Just realized TBS is no longer registered. Shame. He/she was very helpful.ToushiTime wrote: ↑Fri Oct 04, 2024 8:08 am
TBS did an interesting comparison of a Japan-listed mutual fund versus a Japan-listed ETF a few years ago.
viewtopic.php?t=1453
monex tokutei
Re: monex tokutei
Aiming to retire at 60 and live for a while longer. 95% index funds (eMaxis Slim etc), 5% Japanese dividend stocks.
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Re: monex tokutei
Totally agree.captainspoke wrote: ↑Thu Oct 03, 2024 11:55 amHow about a look at that "tax efficiency" of internally reinvesting dividends while adding expense ratio into the mix. At first, it would seem that reinvesting those dividends without tax would be better--but is it? (and I welcome any criticism on this math! )Tsumitate Wrestler wrote: ↑Wed Oct 02, 2024 11:53 am...Japanese mutual funds ...in addition to the tax efficiency ...
Let's say two people invest 100,000 --and that could be dollars or yen, I don't think that makes any difference here.
So person J invests in the eMaxis slim S&P 500 mutual fund, and person US invests in the vanguard ETF, VOO. In the first case, the investor never sees the dividend, and it is invested tax-free, and life goes on. Wow, what a deal!
In the latter case, VOO pays a dividend of 1.26%. So to simplify things, after a year, the US investor gets a dividend payout of 1.26% x 100,000 = 12.6, and oh my gosh, they're going to pay tax on that, whereas person J, above, is smiling, since they get the dividend reinvested internally--and no tax.
But the expense ratio of the eMaxis slim fund is 0.09372%, so that means it has cost person J 100,000 times that percentage, or 93.72 to own that mutual fund for the year.
On the other hand, person US bought the VOO ETF, and the expense ratio is 0.03%. So their 100,000 times that comes to 30 to own that for the year.
So person J has paid 93.72, and person US has paid 30, so far. That's a difference of 63.72 (and of course assuming fund performance has been equal) But doesn't person J have the more tax efficient mutual fund?
Person US will pay 20.315% tax here on the 1.26% dividend. So 100,000 x 1.26% = 126 (= dividend), and the tax will be 126 x 20.315 = 25.5969 and then, subtract that from the 63.72 above, and you still get a positive number--person US who bought the ETF is still ahead by 38.1231
So to me (and again, correct me if this math is wrong) it looks like person US is coming out ahead--the lower expense ratio of the VOO ETF more than offsets what person J gets via tax free reinvested dividends, but with an expense ratio that is triple what the US person pays.
I've done all this on the back of this envelope that I happened to have here, and I've run out of space. So I won't go on to how this itty-bitty difference (advantage, person US) is magnified in successive years.
My point is that the supposed conclusion that Japanese MFs and their tax-free reinvesting is simply the cat's meow of it all, and that ETFs are satan's instrument, might not be correct.
**
We return you now, to the "monex tokutei" topic. Or not, as you please.
viewtopic.php?p=38507#p38507
I personally have both Japanese index mutual funds at Monex as well as US ETFs whose dividends are reinvested free of charge using Firstrade’s DRIP service. They both have their pros and cons!Traditionally, distribution payments were considered to be disadvantageous to investors when investing for the long term, as they accelerate the timing of taxation. However, the estimates in this report show that, following the introduction of the foreign tax credit, if the foreign taxes borne by the fund can be fully deducted from income tax on distributions, it is more likely that investors will receive a higher after-tax return if distributions are paid out than if they are not paid out.
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Re: monex tokutei
IMO do it.
The difference seems to be between investing now, and investing next year.
It’s more a detail that you would sell from your taxable account around year end and buy back in nisa in 2025 and if you make any profits this year you’d have to pay 20% of those profits in tax (since you say you’ve set your account to automatically deduct tax), but the remaining 80% of the profits would be money you wouldn’t otherwise have. If you lose money you don’t pay tax of course.
Who knows whether there are profits to be had in the last 3 months of the year but I’m guessing there will be with the US election passing by (so long as there isn’t an extreme outcome), but in 3 months you probably won’t be making or losing much either way.
