Looking long term for Tsumitate NISA and iDECO

[Djdawang]

Hi everyone,
long time reader first time poster. Looking at getting my finance ready for the long haul.
I am
*35/Canadian/permanent resident/private high school teacher with side jobs (7.5mill/year net)/pay into private school insurance & pension
*wife/35/japanese/housewife/no income
*no house (renting)/no kids (planning)
*don't like to gamble, just secure for future use when I become retired. Looking at something like 8-10% return if possible.

I was looking at getting into tsumitate NISA and iDeco.
we just want to go with simple easy contributions
Are my contribution numbers correct for each month?


Husband IDECO 12000 Tsumitate NISA 33333 Total 45333
Wife IDECO 23000 Tsumitate NISA 33333 Total 56333
Total per month for both 101666
Total per year for both 1219992

*We haven't signed up for anything yet, but looking at Rakuten securities for both services for husband and wife.
*We want to buy a house in the future. But I feel my money is actually being wasted keeping it in a normal bank account.
*I am okay putting away 100,000 yen per month away for retirement. I can even stretch it to 150,000/mo
*I don't want to keep looking at stocks/funds and getting hooked at looking at my phone for buying/selling etc. I just want to set it and forget it. Maintenance free.
*I have been reading up throughout the forums and also in reddit. Read millionaire teacher and bogleheads and scoured youtube vids.

Question I have are:
1) are my contribution numbers correct?
2) putting contributions in safe normal funds like these
1550 MAXIS 海外株式
1348 MAXIS トピックス
eMAXIS Slim 全世界株式(除く日本)
eMAXIS Slim 先進国株式インデックス
would be okay?
3) My main goal is to Reduce my income tax and city tax and save for the future. Is this the best route?

I was reading this thread
viewtopic.php?f=4&t=30
and @kalas did some great calculation. Scenario 1a is the one I think fits me best.

Looking at advice and some direction.

Thanks in advance and shout out to Ben for being a true G!

[mule96]

Ah good idea to start. Some comments:

Husband IDECO 12000 Tsumitate NISA 33333 Total 45333
Wife IDECO 23000 Tsumitate NISA 33333 Total 56333
Total per month for both 101666
Total per year for both 1219992

Hard to tell, it depends what your school pension is actually. If its a standard Kouseinenkin, then you can contribute more, but the maximum contribution is calculated on various things. For your wife if she doesn't work this should also be correct. For Tsumitate NISA you can contribute also in non monthly payments (yearly limit).

*We haven't signed up for anything yet, but looking at Rakuten securities for both services for husband and wife.

While Rakuten is indeed a good choice, you will find a lot of couples that go to two different brokers for avoiding the risk to be concentrated to much on one broker.

*We want to buy a house in the future. But I feel my money is actually being wasted keeping it in a normal bank account.

You can withdraw your Tsumitate NISA at any point, but your IDECO money is locked up until retirement.

1550 MAXIS 海外株式
1348 MAXIS トピックス
eMAXIS Slim 全世界株式(除く日本)
eMAXIS Slim 先進国株式インデックス

This is a big Topic itself, but Rakuten doesnt have those Funds in IDECO (but similar ones). They also overlap each other. For NISA, the first two are older expensive funds and there are similar ones from the Slim series, which are cheaper (eg eMaxi Slim 国内株式 (TOPIX)) and the eMAXIS Slim 全世界株式(除く日本) which is the same as the 1550. Please also note that you cover developed markets by both eMAXIS Slim funds.

3) My main goal is to Reduce my income tax and city tax and save for the future. Is this the best route?

This is definitely a good approach. iDECO will reduce your current income Tax. In Nisa you cannot reduce income tax, but invest without capital gains tax (as a short summary).

[RetireJapan]

Yep looks reasonable, but you might be able to find cheaper funds now

Also for school or university teachers who are members of a kyosai, iDeCo limit is indeed 12,000 a month.

[Djdawang]

Thanks for the replies and a bit of insight.
I also saw another thread about Fuka nenkin.

I guess I really should be doing

Husband IDECO 11600. Fuka Nenkin 400 Tsumitate NISA 33333 Total 45333
Wife IDECO 22600. Fuka Nenkin 400 Tsumitate NISA 33333 Total 56333
Total per month for both 101666
Total per year for both 1219992

Yes I am in the kyosai Joken system.

[Sybil]

Wife IDECO 22600.

As you are probably already aware, your wife (as a non-tax payer) wouldn't get the main benefit of iDeCo - which is a reduction in tax.

[adamu]

Wife IDECO 22600.

As you are probably already aware, your wife (as a non-tax payer) wouldn't get the main benefit of iDeCo - which is a reduction in tax.

Doesn't it also shield against dividend tax, capital gains tax, and income tax when receiving payouts? Sounds like it's worth doing, even if the money going in is not gross.

I'm aware it's a lifestyle choice and you're probably not going to change it, but the thing that seems like it would most improve your finances is if your wife also earned an income. That would probably allow you to up your savings rate into decent double-figure territory without any loss of spending.

[Djdawang]

Wife IDECO 22600.

As you are probably already aware, your wife (as a non-tax payer) wouldn't get the main benefit of iDeCo - which is a reduction in tax.

Ah I wasn’t aware. I thought that he household income can benefit from it even more. Thanks for the heads up. I guess house wives don’t really need IDECO

[RetireJapan]

This is something that has been weighing on my mind for a while: is it a good idea for dependent spouses (non-taxpayers) to open and pay into an iDeCo account?

Pro: no tax on capital gains, savings/investments in the spouse's name (peace of mind)
Con: can't get the money before age 60, gift tax issues(?), lump sum is taxed (but tax free allowance should cover most of it)

Has anyone run the numbers/seen anything going into this?

[Sybil]

Ah I wasn’t aware. I thought that he household income can benefit from it even more. Thanks for the heads up. I guess house wives don’t really need IDECO

The rules might be changed in the future I guess. Actually, they should be encouraging housewives to save independently for their retirement. Even if they don't increase the allowance they should give the option of splitting the allowance between the two spouses.

[Djdawang]

Thanks for replying. I was researching and found some English content.

Taken from here
https://www.ideco-koushiki.jp/english/#

Important points

*Participants are personally responsible for the investment of their assets. The benefits they receive will vary, depending on the performance of their investments.
*Investment products include products that do not have guaranteed principals. Select products based on a solid understanding of potential risks and benefits.
*Since iDeCo is a pension plan designed to accumulate assets for old age, it is subject to tax breaks. This means that you will generally not be permitted to withdraw assets from the pension until you turn 60. Additionally, note that how long you’ve been enrolled in the pension plan will affect when you can receive your benefits.
*Fees apply. (The amount of these fees will depend on the financial institution.)
*Individuals with no taxable income will not benefit from income tax deductions for contributions.
*The income tax deduction only applies to the participant’s income.
*Spouses are not eligible to receive income tax deductions.
Investment assets are also subject to the separate special corporation tax; however, this tax has been suspended until March 31, 2020.