Saving for College - What is the Best Approach?

[Chibalass]

It sounds like your idea to go for the loans and keep the saving plan is a steady idea.
University is so expensive, it is surely helpful for young adults to understand all the costs. When I was at uni a lot of people took the loans to put down deposits on student housing and then kept/sold that property later. The money you have saved so far could be a house deposit.
I have a question about the kid’s account. When you opened that Vanguard account, who did you open it with? Is it in your kid’s name already? My kids are younger so I’m considering a few different options.
Thanks,

[Bubblegun]

I suppose it’s good they learn about money while at college as I don’t think they learn anything about it at school.
As you said it could be a deposit on a house.
We opened up the vanguard account with saison and it’s in his name. I don’t think there were that many options 15 years ago as I don’t recall NISA and the only thing the wife pointed out was a post office account. Basically money in, probably the same money out and I don’t think there was much of an investment or interest being earned.... if any at all. So we plumped for vanguard via saison. We thought even if it makes 2% or 3% it seemed better that a terrible zero point something from a bank.
We never used the government child allowance, we just saved it. It was money we never had when he was born, so we thought it was a nice mind set to imagine we never had the money anyway.
Hopefully the dip in 2008 helped and gorge recent dip can help with his investment.
Heck if I had my way I’d open up an IDECO for him and plonk half in now, and keep the rest ticking over.

[Chibalass]

We never used the government child allowance, we just saved it.

I see the logic about the child benefit. We started doing the same with the P.O. when they were born and then used that money to start the NISA. The NISA is with Kamakura Toushin: https://www.kamakuraim.jp/ We have had it for four years so have put the max (80man per year) in there. It has made about 2-3% per year.
We have about 10 more years to save before the first kid goes to uni so I'm looking for a second way to make another account. I assume your Vanguard gets taxed? I might go with Rakuten and do Vanguard because we have other accounts there. Thanks again for sharing your comments.

[adamu]

The NISA is with Kamakura Toushin: https://www.kamakuraim.jp/ We have had it for four years so have put the max (80man per year) in there. It has made about 2-3% per year.

A quick look at that their website says that that's an active fund with a charge of 1.10% percent.

You can get passive funds that charge one tenth of that. Depending on your objectives, you may wish to move to a passive fund at a discount broker.

For example the MSCI all country world index performed: 8.22%, 24.35%, -9.15%, 26.70% for the last 4 years, which is an average of 12.53%. And because the fees are ten times lower, you keep more money of the return, which compounds in your favour.

https://finance.yahoo.com/quote/ACWI/performance/

Here's a link to Shintaro money article where they show that this fund loses to a standard domestic index fund:

https://shintaro-money.com/active-funds-summary/#i-12

[Chibalass]

Thank you for this very helpful information. It's all very useful and I will take a look at those resources you suggest.
I can see what you mean about the fees adding up over time.

Thanks for your time to research this!

[Jansen]

Another way to think of fees are as a percentage of your profit.

Continuing on from Adamus example of 12.53% per annum and a 1.1% fee. That means they are skimming 10% off your overall profits. That might not seem like much on a 12% gain, but imagine if you were at 5% or less.

[Bubblegun]

We never used the government child allowance, we just saved it.

I see the logic about the child benefit. I assume your Vanguard gets taxed? I might go with Rakuten and do Vanguard because we have other accounts there.

Yes I’m assuming it is taxed. This was before all the NISA products and IDECO products.
I’m not sure why the gov or the company don’t allow it to switch to a more tax efficient system.. Anyway I’m not quite sure as we’ve never taken anything out of the funds, but I’m sure the tax man gets his cut.

Maybe someone can chime in here about these funds.
1) would the fund set up before NISA/IDECO and the same fund in today’s NISA/IDECO have the same portfollio eg, Microsoft, google, bonds etc? If so why wouldn’t the company inform us investors to switch to the same fund in a NISA if it it more tax efficient and charged all being equal
Have to ask due to the constant history of financial mid-selling and poor impartial advice.

2) would I be correct in my thinking that a fund sold in Japan, is the same fund sold in the UK.... with the same stocks, shares, bonds? Therefore the growth/return would be the same.... no matter which country it is bought in. The only difference being two companies offering the same said financial product.
My initial thought is they would be exactly the same.