One suggestion I have seen from Asakura Tomoya-san (former Morningstar Japan guy) is to put such extra cash into a foreign country developed bond fund until ready to pile it into NISA, which I have done personally without regret, but there is a bit of currency risk involved there, if the yen were to strengthen between now and when you want to go into nisa. A little less risky than stock funds but then stocks are probably going to go up.
Tokutei and standard are both taxable account types, but you saystupid question incoming: these will be from my taxable account but does this go into my tokutei?or just standard acct?
> (have this set so dont have to calculate,declare taxes etc)
which sounds like your tokutei account.
(In which case if you did make any profits on a sale you’d have tax deducted then)
That seems odd. I have the option to choose either NISA or Taxable account when placing orders for US ETFs in my Monex account…reason for asking is if i try to put the money into the all country emax etc it comes up with the 特定as an option but not for the ETFs..
presume there is a simple explanation i am missing
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Re: monex tokutei
And as the rollout of ETFs in the US came well before any in Japan, I need to add that vanguard allows fractional share dividend reinvesting for its own ETFs. So if you get that VOO dividend payout, and it's not enough for a full share, vanguard lets you immediately reinvest it in VOO by buying a fractional share.
Fidelity will let you buy fractional shares of any ETF they sell, JPM has a list of about 100 various ETFs for which they do the same.
So you can just tick the box for 'reinvest dividends' for a specific ETF you might buy, or do it globally, for everything you hold (each ETF would reinvest in its own shares).
So the argument that a person might've left some funds uninvested (for a number of months?) seems weak.
Fidelity will let you buy fractional shares of any ETF they sell, JPM has a list of about 100 various ETFs for which they do the same.
So you can just tick the box for 'reinvest dividends' for a specific ETF you might buy, or do it globally, for everything you hold (each ETF would reinvest in its own shares).
So the argument that a person might've left some funds uninvested (for a number of months?) seems weak.
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Re: monex tokutei
I posted once on topic, so I will have at shot at the ETF dividends thing now myself
To expand my horizons I migrated some taxable account toshin holdings to US ETFs, and since have used the dividends to buy a bit of this and that. I’ve had some winners and losers (buying Lyft shares was the worst - whoops, but GGAL, BMA have done me better than 50%, and I don’t think they are covered by my other index investments).
GLDM has the lowest expense ratio for gold investments that I am aware of.
I get an email telling me when I have a dividend so I know when I have a chance to do something.
All up, since I have more investment options to choose from, I can’t say which is better. I wouldn’t have bought my 50% winners had I just been reinvesting the dividends in my Toshin or even in the ETFs.
Do what makes you happy! To me this is just satellite investing around the fringe and doesn’t matter much whether you stick with Toshin or ETFs.
But I do feel it’s expanded my horizons. I read a book about value investing recently, and might have a dabble at it in future… might not have bought those lyft shares had I read it first…
To expand my horizons I migrated some taxable account toshin holdings to US ETFs, and since have used the dividends to buy a bit of this and that. I’ve had some winners and losers (buying Lyft shares was the worst - whoops, but GGAL, BMA have done me better than 50%, and I don’t think they are covered by my other index investments).
GLDM has the lowest expense ratio for gold investments that I am aware of.
I get an email telling me when I have a dividend so I know when I have a chance to do something.
All up, since I have more investment options to choose from, I can’t say which is better. I wouldn’t have bought my 50% winners had I just been reinvesting the dividends in my Toshin or even in the ETFs.
Do what makes you happy! To me this is just satellite investing around the fringe and doesn’t matter much whether you stick with Toshin or ETFs.
But I do feel it’s expanded my horizons. I read a book about value investing recently, and might have a dabble at it in future… might not have bought those lyft shares had I read it first…
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Re: monex tokutei
This would only apply if you are buying US ETFs via a Japanese broker. If you buy it at a US online broker like Firstrade, you can have all your dividends re-invested automatically and free of charge, into whole and fractional shares so that the dividends are re-invested in full. (imho, the availability of DRIP re-investing, in addtion to being able to trade free of charge, and having access to more timely and in depth information on US stocks and ETFs in comparison to a Japanese online broker is the attraction of using an overseas broker like Firstrade).ToushiTime wrote: ↑Fri Oct 04, 2024 8:08 amTsumitate Wrestler wrote: ↑Thu Oct 03, 2024 12:55 pmI wasn't solely focusing on fees—you're overly fixating on the cost issue without considering the broader picture. I think you would agree, as I was trying to state above, that mutual funds are far more user friendly to beginners.captainspoke wrote: ↑Thu Oct 03, 2024 12:05 pm Also, these are tiny bits compared to 100,000 of something. So even tho ETFs come out better, above, there is no real conclusion, and we're talking about peanuts.
