Personal Finance for Residents of Japan
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Depends what you want, really. You could put more into those excellent mutual funds.Chibalass wrote: ↑Thu Dec 03, 2020 4:51 am Thanks for the summary. First two are done and pension planning etc is fine, I'm thinking about making the next ones more automatic investment payments. What are some suggestions on making the next step to more automatic payments?
Currently I have automatic deductions per month going to
eMAXIS Slim 全世界株式(オール・カントリー)
and
eMAXIS Slim 先進国債券インデックス
These are outside NISA and iDECO as those are already allocated. Both are with Rakuten but we also have SBI.
Thanks in advance for any suggestions.
Good choices!RetireJapan wrote: ↑Thu Dec 03, 2020 5:07 amDepends what you want, really. You could put more into those excellent mutual funds.Chibalass wrote: ↑Thu Dec 03, 2020 4:51 am Thanks for the summary. First two are done and pension planning etc is fine, I'm thinking about making the next ones more automatic investment payments. What are some suggestions on making the next step to more automatic payments?
Currently I have automatic deductions per month going to
eMAXIS Slim 全世界株式(オール・カントリー)
and
eMAXIS Slim 先進国債券インデックス
These are outside NISA and iDECO as those are already allocated. Both are with Rakuten but we also have SBI.
Thanks in advance for any suggestions.
Personally I am trying to build up some dividend income alongside my main index investing. I know it is probably less tax-efficient and may result in less money over the long-term, but I just like getting dividends
You could also up your emergency fund, pay down the mortgage (if you have one), or look into REITs or P2P lending (called 'social lending' here in Japan.
How much you save/invest and for how long is probably more important than what you do with it (within reason) so just upping the amount you invest is probably good enough...
Anyone else?
Do you know the only thing that gives me pleasure? It's to see my dividends coming in. John D. Rockefeller. Biography.
Definitely steer clear of P2P lending. It's extremely risky and the returns aren't worth it.Kanto wrote: ↑Thu Dec 03, 2020 5:50 am Be cautious with P2P in Japan -> https://asia.nikkei.com/Business/Compan ... -penalties
I'm not sure if that is correct. In Japan, REIT dividends are taxed the same as those from stocks. A mutual fund comprised of REITs is as tax efficient as a stock fund.
It would depend on whether we are talking about J-REITs or American or foreign REITS.fools_gold wrote: ↑Thu Dec 03, 2020 7:32 amDefinitely steer clear of P2P lending. It's extremely risky and the returns aren't worth it.Kanto wrote: ↑Thu Dec 03, 2020 5:50 am Be cautious with P2P in Japan -> https://asia.nikkei.com/Business/Compan ... -penalties
I'm not sure if that is correct. In Japan, REIT dividends are taxed the same as those from stocks. A mutual fund comprised of REITs is as tax efficient as a stock fund.
RIET funds might be not as diversified as stock funds, but the point is that they offer diversification out of stocks. You don't have to hold them, but a lot of people, Burton Malkiel included, recommend holding about 15%.
REIT's are less tax efficient than stocks even when their dividends get the same tax treatment because a REIT is mostly unable to reinvest in itself. When a company uses funds for investments that will grow future earnings instead of paying those funds as dividends to investors it is delaying the tax impact for its investors of its free cash flows. This is the same reason a no-dividend stock like Berkshire Hathaway is much more tax efficient for shareholders than a high dividend stock like AT&T. Because REIT's must passthrough 90%+ of their income to investors they are less tax efficient even in places like Japan where REIT dividends get the same tax treatment as stock dividends (even more so in the US where REIT dividends are taxed at a higher rate).I'm not sure if that is correct. In Japan, REIT dividends are taxed the same as those from stocks. A mutual fund comprised of REITs is as tax efficient as a stock fund.
Just to clarify...I was talking about holding an REIT index fund, not individual REITs. Most index funds in Japan are structured so that distributions are kept within the fund and are therefore not taxed. Of course, holding individual REITs or a REIT ETF outside a NISA wouldn't be a good idea due to their relatively high dividends.TokyoWart wrote: ↑Thu Dec 03, 2020 11:04 am REIT's are less tax efficient than stocks even when their dividends get the same tax treatment because a REIT is mostly unable to reinvest in itself. When a company uses funds for investments that will grow future earnings instead of paying those funds as dividends to investors it is delaying the tax impact for its investors of its free cash flows. This is the same reason a no-dividend stock like Berkshire Hathaway is much more tax efficient for shareholders than a high dividend stock like AT&T. Because REIT's must passthrough 90%+ of their income to investors they are less tax efficient even in places like Japan where REIT dividends get the same tax treatment as stock dividends (even more so in the US where REIT dividends are taxed at a higher rate).
Thanks for the clarification. I agree that this gets around the tax inefficiency I was citing. That ability of Japanese funds to reinvest dividends without taxes is really a thing of beauty (and hence off-limits for American expats).Just to clarify...I was talking about holding an REIT index fund, not individual REITs. Most index funds in Japan are structured so that distributions are kept within the fund and are therefore not taxed. Of course, holding individual REITs or a REIT ETF outside a NISA wouldn't be a good idea due to their relatively high dividends.