Selecting Funds for an SBI Select iDeCO

[nickendo]

Firstly, thanks for the wonderful website. What an amazing resource. This is my first post, so please excuse my ignorance.

I’m a UK citizen. 39 years old. Japanese permanent resident with a Japanese wife. Both working. No kids. Been here 6 years, and have no plans to return back to the UK. I sorted out back payment of my UK pension last year, and set up class 2 contributions, so I’m now set to receive full UK state pension upon retirement. (fingers crossed!)

I’ve been paying into Kokumin Nenkin for about 5 years. Having read the advice on this website, I plan to sign up for the Fuka Nenkin extra contribution ASAP. If I retire at 65 I’ll have 30 years of Kokumin Nenkin contributions.

Although the combined UK and Japanese state pensions are better than nothing, I urgently need to address the huge shortfall in my retirement income. I’m going to follow the advice given here and sign up for an iDeCo.

I fit into the self-employed category, so I can invest the full 67,000 per month (after the Fuka Nenkin deduction). This is a little bit of a stretch, but I’m going to try to make this maximum payment - I think it'll be a good motivator for making savings in my outgoings. If I can also find extra funds for a NISA down the line I will definitely look into this too.

I wonder what kind of return I can expect if I fully fund an iDeCo for 20 years prior to turning 60? If I select to receive an annuity, what monthly amount might I expect to receive?

For my iDeCo I’ve decided to go with SBI.

I’m now selecting funds. I read that it was good to try to diversify my investments, but this really is the limit of my knowledge.

These are the three funds I’m considering:

1. ((Domestic stocks)) ｅＭＡＸＩＳ Ｓｌｉｍ先進国債券インデックス　20％
2. ((International bonds)) ｅＭＡＸＩＳ Ｓｌｉｍ国内株式（ＴＯＰＩＸ）　20％
3. ((International stocks)) ｅＭＡＸＩＳ Ｓｌｉｍ米国株式（Ｓ＆Ｐ５００）60％

Does this look like a reasonable selection?

Is the split about right?

Any advice very welcome indeed.

Thanks in advance!

[RetireJapan]

Hi nickendo

Welcome to the forum! Your plan seems eminently reasonable

Personally I would be inclined to go for less concentration on US stocks (particularly as a UK citizen). Perhaps the eMaxis Slim all-country fund might be an alternative? That would also eliminate the need for a domestic fund stock fund as it also includes Japanese stocks.

As for how much your iDeCo fund might be worth at 60 (or 70, as you can let it run for up to ten years after ceasing contributions at 60) it is impossible to say. Defined contribution accounts like iDeCo set a limit on how much you can pay in, but the results depend on how you invest the funds and how those investments perform.

A whole range of outcomes are possible. Personally I am using an arbitrary 4% number for my investments in planning, but historically you might expect slightly more and it is possible to get less. However, over 20-30 years you could reasonably expect your account balance to grow.

Don't forget the substantial income tax benefit from iDeCo, this will turbo charge your returns, particularly if you also invest the amount saved in taxes.

And your plan will probably change as you get more experience and see how your investments perform (and how you feel about it). One good thing about iDeCo is that it is relatively easy to change your allocation if you need to.

Anyone else?

[Sybil]

As already stated iDeCo is the way to go. If needs be divert any existing savings and investments into the iDeCo to ensure you max it out every month.

[nickendo]

That sounds like good advice. Thanks to both of you.

Definitely going to try for the maximum iDeCo. Future me will surely thank past me for doing so!

I like your idea of being less US market focused. I'm looking at the list of SBI's eMaxis, here: https://www.dcnenkin.jp/search/product. ... &item=223C

I'm trying to locate the all country emaxis fund you suggested. Perhaps you are referring to this one?

ｅＭＡＸＩＳ Ｓｌｉｍ先進国株式インデックス

https://www.dcnenkin.jp/search/product. ... e=03319172

[adamu]

Unfortunately the all-country eMAXIS Slim fund is not available in SBI's iDeco, because the number of funds is limited and they provide their own (inferior, in my opinion) all country option.

1. ((Domestic stocks)) ｅＭＡＸＩＳ Ｓｌｉｍ先進国債券インデックス　20％
2. ((International bonds)) ｅＭＡＸＩＳ Ｓｌｉｍ国内株式（ＴＯＰＩＸ）　20％
3. ((International stocks)) ｅＭＡＸＩＳ Ｓｌｉｍ米国株式（Ｓ＆Ｐ５００）60％

Note that the English and Japanese don't match up here. The order in Japanese is: Developed World Bond Index, Japan Stocks, American Stocks.

I also use SBI for iDeCo, and although I don't have any bonds, I mix-and match other eMaxis Slim funds to make up something similar to the all country fund. It's not perfect, but it'll do (hopefully). Details are on this thread: viewtopic.php?f=11&t=419

[Jansen]

Considering the lacklustre performance for the past 5 years, I'd probably leave TOPIX out.
Considering the current state of the world I wouldn't buy any emerging markets too.
So that leaves just these 3?

三菱ＵＦＪ国際－ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス
三菱ＵＦＪ国際－ｅＭＡＸＩＳ　Ｓｌｉｍ米国株式（Ｓ＆Ｐ５００）
三菱ＵＦＪ国際－ｅＭＡＸＩＳ Ｓｌｉｍ 先進国株式インデックス

[RetireJapan]

Personally I am overweight emerging market stocks as they seem to be underperforming. That may or may not work out well for me over the long run.

[adamu]

Considering the lacklustre performance for the past 5 years, I'd probably leave TOPIX out.
Considering the current state of the world I wouldn't buy any emerging markets too.

You can pick today's winners, but that doesn't mean they'll be tomorrow's. That's why I just buy the world.

P.S. Wonder how long it'll be before we can invest in Martian Frontier All Cap

[gaijinkun]

SBI is introducing new FUND

ＳＢＩ－ＳＢＩ・バンガード・Ｓ＆Ｐ５００インデックス・ファンド
https://site0.sbisec.co.jp/marble/fund/ ... =189311199

Trust fee is 0.09264％
What other costs are there? Could not find.

[mule96]

It is a wrapper of the Vanguard SP500 ETF. The costs are divided with 0.03% from the ETF and 0.06264% from SBI.

It is a difficult topic and there are better experts here, but so far if I remember right, those wrappers are less tax effective than direct funds.