Work Restrictions & Passive Investing

[Fred589]

Stuck

My workplace has a strict policy for investing given my industry and I need advice. My goal is to set-up passive retirement investments for me and my spouse as well as an education account for my child.

My work only allows me to use Interactive Brokers or another similar Japanese brokerage. If I want to use an alternate provider I have to receive approval and can only use it for accounts which are fully managed by an investment advisor or for open-end mutual funds.

I downloaded the interactive Brokers trial and it seems pretty overwhelming and technical, at least on the surface, so I am concerned about doing it myself.

Also to note, my work refused me opening a iDECo account because there is already a DC Plan in place through work. They told me that despite companies saying it’s possible to do both, it’s not possible.

My questions are:

- should I be scared of trying to learn Interactive Brokers from scratch and managing it myself? This intimidates me because if I make a mistake I have only myself to blame (if something goes wrong, my spouse would then also blame me instead of a bank)

- Does anyone have any experience with dealing with other services in Japan while having such restrictions? This seems like a pain to get acceptance for from a financial institution

- any other ideas or suggestions?

Would very much appreciate any advice or insight. Thank you.

[RetireJapan]

Hi Fred589

Welcome to the forum! Which Japanese broker are you authorised to use?

iDeCo can be used alongside some company DC plans, but not others (depends on the conditions). Sounds like your company has one of the latter ones.

[Fred589]

Mitsubishi UFJ Morgan Stanley PB Securities. When I contacted them, they only offer a brokerage account service. To gain access to their wealth management services, they wanted 400-500k (sorry, forget which) USD equivalent as a starting point.

[RetireJapan]

If you are investing for the long-term, buying index funds in a broker account is fairly easy.

[greedisgood]

Why is an employer allowed to restrict how an employee invests their own money?

Conflict of interest? Visa issue?

[RetireJapan]

Investment firms have to avoid the appearance of insider trading.

[Fred589]

If you are investing for the long-term, buying index funds in a broker account is fairly easy.

Ok, I was just worried about things like low activity fees (works out to about $10 per-month).

For specifics of what ETF and Mutual funds I should be considering for investment, I suppose that is up to me to research. Alternatively, is it possible to pay someone in Japan to give me advice on that? There are lots of niche and esoteric ETF’s out there for example that I will have to learn to differentiate.

[RetireJapan]

Our standard advice is just to buy the world (via world equity/world bond index funds) and rebalance occasionally. Most active investors underperform the index, especially after paying fees.

[Fred589]

Our standard advice is just to buy the world (via world equity/world bond index funds) and rebalance occasionally. Most active investors underperform the index, especially after paying fees.

Certainly not going for an active strategy (a random walk down Wall Street and all that Jazz), but making the initial strike is what concerns me most. I will do my homework and consider Interactive Brokers more seriously.

[jcc]

Our standard advice is just to buy the world (via world equity/world bond index funds) and rebalance occasionally. Most active investors underperform the index, especially after paying fees.

Certainly not going for an active strategy (a random walk down Wall Street and all that Jazz), but making the initial strike is what concerns me most. I will do my homework and consider Interactive Brokers more seriously.

Something like 80:20 stocks/bonds. Stick the bonds in developed nations, don't bother with japan. For the stocks, find a fund/funds that cover you for the whole world. Most developed nations funds are ex-japan so you'd normally get developed nations + developing + japan funds. Some providers have a "all-in-one" package, which aren't bad, but they charge a small premium for it. If you have access to eMaxis slim, those are great low-cost funds(not etfs, which have some tax disadvantages). The other high quality domestic fund brands are things like tawara no load and nissei. Vanguard is of course excellent but suffers from a multiple taxation disadvantage that sets it barely behind eMaxis, though that issue is gone if you're investing in US only ETFs/funds.

There are some threds in the forums with some pretty deep dives into the taxation issues and whatnot, but in the end of the day:

1) Educate yourself. You're the only person looking out for yourself. Spend some time reading. 40 hours reading will pay off way more over your lifetime than one weeks pay.
2) Most "wealth managers" are not looking out for your interests, and even the ones that think they are rarely outperform the market once you deduct their fees. This is why 1 is so important.