Help VTI or ｅＭＡＸＩＳ Ｓｌｉｍ?

[lemoninvestor]

Hi guys,

I've been reading a few books and have decided to take my investments seriously and I'm looking to build a portfolio of around 70% index and 30% bonds. Just a quick background history, I'm not from the US and I've been living in Japan for almost 3 years now. I'm not sure if I am going to retire here but I have no plans on leaving for the foreseeable future.

My index funds are almost all VTI and I was wondering if this was a good choice or if I should sell all of it and switch over to
ｅＭＡＸＩＳ Ｓｌｉｍ as that's what I've seen recommended here a couple of times. My Japanese isn't that good and I'm not a financial expert so I'm having trouble figuring this out by myself. So I was wondering what's up with ｅＭＡＸＩＳ Ｓｌｉｍ and is it better than Vanguard funds?

Appreciate any help. Thank you!

[adamu]

There are lots of eMaxis slim funds, which one are you talking about? There is no eMaxis slim equivalent to VTI, which represents the whole US stock market. The closest one would be ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００） which is equivalent to VOO.

The biggest issue is probably that your ETF pays dividends, which are taxed when you receive them, but an eMaxis Slim fund automatically reinvests the dividends, which means you get to keep more of the value of the fund for longer (although you still end up paying the tax when you cash out, but it's compounding until then). The purchase/sale costs for ETFs also add up over time. Trading eMaxis Slim funds is free.

You could consider diversifying even more. eMaxis Slim All Country, for example, invests in all the public companies in the world, equivalent to VT. When you add non-US stocks, eMaxis slim is better, because the US-based ETFS are subject to tipple taxation (origin country, US, Japan), but eMaxis Slim is just double (origin country, Japan). Plus, you can cut out the Japanese tax if you use a NISA or iDeCo, but not the US tax.

Rebalancing your entire portfolio on a whim is probably quite an extreme move. Maybe you could try allocating new investments to the new funds for a while while you get used to it and consider your position more?

I don't have much experience with bonds, and spent some time looking into them myself recently but eventually gave up, so can't help you there.

[lemoninvestor]

Hey Adamu. Sorry for not being clear, I was comparing it to ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００）.

I didn't know that I'm paying that much more compared to what's available locally! Since I’m trying to optimize my investments for the long term I think it makes sense to add in eMaxis Slim funds to my portfolio. Thank you for your help!

[Roger Van Zant]

There are lots of eMaxis slim funds, which one are you talking about? There is no eMaxis slim equivalent to VTI, which represents the whole US stock market. The closest one would be ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００） which is equivalent to VOO.

The biggest issue is probably that your ETF pays dividends, which are taxed when you receive them, but an eMaxis Slim fund automatically reinvests the dividends, which means you get to keep more of the value of the fund for longer (although you still end up paying the tax when you cash out, but it's compounding until then). The purchase/sale costs for ETFs also add up over time. Trading eMaxis Slim funds is free.

You could consider diversifying even more. eMaxis Slim All Country, for example, invests in all the public companies in the world, equivalent to VT. When you add non-US stocks, eMaxis slim is better, because the US-based ETFS are subject to tipple taxation (origin country, US, Japan), but eMaxis Slim is just double (origin country, Japan). Plus, you can cut out the Japanese tax if you use a NISA or iDeCo, but not the US tax.

Rebalancing your entire portfolio on a whim is probably quite an extreme move. Maybe you could try allocating new investments to the new funds for a while while you get used to it and consider your position more?

I don't have much experience with bonds, and spent some time looking into them myself recently but eventually gave up, so can't help you there.

When I search for ｅＭＡＸＩＳ　Ｓｌｉｍ　全世界株式（オール・カントリー） on SBI, this comes up:
三菱ＵＦＪ国際－ｅＭＡＸＩＳ　Ｓｌｉｍ　全世界株式（オール・カントリー）

Does SBI not offer this? It is offered by 三菱ＵＦＪ国際 instead?

[Kanto]

There are lots of eMaxis slim funds, which one are you talking about? There is no eMaxis slim equivalent to VTI, which represents the whole US stock market. The closest one would be ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００） which is equivalent to VOO.

