Strategy for the 2025 NISA

[sutebayashi]

I wonder, if the poop hits the fan in the US, would i be better to put the money into the NIKKEI 225?

Actually that’s when I’d like to buy more US, not now when the magnificent 7 are doing most of the heavy lifting!

I’m a ways from retirement but started out with stocks (DM, EM), bonds (DM, EM) and extras (REITs, commodities), haven’t changed things much (reduced commodities and added Gold), and imagine I won’t ever change things much. My portfolio would have underperformed an all equities one, but I never had sleepless nights during a period of market correction. I started after the GFC ended though.

But if something does happen in one area, I don’t think you ought to sell it up and buy all of something else. Have a bit of each to start with, and rebalance maybe once a year if something has done good or bad relative to the rest of the portfolio. One can buy low and sell high in this way.

[Bubblegun]

I wonder, if the poop hits the fan in the US, would i be better to put the money into the NIKKEI 225?

Actually that’s when I’d like to buy more US, not now when the magnificent 7 are doing most of the heavy lifting!

I’m a ways from retirement but started out with stocks (DM, EM), bonds (DM, EM) and extras (REITs, commodities), haven’t changed things much (reduced commodities and added Gold), and imagine I won’t ever change things much. My portfolio would have underperformed an all equities one, but I never had sleepless nights during a period of market correction. I started after the GFC ended though.

But if something does happen in one area, I don’t think you ought to sell it up and buy all of something else. Have a bit of each to start with, and rebalance maybe once a year if something has done good or bad relative to the rest of the portfolio. One can buy low and sell high in this way.

Well absolutely.If I have time for any crash to recover from any poop/fan incidents Im happy to keep buy-in the ETF.But I probably want to stop buying stuff when i retire. Otherwise I'm just saving money to give it to Apple,Google,NVIDIA, et al.Anyway, it is bloody addictive and a hard habit to break to keep buying FUNDS/ETFs after 35+ years.(Although i might jsut continue for the grandkids). I basicaly want to retire, or atleast slow down, work a few hours a day or two when I retire and not fall into the 1 more year trap. There comes a point, when we need to pay ourselves, especially once the kids have finished high school. I would like to take my foot off the accelerator, and put things into a lower gear. When we retire, we will start to lose contact with work friends,(some will be friends and some will be just colleague friends) and the routine we have had built into us from the ages 4 or 5 will have gone.The purpose of a routine, work, or school,which was the bedrock of our social life, will have gone to be replaced by family, and a different kind of clock.Not a clock with numbers telling us when to get up, go to work, etc, but a SAND CLOCK. So,I'm about 6 to 10 years out from retirement. Blimey! Where did that time go?!

[Tsumitate Wrestler]

Thanks for that. Currency risk was never in my thoughts with bonds.

People here are overly fixated with it I believe. It really is no more of a risk than with equities.

That’s precisely the issue.

Bubblegun operated under the assumption that shifting from equities to bonds would eliminate risk entirely. However, this only mitigates investment risk while still leaving currency risk.

Yen-based investors, however, face limited de-risking options: they must choose between accepting currency risk on foreign assets, bearing market risk with foreign equities, or settling for low to no yield on domestic treasuries.

When de-risking for retirement, these risks can’t be dismissed, especially amid dramatic interest rate shifts and volatile currency pairs.

[Bubblegun]

Thanks for that. Currency risk was never in my thoughts with bonds.

People here are overly fixated with it I believe. It really is no more of a risk than with equities.

That’s precisely the issue.

Bubblegun operated under the assumption that shifting from equities to bonds would eliminate risk entirely. However, this only mitigates investment risk while still leaving currency risk.

Yen-based investors, however, face limited de-risking options: they must choose between accepting currency risk on foreign assets, bearing market risk with foreign equities, or settling for low to no yield on domestic treasuries.

When de-risking for retirement, these risks can’t be dismissed, especially amid dramatic interest rate shifts and volatile currency pairs.

I think we can agree that BOTH have risk.
Staying in stocks has a stock price risk and a currency risk.

The bonds have less price risk but still keeps the currency risk.
So I guess this is about “reducing the risk” because we can’t eliminate the risk.
Now if , as some say, future returns on the s&p500 might be only 3% annually over the next decade then who knows what is better. One thing I guarantee is, there will be a correction and a crash. But all the gurus on the news are just chosen to grab the headlines, put up the fear or the hype. News shows really don’t want some guy on saying, it’s gonna be “normal”
Which really mean he has no idea.
So what do we do.
Well I’ve chatted with the better half and I forgot we actually bought one of those Japanese investment, saving policy thingy me bobs, which will guarantee 10, million yen no matter what happens to the currency or stock market. So I guess I can think that appears more like a bond without the currency risk.
We bought as we were heavily in stocks. Or rather she chose it because we are heavily in stocks. It was originally bought to pay for college. And if I die it’ll still pay out 10 million.
I have no idea what they are called in Japan.

