (e.g. half lump sum and half DCA).

This assumes that you think stocks will go up. If you think they'll go down or get stuck in a range, then DCA is probably best.

No one knows what the exchange rate or the stock market will be like 12 months from now. A few will try to guess based on their opinion, expert forecasts, news headlines, etc. They may feel peace of mind knowing they have picked the best strategy with the information at hand. Others will feel peace of mind knowing they have picked the best strategy based on statistics (though none of these consider exchange rates as far as I know). Others won't feel peace of mind at all and will worry about making the right decision. Hopefully most will realise that even if they did make the wrong decision and experience some pain in the short term, in the long term their investments will be just fine.