Buying the dip, speculating

[Jackson]

To clarify, why isn’t 1655 more popular than
ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００? The latter has a lag when you buy or sell, so you don’t actually know the price you’re buying/selling, unlike 1655.

Japanese mutual funds allow for dividends to be internally reinvested, this there is not taxable event. No need for a "DRIP". They are extremely convenient.

They also can be bought in "yen" amounts, purchased on a scheduled, purchased with a credit card that grants you points, warm you free points for holding them.

They can also be sold on a schedule to generate a dividend like income in retirement, using many different metrics.

....

But when the market was down 15%, I could not use an MF to buy in, as MF take days to settle. So, I simple used the ETF version.

When the 2026 NISA opens, I'll sell they ETF and rebuy the MF version.

Btw, are there any special considerations when buying/selling on Rakuten outside of NISA (for example ishares 500)? Iiuc, a 20% tax is automatically taken out, so there’s no extra paperwork or taxes that need to be done. When selling (also in nisa), the funds are automatically deposited in your linked saving account? So it’s basically all hassle free? If you’re unable to sell a stock or ETF and must hold for a couple of years, for example, there are no crippling hidden fees etc? It’s better to stick to popular offerings, because they are easier to buy/sell? Just want to make sure there’s no nasty surprises when I start speculating.

[Tsumitate Wrestler]

To clarify, why isn’t 1655 more popular than
ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００? The latter has a lag when you buy or sell, so you don’t actually know the price you’re buying/selling, unlike 1655.

Japanese mutual funds allow for dividends to be internally reinvested, this there is not taxable event. No need for a "DRIP". They are extremely convenient.

They also can be bought in "yen" amounts, purchased on a scheduled, purchased with a credit card that grants you points, warm you free points for holding them.

They can also be sold on a schedule to generate a dividend like income in retirement, using many different metrics.

....

But when the market was down 15%, I could not use an MF to buy in, as MF take days to settle. So, I simple used the ETF version.

When the 2026 NISA opens, I'll sell they ETF and rebuy the MF version.

Btw, are there any special considerations when buying/selling on Rakuten outside of NISA (for example ishares 500)? Iiuc, a 20% tax is automatically taken out, so there’s no extra paperwork or taxes that need to be done. When selling (also in nisa), the funds are automatically deposited in your linked saving account? So it’s basically all hassle free? If you’re unable to sell a stock or ETF and must hold for a couple of years, for example, there are no crippling hidden fees etc? It’s better to stick to popular offerings, because they are easier to buy/sell? Just want to make sure there’s no nasty surprises when I start speculating.

Some ETFS trade are free {Maxis series, most iShares) some do not.

All have management fees, just like mutual funds. Some are fair, some are not.

ETFs must be bought and sold in share amounts, not YEN/Dollar amounts.

Sometimes a Japanese ETF must be bought in a lot of 10, odd lots are possible but disadvantageous.

ETFS disperse dividends, they are taxed upon receipt {Outside of a NISA}, you often cannot buy a share with the average dividend amount. Mutual funds can reinvest these dividends, and not distribute them. No taxable event.

ETFs are perfectly fine in a taxable, but sub-optimal in a NISA.


Cliffnote - Japanese style mutual funds {Ala: Emaxis Slim} are the better choice for 99% of those investing in Japan. But Etfs are fine too. This logic is reversed in America, where mutual funds have less of these advantages.

[ChapInTokyo]

To clarify, why isn’t 1655 more popular than
ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００? The latter has a lag when you buy or sell, so you don’t actually know the price you’re buying/selling, unlike 1655.

Japanese mutual funds allow for dividends to be internally reinvested, this there is not taxable event. No need for a "DRIP". They are extremely convenient.

They also can be bought in "yen" amounts, purchased on a scheduled, purchased with a credit card that grants you points, warm you free points for holding them.

They can also be sold on a schedule to generate a dividend like income in retirement, using many different metrics.

....

But when the market was down 15%, I could not use an MF to buy in, as MF take days to settle. So, I simple used the ETF version.

When the 2026 NISA opens, I'll sell they ETF and rebuy the MF version.

Btw, are there any special considerations when buying/selling on Rakuten outside of NISA (for example ishares 500)? Iiuc, a 20% tax is automatically taken out, so there’s no extra paperwork or taxes that need to be done. When selling (also in nisa), the funds are automatically deposited in your linked saving account? So it’s basically all hassle free? If you’re unable to sell a stock or ETF and must hold for a couple of years, for example, there are no crippling hidden fees etc? It’s better to stick to popular offerings, because they are easier to buy/sell? Just want to make sure there’s no nasty surprises when I start speculating.

If you’re speculating, go with Japan based ETFs rather than mutual funds. You get real time trading, and also have automatic foreign tax credit to offset the taxes on dividends received by the ETF whereas with a non-distributing mutual fund there is no way to offset that foreign tax credit.