Im wondering now if it is better to move the fund we have into a NISA.

[RetireJapan]

Maybe someone can chime in here about these funds.
1) would the fund set up before NISA/IDECO and the same fund in today’s NISA/IDECO have the same portfollio eg, Microsoft, google, bonds etc? If so why wouldn’t the company inform us investors to switch to the same fund in a NISA if it it more tax efficient and charged all being equal
Have to ask due to the constant history of financial mid-selling and poor impartial advice.

2) would I be correct in my thinking that a fund sold in Japan, is the same fund sold in the UK.... with the same stocks, shares, bonds? Therefore the growth/return would be the same.... no matter which country it is bought in. The only difference being two companies offering the same said financial product.
My initial thought is they would be exactly the same.

Im wondering now if it is better to move the fund we have into a NISA.

Index funds are designed using a benchmark and basically buy one or more funds. They are going to be basically the same regardless of which company manages them (the fees may differ though).

Brokers tend to be hands-off in that they charge low fees to more people and don't give individual advice.

You can't 'move' investments into NISA, but rather need to buy new ones inside the NISA wrapper (either with new money or by selling the current investments and buying new ones).

Generally speaking, it is better to pay no tax using NISA than pay tax in a taxable account.

[Bubblegun]

Maybe someone can chime in here about these funds.
1) would the fund set up before NISA/IDECO and the same fund in today’s NISA/IDECO have the same portfollio eg, Microsoft, google, bonds etc? If so why wouldn’t the company inform us investors to switch to the same fund in a NISA if it it more tax efficient and charged all being equal
Have to ask due to the constant history of financial mid-selling and poor impartial advice.

2) would I be correct in my thinking that a fund sold in Japan, is the same fund sold in the UK.... with the same stocks, shares, bonds? Therefore the growth/return would be the same.... no matter which country it is bought in. The only difference being two companies offering the same said financial product.
My initial thought is they would be exactly the same.

Im wondering now if it is better to move the fund we have into a NISA.

Index funds are designed using a benchmark and basically buy one or more funds. They are going to be basically the same regardless of which company manages them (the fees may differ though).

Brokers tend to be hands-off in that they charge low fees to more people and don't give individual advice.

You can't 'move' investments into NISA, but rather need to buy new ones inside the NISA wrapper (either with new money or by selling the current investments and buying new ones).

Generally speaking, it is better to pay no tax using NISA than pay tax in a taxable account.

Thanks for that. You basically confirmed everything I thought.
With vanguard pulling out of Japan, I’ll need to check out if the NISA version is still available.

[Kanto]

Maybe someone can chime in here about these funds.
1) would the fund set up before NISA/IDECO and the same fund in today’s NISA/IDECO have the same portfollio eg, Microsoft, google, bonds etc? If so why wouldn’t the company inform us investors to switch to the same fund in a NISA if it it more tax efficient and charged all being equal
Have to ask due to the constant history of financial mid-selling and poor impartial advice.

2) would I be correct in my thinking that a fund sold in Japan, is the same fund sold in the UK.... with the same stocks, shares, bonds? Therefore the growth/return would be the same.... no matter which country it is bought in. The only difference being two companies offering the same said financial product.
My initial thought is they would be exactly the same.

Im wondering now if it is better to move the fund we have into a NISA.

Index funds are designed using a benchmark and basically buy one or more funds. They are going to be basically the same regardless of which company manages them (the fees may differ though).

Brokers tend to be hands-off in that they charge low fees to more people and don't give individual advice.

You can't 'move' investments into NISA, but rather need to buy new ones inside the NISA wrapper (either with new money or by selling the current investments and buying new ones).

Generally speaking, it is better to pay no tax using NISA than pay tax in a taxable account.

Thanks for that. You basically confirmed everything I thought.
With vanguard pulling out of Japan, I’ll need to check out if the NISA version is still available.

Vanguard pulling out of Japanese (Physically) does not change things for individual retail investor like ourselves. The funds are still available on Rakuten and other brokers.

However, keep in mind that many MUGJ Emaxis slim mutual fund products have a cost advantage over Vanguard products.

Bogle himself would not want us to pay more, for something of equal quality!