So better to say that they are effectively equal, and not that one or the other is unequivocally better.
(and as with faxes, ETFs have taken over in the US. how long will it take japan to catch up?)
For a breakdown of the cost analysis, someone has already done the math: https://shintaro-money.com/kaigai-etf-relay-2/
Automated reinvesting has been mentioned already as a mutual fund advantage, but just to spell that out for the benefit of others:
A drawback of ETFs is that your holding needs to be large enough to generate enough dividends to pay for a new unit when reinvesting. If not, you have to postpone the reinvestment or supplement it with other funds that you hadn't planned on investing.
TBS did an interesting comparison of a Japan-listed mutual fund versus a Japan-listed ETF a few years ago.
viewtopic.php?t=1453
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Re: monex tokutei
Fairly irrelevant to non-Americans living in Japan though. No one is doubting US listed ETFs are the best bet for Americans.captainspoke wrote: ↑Sat Oct 05, 2024 6:08 am And as the rollout of ETFs in the US came well before any in Japan, I need to add that vanguard allows fractional share dividend reinvesting for its own ETFs. So if you get that VOO dividend payout, and it's not enough for a full share, vanguard lets you immediately reinvest it in VOO by buying a fractional share.
Fidelity will let you buy fractional shares of any ETF they sell, JPM has a list of about 100 various ETFs for which they do the same.
So you can just tick the box for 'reinvest dividends' for a specific ETF you might buy, or do it globally, for everything you hold (each ETF would reinvest in its own shares).
So the argument that a person might've left some funds uninvested (for a number of months?) seems weak.
Rather, for everyone else here in Japan, Japan mutual funds offer many advantages. Especially, and I'm putting extra emphasis here, for novices.
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Re: monex tokutei
Investing in US stocks or ETFs via a US online broker enables free trading and free reinvestment of dividends in addition to an English language interface.Fairly irrelevant to non-Americans living in Japan though.
So for English speakers, investing at a non-Japanese broker has much to recommend it. It’s not just for Americans living here imho.
米国株取引ならFirstradeがおすすめ!日本の証券会社との違いを徹底比較 (2024年9月8日)
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Re: monex tokutei
Maybe. I think it's a bit niche though. Hassle to transfer money, much more complex tax reporting, exchange rates, no access to NISA/iDeCo.ChapInTokyo wrote: ↑Sun Oct 06, 2024 1:21 am So for English speakers, investing at a non-Japanese broker has much to recommend it. It’s not just for Americans living here imho.
Unless someone can't use Japanese at all, or plans to leave Japan in the short to medium term, or wants to do more active investing, I don't see much appeal.
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eMaxis Slim Shady
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Re: monex tokutei
Many Japanese brokers are moving to English support. Fire up MooMoo, 100% English support.RetireJapan wrote: ↑Sun Oct 06, 2024 1:59 amMaybe. I think it's a bit niche though. Hassle to transfer money, much more complex tax reporting, exchange rates, no access to NISA/iDeCo.ChapInTokyo wrote: ↑Sun Oct 06, 2024 1:21 am So for English speakers, investing at a non-Japanese broker has much to recommend it. It’s not just for Americans living here imho.
Unless someone can't use Japanese at all, or plans to leave Japan in the short to medium term, or wants to do more active investing, I don't see much appeal.
Tradestation with Monex is offered in English for US stocks, along with DRIP.
Also, I think with a basic level of Japanese, and browser translation, trading is pretty simple on Rakuten, Monex and SBi.
Using an American brokerage as a non-American is pretty niche. Circling back the wagons, not-for-a-novice. Most people I know that do it are trying to play the options market, there is limited access in Japan.