The biggest issue is probably that your ETF pays dividends, which are taxed when you receive them, but an eMaxis Slim fund automatically reinvests the dividends, which means you get to keep more of the value of the fund for longer (although you still end up paying the tax when you cash out, but it's compounding until then). The purchase/sale costs for ETFs also add up over time. Trading eMaxis Slim funds is free.

You could consider diversifying even more. eMaxis Slim All Country, for example, invests in all the public companies in the world, equivalent to VT. When you add non-US stocks, eMaxis slim is better, because the US-based ETFS are subject to tipple taxation (origin country, US, Japan), but eMaxis Slim is just double (origin country, Japan). Plus, you can cut out the Japanese tax if you use a NISA or iDeCo, but not the US tax.

Rebalancing your entire portfolio on a whim is probably quite an extreme move. Maybe you could try allocating new investments to the new funds for a while while you get used to it and consider your position more?

I don't have much experience with bonds, and spent some time looking into them myself recently but eventually gave up, so can't help you there.

When I search for ｅＭＡＸＩＳ　Ｓｌｉｍ　全世界株式（オール・カントリー） on SBI, this comes up:
三菱ＵＦＪ国際－ｅＭＡＸＩＳ　Ｓｌｉｍ　全世界株式（オール・カントリー）

Does SBI not offer this? It is offered by 三菱ＵＦＪ国際 instead?

This is the same fund. The fund is not owned by Rakuten or SBI ....it is owned and managed by MUFG

https://emaxis.jp/fund/253425.html

[LukeTek]

There are lots of eMaxis slim funds, which one are you talking about? There is no eMaxis slim equivalent to VTI, which represents the whole US stock market. The closest one would be ｅＭＡＸＩＳ Ｓｌｉｍ 米国株式（Ｓ＆Ｐ５００） which is equivalent to VOO.

The biggest issue is probably that your ETF pays dividends, which are taxed when you receive them, but an eMaxis Slim fund automatically reinvests the dividends, which means you get to keep more of the value of the fund for longer (although you still end up paying the tax when you cash out, but it's compounding until then). The purchase/sale costs for ETFs also add up over time. Trading eMaxis Slim funds is free.

You could consider diversifying even more. eMaxis Slim All Country, for example, invests in all the public companies in the world, equivalent to VT. When you add non-US stocks, eMaxis slim is better, because the US-based ETFS are subject to tipple taxation (origin country, US, Japan), but eMaxis Slim is just double (origin country, Japan). Plus, you can cut out the Japanese tax if you use a NISA or iDeCo, but not the US tax.

Rebalancing your entire portfolio on a whim is probably quite an extreme move. Maybe you could try allocating new investments to the new funds for a while while you get used to it and consider your position more?

I don't have much experience with bonds, and spent some time looking into them myself recently but eventually gave up, so can't help you there.

I'm very interested in the taxation part:

1. when I purchase and hold an ETF, will I have to pay taxes every time it pays dividend (typically once a year)? Why does it not happen with the eMaxi mutual fund? Afaik there are brokers which enables auto-reinvestments on ETFs, right?
2. let's consider the eMaxi Slim found on the whole world (全世界株式（オール・カントリー）). Will I have to pay the US part of taxation on this fund? If so, is it automatically done by Rakuten/SBI?

Sorry but I'm struggling to find definite information on this part on the net

[lemoninvestor]

Alright, I set up my Rakuten account to buy All Country monthly (積立). So since I wouldn’t know the number of units I’d be able to purchase when it executes does that mean that Mutual Funds in Japan allow investors to buy fractional shares or will it just purchase as much as what my budget allows? So for example if I’ve set it at 10,000 month and each unit of All Country costs 12,000 does that mean that I won’t receive any units this month but would end up receiving 1 unit the following month (20,000-12,0000) and I’d have 8,000 left over in my account. Is my understanding correct?

[RetireJapan]

Mutual funds in Japan allow you to buy in increments of 1 yen with a minimum purchase of 100 yen. The price of the fund doesn't matter. This makes them much more flexible than individual shares or ETFs.