A lookback and forward

[griffinheart]

Hi everyone,

(no TL;DR sorry)

wanted to do a personal sit-rep of what's going on and thought why not just share
it so that we can all benefit from it. This is mostly how I put things to myself.

I'm pretty open with my financials and way of living since I believe that we can
all do better with more information.

I'll split this into:

- What lead to current situation
- What is the current situation
- What is in the future

What lead to current situation:

I'm a 32 years old software engineer, moved to Japan around 6 years ago and
am married to a Japanese citizen, no children and we do taxes separately.

Previously (2 years and back) I've had no savings whatsoever and only a debt of
around 25,000 euros (school related), used to work in small startups and not
doing much money so I never researched nor cared about retirement.

2 years ago I moved jobs into a remote position to the US and my money situation
changed, I payed the debt as quickly as possible and roughly 1 year ago opened
an iDeco and have been contributing 68,000 yen monthly. I'm a sole-ownership so
I have to do my own taxes and etc.

I invoice 8,750 usd monthly, this gets deposited to my USD account in Mizuho.
I have a tax accountant doing my returns and I can put some stuff as business
expenses.

This has also been the first year I've looked closely into learning more about
financial things. I've had a past 2 years of living "nicely" and still being
able to save.

The current situation:

a birds eye view of net worth


I separate my cash into several bank accounts:



USD account is where I receive the money

Invoices is where I keep the Yen money and from where I pay things like taxes
and etc also my "emergency fund"

Shared is an account with my wife where we put rent money and groceries and
etc (like buying a fridge)

Salary account, I've decided that even though I get the money above I would
pay myself a salary out of that, at the start it was 450,000 ypm (yen per month)
but I've tried to reduce this to 350,000 ypm.

As much as I can I try to pay everything from my "salary" even if it was a tax
bill or something. the iDeco draws automatically from the Invoices account.

I pay the credit card fully every month

Now on the investments/retirement side

I've had the iDeco for almost a full year and just opened a NISA these past
few days of December.

My iDeco:

https://imgur.com/Cgn4ySv and a monthly view https://imgur.com/HZ2qrNs

楽天・全米株式インデックス・ファンド
(vanguard fund all americas)

0.1696% fees 50% of allocation

インデックスファンド海外新興国（エマージング）株式 (emerging markets)

0.594% fees 20% of allocation

iTrust日本株式 (all japan)

0.9612％fees and 15% allocation

MHAM日本成長株ファンド＜DC年金＞ (japan growth stocks)

1.674％ fees and 15% allocation


I'm all stocks roughly 50% states, 20% emerging markets and 30% Japan

My NISA:

https://imgur.com/w72m6Ri

eMAXIS Slim 国内株式(TOPIX) (Japan companies)

0.17172% fees 25% allocation

eMAXIS Slim 先進国株式インデックス(developed countries) 60%

0.11772% fees 60% of allocation

eMAXIS Slim 新興国株式インデックス(developing countries) 15%

0.20412 fees 15% of allocation

The NISA got open like 15th of December and wanted to use the 2018 allocation,
all dividends are being reinvested

60% developed, 25% japan, 15% developing

In general I'm taking a beating on my iDeco but not worried, what worries me
is that I have selected a few funds that might be too "expensive".

What is in the future:

Wow if you're still reading thank you! So many things to do and so many things
I don't know.

To decide what to do first I need to know my short/mid/long term goals and my
risk profile.

There won't seem to be any kids for the next 1 to 2 years.

Eventually buying a house (no timeline for this), the situation here is more
complex. PR needs to come first, but even with that by being self-employed it
makes things harder. If possible I would like to take advantage of very low
interest rates.

My invoices account functions as a buffer for paying tax bills + emergency fund

I'm not worried too much about risk atm so comfortable with a very aggressive
strategy/allocation

Wishes/wants:

• Get PR ASAP
• Wife really wants insurance (health related) but I don't want insurance as
  an investment. Ideally here what I would wish is to have a point person/company where
  I can put health related insurances like cancer, vehicle related and etc but
  not sure this exists.
• In 5 years be in a situation that buying a house is not a problem
  Not required but a wish, having a mortgage at the Japanese rates is also very
  attractive but I also want to be in a situation where I have enough wealth that
  I could potentially pay a lot of it but would prefer to keep it invested.