投資信託等の二重課税調整制度開始のご案内
(Information on the start of a double taxation adjustment system for investment trusts, etc):
https://www.jsda.or.jp/anshin/oshirase/ ... in_tax.pdf

[Jackson]

Japanese mutual funds allow for dividends to be internally reinvested, this there is not taxable event. No need for a "DRIP". They are extremely convenient.

They also can be bought in "yen" amounts, purchased on a scheduled, purchased with a credit card that grants you points, warm you free points for holding them.

They can also be sold on a schedule to generate a dividend like income in retirement, using many different metrics.

....

But when the market was down 15%, I could not use an MF to buy in, as MF take days to settle. So, I simple used the ETF version.

When the 2026 NISA opens, I'll sell they ETF and rebuy the MF version.

Btw, are there any special considerations when buying/selling on Rakuten outside of NISA (for example ishares 500)? Iiuc, a 20% tax is automatically taken out, so there’s no extra paperwork or taxes that need to be done. When selling (also in nisa), the funds are automatically deposited in your linked saving account? So it’s basically all hassle free? If you’re unable to sell a stock or ETF and must hold for a couple of years, for example, there are no crippling hidden fees etc? It’s better to stick to popular offerings, because they are easier to buy/sell? Just want to make sure there’s no nasty surprises when I start speculating.

Some ETFS trade are free {Maxis series, most iShares) some do not.

All have management fees, just like mutual funds. Some are fair, some are not.

ETFs must be bought and sold in share amounts, not YEN/Dollar amounts.

Sometimes a Japanese ETF must be bought in a lot of 10, odd lots are possible but disadvantageous.

ETFS disperse dividends, they are taxed upon receipt {Outside of a NISA}, you often cannot buy a share with the average dividend amount. Mutual funds can reinvest these dividends, and not distribute them. No taxable event.

ETFs are perfectly fine in a taxable, but sub-optimal in a NISA.


Cliffnote - Japanese style mutual funds {Ala: Emaxis Slim} are the better choice for 99% of those investing in Japan. But Etfs are fine too. This logic is reversed in America, where mutual funds have less of these advantages.

Fantastic, exactly what I wanted to know. Thanks.

[Jackson]

Japanese mutual funds allow for dividends to be internally reinvested, this there is not taxable event. No need for a "DRIP". They are extremely convenient.

They also can be bought in "yen" amounts, purchased on a scheduled, purchased with a credit card that grants you points, warm you free points for holding them.

They can also be sold on a schedule to generate a dividend like income in retirement, using many different metrics.

....

But when the market was down 15%, I could not use an MF to buy in, as MF take days to settle. So, I simple used the ETF version.

When the 2026 NISA opens, I'll sell they ETF and rebuy the MF version.

Btw, are there any special considerations when buying/selling on Rakuten outside of NISA (for example ishares 500)? Iiuc, a 20% tax is automatically taken out, so there’s no extra paperwork or taxes that need to be done. When selling (also in nisa), the funds are automatically deposited in your linked saving account? So it’s basically all hassle free? If you’re unable to sell a stock or ETF and must hold for a couple of years, for example, there are no crippling hidden fees etc? It’s better to stick to popular offerings, because they are easier to buy/sell? Just want to make sure there’s no nasty surprises when I start speculating.

If you’re speculating, go with Japan based ETFs rather than mutual funds. You get real time trading, and also have automatic foreign tax credit to offset the taxes on dividends received by the ETF whereas with a non-distributing mutual fund there is no way to offset that foreign tax credit.

投資信託等の二重課税調整制度開始のご案内
(Information on the start of a double taxation adjustment system for investment trusts, etc):
https://www.jsda.or.jp/anshin/oshirase/ ... in_tax.pdf

? So with something like the emaxis slims (in and out of nisa?), there is a “dividend tax” that is not handled automatically, but you must file for separately each year in your personal tax return??

[ChapInTokyo]

Btw, are there any special considerations when buying/selling on Rakuten outside of NISA (for example ishares 500)? Iiuc, a 20% tax is automatically taken out, so there’s no extra paperwork or taxes that need to be done. When selling (also in nisa), the funds are automatically deposited in your linked saving account? So it’s basically all hassle free? If you’re unable to sell a stock or ETF and must hold for a couple of years, for example, there are no crippling hidden fees etc? It’s better to stick to popular offerings, because they are easier to buy/sell? Just want to make sure there’s no nasty surprises when I start speculating.

If you’re speculating, go with Japan based ETFs rather than mutual funds. You get real time trading, and also have automatic foreign tax credit to offset the taxes on dividends received by the ETF whereas with a non-distributing mutual fund there is no way to offset that foreign tax credit.

投資信託等の二重課税調整制度開始のご案内
(Information on the start of a double taxation adjustment system for investment trusts, etc):
https://www.jsda.or.jp/anshin/oshirase/ ... in_tax.pdf

? So with something like the emaxis slims (in and out of nisa?), there is a “dividend tax” that is not handled automatically, but you must file for separately each year in your personal tax return??

No there is no hassle for you as it’s all done automatically.

