Thinking about investing in Finance, nOOb.

[Hárbarðr]

Dear all,

I am new to this forum and new to finance, more or less.
I hope my post fits in this section of the forum.

I want to start investing in finance, ETFs, Stocks, Bonds and such.
But of course, first thing is first, I will need a broker to do that.

I was first looking at opening something in the US (i am not from the US though), like Ameritrade, Interactive Brokers, Fidelity or similar. But a friend told me to research about taxes. Cause I would have to pay for taxes in the US and in Japan as well.

So my first question is:
Will I have to pay taxes in the US as well as in Japan if I have a broker account in the US?

Second questions is:
I was looking at Rakuten Security, since I am already a client of Rakuten, (Credit card, phone, electricity . . .) and thought maybe that would be a good idea to chose them for my broker.

Are Rakuten Security fees high? Are there any hidden fees? Does anyone have any experience with Rakuten Security or already using them?
(I will of course continue my research with Rakuten Security and others)

I hope I am not asking too much, and thank everyone in advance for all the help.

Thank you

[RetireJapan]

If you are not from the US, and are planning to stay in Japan, I recommend investing through Japanese brokers. It will be much easier and you will have basically no tax paperwork to do. You can also take advantage of tax-advantaged accounts like iDeCo and NISA.

If you have an account in the US you will not be double taxed, but your tax paperwork here in Japan will be more complicated.

All the major online brokers in Japan (Rakuten, Monex, SBI, etc.) are pretty much the same. Rakuten gives you the chance to earn points, so if you are already in the points ecosystem that might be attractive.

We generally recommend maxing out iDeCo first, as it reduces your income taxes, then NISA, as it allows you to invest without paying tax, then regular investment accounts.

[Hárbarðr]

Great, thank you so much for this information.

about iDeco and NISA, I am both working for a company but I also have my own business as a 個人事業主 Kojinjigyōshu (sole proprietor)
I see that there were different amount to max out for iDeco if you are working for a company and if you are a business owner.

How would I go about that?

And thank you for the information about Rakuten, I think they might be a good idea, because of the ecosystem I am already in.

Again, thank you for the very fast and helpful response.

[RetireJapan]

about iDeco and NISA, I am both working for a company but I also have my own business as a 個人事業主 Kojinjigyōshu (sole proprietor)
I see that there were different amount to max out for iDeco if you are working for a company and if you are a business owner.

This depends on the type of nenkin you pay. If you pay kokumin nenkin, your iDeCo limit is 68,000 yen a month. If kosei nenkin, your limit is 23,000 yen a month (unless you have a corporate DC or DB pension plan already). If you are not paying into nenkin you cannot use iDeCo.

Also you may find the small-medium business savings plan useful to reduce income tax as a sole proprietor: https://www.retirejapan.com/blog/the-me ... ving-plan/

[Hárbarðr]

Wonderful information.

I am under the kosei nenkin, so I guess I could only max out 23,000yen.

I guess that would still give me some tax eduction benefits.


Thank you very much.

[StockBeard]

Just wanted to add a few points regarding opening an account in the US, in case that's something you're still considering.

In my experience, opening a brokerage account with a US firm as a non-US citizen living in Japan is practically impossible, with Interactive Brokers being the notable exception. These things evolve constantly of course, but just my two cents on that.

Also to reply on Ben's statement below, I also feel the need to add my two cents here.

If you have an account in the US you will not be double taxed, but your tax paperwork here in Japan will be more complicated.

Ben, although you're mostly right on this, I feel the need to, once again, point at my personal experience, as a non US citizen owning a brokerage account in the US, and having a big accounting firm that did my taxes. I was double taxed on dividends held in that brokerage account: the US withholds 10% of the dividends (US-Japan tax treaty), and these 10% cannot be (according to this accounting firm) reported as tax credit on my JP Tax. (Details as to why I am double taxed and why the accounting firm thinks this is needed, are here: viewtopic.php?f=8&t=582&start=10#p4722 )


I would say a more accurate statement is that although countries make effort to avoid double taxation, in some cases it cannot be avoided.

[Hárbarðr]

Thank you very much for this information.

After a lot of research I think the best idea and the simplest is to open here in Japan.

It just sends love the smarter choice.

Thank you very much.