Capital gains for retirement

[TelecInvestor]

Hi everyone,

I was looking at my retirement plans and finally decided to open a SBI Select iDeCo account that has those sweet sweet eMAXIS index funds

I was looking to post the following in the iDeCo subforum but since it is quite a generic question, I might well post it here as I believe it does apply to any kind of growth portfolio with views of >30 years long investments.

As said, I'm looking to open this Japanese 401k (but better) and looking to invest into these index funds that don't seem to give dividends in expectations to secure a better retirement.

I'm totally OK with the "no dividends" (or better said, reinvested dividends), however I'm not sure how that works in reality when the "time" comes:

I feel that dividends are quite automatic in the sense that "I won't have to do anything and the money would come", however in this case where is a mostly capital gains scenario, I will have to be constantly selling to earn that money, correct?

Is here where the magical percentage (7% was it?) which you can keep endlessly getting the new capital gains sold and repeat. Just wanted to confirm this is the "procedure". Thanks and regards

[adamu]

I feel that dividends are quite automatic in the sense that "I won't have to do anything and the money would come", however in this case where is a mostly capital gains scenario, I will have to be constantly selling to earn that money, correct?

Correct. Although for iDeCo there are additional rules.

Is here where the magical percentage (7% was it?) which you can keep endlessly getting the new capital gains sold and repeat. Just wanted to confirm this is the "procedure". Thanks and regards

There is some debate, but it's around 3-4%. Definitely not 7%. 4% should be fine if you are flexible about doing some paid work in "retirement".

The Shockingly Simple Math Behind Early Retirement.

[TelecInvestor]

Thanks for the confirmation adamu!

As for the additional rules, do you refer it is a retirement account with limitations of when you can take that money, or is there something else?

Thanks again!

[adamu]

That's right. The iDeCo is heavily regulated, so while it's a good deal it's best to research it properly.

RetireJapan wrote an English guide (I've not read it, so don't know if it covers withdrawals) - and also links to a great Japanese book about it too (the book definitely does, but I'm fuzzy on the details as it's a long way off for me): https://gumroad.com/l/rSGsF

You can also learn everything you need from reading websites and blogs, if you're willing to put the time in.