[northSaver]

You can reduce risk by diversifying. Which lowers the risk but also the returns (usually). Assets commonly used for diversification are cash, bonds, gold and real estate. You just pick a mix you are comfortable with and go from there. No one knows what your chosen portfolio will do in the future but fortunately there are easy ways to see how it did in the past. That's all we've got - the past - unless we're into prediction and market timing. One way to look at the past for a yen-based investor is to use https://myindex.jp/ Assuming the data is correct, it's a useful tool to play around with different allocations of asset classes and see how they performed, versus "risk", in the past. However, in the context of this thread title, you may be limited as to what you can buy efficiently in tax-sheltered accounts.

[Bubblegun]

You can reduce risk by diversifying. Which lowers the risk but also the returns (usually). Assets commonly used for diversification are cash, bonds, gold and real estate. You just pick a mix you are comfortable with and go from there. No one knows what your chosen portfolio will do in the future but fortunately there are easy ways to see how it did in the past. That's all we've got - the past - unless we're into prediction and market timing. One way to look at the past for a yen-based investor is to use https://myindex.jp/ Assuming the data is correct, it's a useful tool to play around with different allocations of asset classes and see how they performed, versus "risk", in the past. However, in the context of this thread title, you may be limited as to what you can buy efficiently in tax-sheltered accounts.

You’ve nailed it! They tell NOT to base decisions on the past but that’s all we’ve got to base our choices on. Not just in investing but in everything. And let be honest, they keep using the past evidence to convince us to invest. Which kinda feels disingenuous when they say “past performance is no guarantee of future performance” just feels like legal speak,and protects the companies against being sued.
I’ll check out the my index link.

I have property. So that’s stable.
I have long term insurance policy that’ll pay out in a few years. Again stable! Probably as good as bonds if I let it mature.
S&P500: Long term. But can be volatile.
Nasdaq:wow that’s a ride. But been very worth it.
Maybe I have enough.
If the jobby does hit the fan, well we can sell the house, or maybe, maybeeeee…. I’m focusing too much on a future crash. Maybe I’m ignoring some other parts..
Thanks for everyone’s advice. Somethings have come to mind that I never thought of and useful.

[Northern Investor]

Since the request for comment went out, I'll gladly respond.

My plans for 2025 are pretty much the same as 2024. As I am an American
we are doing this through my wife's account. We put put 20% into a Topix fund, 20% into an all world fund and 60% in the ol' S&p500. I plan on doing this until I retire. Though I've also put a couple of 50000 yen lump sums into the S&p500 growth section. Might do that more next year as well. Not sure I'm going to max it out in 5 years. Probably closer to 10.

On an aside, what are the chances a Trump win could plunge the US into an authoritarian nightmare and destroy the entire market? Er, asking for a friend.

[Swimmer]

On an aside, what are the chances a Trump win could plunge the US into an authoritarian nightmare and destroy the entire market? Er, asking for a friend.

Don't spoil the thread with your political opinions.

[Northern Investor]

My apologies. My goal was not to bring politics into the discussion, but certainly the possibility must be entertained, and it’s hard to separate politics and the market, regardless of opinion. I’m seriously worried about it, and it’s caused me to considering pausing my investments into 2025 until I can get some clarity on the future of the US.

Anyways, I’m sensing this is too charged a thing to bring up here, it’s not on topic and I’m happy to let it go. Please carry on and apologies once again.

[sutebayashi]

On an aside, what are the chances a Trump win could plunge the US into an authoritarian nightmare and destroy the entire market? Er, asking for a friend.

I think it will be tough for either of them to destroy the entire market in short order, and I have a decent mix of non-US assets in my portfolio anyways.

If Congress is gridlocked then they won’t be able to do all of the stuff they have been talking about during the election campaigning.

My main concern is that the US is becoming like Japan with the massive public debt, so hopefully both sides cut spending back to pre-Covid levels and enact policies that are positive for tax revenue, showing us a balanced budget or better, when they actually take the reins. If they come in and do anything too crazy I trust the US bond market will give them a good spank.