Actionable's:

- Fully fund my 2019 NISA and probably do the same allocation
- Open a 2019 NISA for the wife and fully fund it
- Figure out if wife can have an iDeco (her company seems to have some retirement
related stuff)
- Rework my iDeco around cheaper funds
- Fully utilize furosato nozei
- Reduce my expenses so that I can start funding a taxable investment account
- Be able to allocate a small part of my money to "fun" investing (cryptos or
companies I believe in)

Questions:

- Changing my iDeco allocation means selling what I have?
- Given the very recent turmoils in the market maybe delay a bit 2019 NISA buying
or go for a mix of lump-sum + average?!
- Is there any tax advantaged vehicle I'm missing?
- What am I doing wrong?
- Is there a point person for insurance related stuff?

Conclusion:

For some weird reason my brain feels like I'm in a dire'er situation than before
so I'm trying to ignore that and be smart. I guess its because before I never
had anything to lose while now I feel I do.

Looking at it I'm miles better now than before and with a clear road path to be
better.

3 years ago I had a net worth of -25,000 euros and now with roughly 5,000,000yen
minus taxes to be payed.

Thanks for reading.

[RetireJapan]

Hi GH

Looking good! You could probably do some fine-tuning, but give yourself a big high five for getting on a much better track

Your iDeCo funds look really expensive. Who is your provider? They may have the eMaxis Slim range, which could be better than your current funds. Changing funds (rebalancing) is pretty painless in iDeCo.

If you are paying a lot of income tax you might consider the SME cash savings scheme: https://www.retirejapan.com/blog/the-me ... ving-plan/

Your accountant should be able to discuss it with you and see if it would be a good fit.

We don't really know what is going to happen with the market. Could keep falling or shoot up again in January. Do whatever makes you comfortable (regular purchases, put in whole allocation in January, split into 2-3 purchases, etc.).

Anyone else?

[griffinheart]

Thanks for taking a look Ben,

My iDeco is with Rakuten, I'll be moving onto a different allocation with cheaper funds.

Well one thing does usually happen, its goes down a by a "lot" over a "short" frame of time and goes up step by step over a "longer" frame of time. But who knows it can go double down or double up. In any case I'll let this new years season pass and decide what to do mid/late January.

I think we've talked about the SME thing but its probably not worth it for me as I'm not really a SME I just work for a company that doesn't have offices in Japan so I have to be a "freelance" and my next move can or not be for a Japanese based company.

Thanks again!

[RetireJapan]

Ah, okay that makes sense. My iDeCo is with Rakuten too. The two main things I might consider with your portfolio is maybe changing the US stock fund to a developed world one, and maybe changing the two active Japan funds to a simple TOPIX one.

I'm planning to take another look at how Rakuten compares to other providers in the new year and maybe move my account to SBI or Monex. I'm sure there will be a blog post about it if that happens

[adamu]

edit: sorry about this. It looks like I got confused and replied to a different thread here.

I'm always afraid of ending up with less money than I put in when it comes to investing. Still very new to it.

Is treating a tsumitate NISA account as something that will contribute into my retirement fund a bad idea?

I think it's a good idea. All investing should be long term (at least 5 to 10+ years), and retirement is suitably long-term, unless you're retiring in the next 10 years!

Check out this blog post: The Market Always Goes Up. The market in general goes through big, sometimes multi-year (or decade!) dips, but in the long run, it always goes up (so far). But you only reap the rewards if you don't sell in the dips. This is important, because if you are likely do to that, stocks are probably not a good choice for you. But if you "stay the course", you should be rewarded in the future, despite short-term troubles.

[captainspoke]

Uh, was anyone else here when the nikkei almost hit 39,000?

Gold peaked at about $1800, but even with the recent "turmoil", look where it is now. (and the price of oil, when will that 'come back' to its peak?)

I do think stocks (in one form or another) are really the only game in town, so I will live with what I'm stuck with. But there have been repeated instances where things never really ever come back, at least not yet. It might be a 20-25 year slog, and not 5-10. Keep that in mind. But, not a problem for someone who is 32. At least I don't think so.

My three-month return looks terrible (affecting one and two year returns), but at least that's bucket #3.