In the case of eMaxis Slim, the fund pays no dividends either in or out of NISA so it’s just a question of what happens to the withholding tax levied by foreign tax authorities on dividends paid to the fund.

In the case of the Japanese ETF, your dividends get taxed for the Japanese withholding less the amount of the foreign withholding tax amounts (automatically).

For the non-distributing Japanese mutual fund, the dividends for the stocks held by the fund gets taxed the foreign withholding tax and the net amount of the dividend less tax gets reinvested within the fund and when you cash in your holdings in the fund the amount of the Japanese withholding tax on your capital gains (inclusive of reinvested dividends) is automatically deducted, if in a taxable account.

In either case there is no additional paperwork, the only difference being that the ETF has the advantage of automatically offsetting the foreign tax amount on dividends against the Japanese withholding tax.

So just remember, ETF will leave you with more cash if you’re investing for a couple of years but if you more investing for retirement (at a Japanese broker), eMaxis Slim will probably perform better by deferring the tax event on the Japanese side.

[Tsumitate Wrestler]

Btw, are there any special considerations when buying/selling on Rakuten outside of NISA (for example ishares 500)? Iiuc, a 20% tax is automatically taken out, so there’s no extra paperwork or taxes that need to be done. When selling (also in nisa), the funds are automatically deposited in your linked saving account? So it’s basically all hassle free? If you’re unable to sell a stock or ETF and must hold for a couple of years, for example, there are no crippling hidden fees etc? It’s better to stick to popular offerings, because they are easier to buy/sell? Just want to make sure there’s no nasty surprises when I start speculating.

If you’re speculating, go with Japan based ETFs rather than mutual funds. You get real time trading, and also have automatic foreign tax credit to offset the taxes on dividends received by the ETF whereas with a non-distributing mutual fund there is no way to offset that foreign tax credit.

投資信託等の二重課税調整制度開始のご案内
(Information on the start of a double taxation adjustment system for investment trusts, etc):
https://www.jsda.or.jp/anshin/oshirase/ ... in_tax.pdf

? So with something like the emaxis slims (in and out of nisa?), there is a “dividend tax” that is not handled automatically, but you must file for separately each year in your personal tax return??

No, it's all done internally. You cannot receive a dividend with Emaxis funds. Some funds give you the option though.

Taxation is automatic with Japanese accounts unless you specifically chose and account type that requires you to pay the tax yourself.

This isn't something most people want, special circumstances etc.

[Jackson]

If you’re speculating, go with Japan based ETFs rather than mutual funds. You get real time trading, and also have automatic foreign tax credit to offset the taxes on dividends received by the ETF whereas with a non-distributing mutual fund there is no way to offset that foreign tax credit.

投資信託等の二重課税調整制度開始のご案内
(Information on the start of a double taxation adjustment system for investment trusts, etc):
https://www.jsda.or.jp/anshin/oshirase/ ... in_tax.pdf

? So with something like the emaxis slims (in and out of nisa?), there is a “dividend tax” that is not handled automatically, but you must file for separately each year in your personal tax return??

No, it's all done internally. You cannot receive a dividend with Emaxis funds. Some funds give you the option though.

Taxation is automatic with Japanese accounts unless you specifically chose and account type that requires you to pay the tax yourself.

This isn't something most people want, special circumstances etc.

Very helpful, thank you!

[Jackson]

If you’re speculating, go with Japan based ETFs rather than mutual funds. You get real time trading, and also have automatic foreign tax credit to offset the taxes on dividends received by the ETF whereas with a non-distributing mutual fund there is no way to offset that foreign tax credit.

投資信託等の二重課税調整制度開始のご案内
(Information on the start of a double taxation adjustment system for investment trusts, etc):
https://www.jsda.or.jp/anshin/oshirase/ ... in_tax.pdf

? So with something like the emaxis slims (in and out of nisa?), there is a “dividend tax” that is not handled automatically, but you must file for separately each year in your personal tax return??

No there is no hassle for you as it’s all done automatically.

In the case of eMaxis Slim, the fund pays no dividends either in or out of NISA so it’s just a question of what happens to the withholding tax levied by foreign tax authorities on dividends paid to the fund.

In the case of the Japanese ETF, your dividends get taxed for the Japanese withholding less the amount of the foreign withholding tax amounts (automatically).

For the non-distributing Japanese mutual fund, the dividends for the stocks held by the fund gets taxed the foreign withholding tax and the net amount of the dividend less tax gets reinvested within the fund and when you cash in your holdings in the fund the amount of the Japanese withholding tax on your capital gains (inclusive of reinvested dividends) is automatically deducted, if in a taxable account.

In either case there is no additional paperwork, the only difference being that the ETF has the advantage of automatically offsetting the foreign tax amount on dividends against the Japanese withholding tax.

So just remember, ETF will leave you with more cash if you’re investing for a couple of years but if you more investing for retirement (at a Japanese broker), eMaxis Slim will probably perform better by deferring the tax event on the Japanese side.

Thank you for the thorough explanation!