RetireJapan

I want to say though that depending on your age, (b) might still be considered a tad conservative (because of the bonds). If you're 20 years away from retirement, I'd just do 100% All Country (or even just cut to the case and do S&P500)

zeroshiki wrote: ↑Sat Jul 31, 2021 1:43 pm (or even just cut to the case and do S&P500)

That assumes that the (very richly valued) US stock market will continue to outperform. Could be true, could not. I don't know, so I'm more comfortable a bit more diversified...

There's 2 main arguments to be made for S&P500:
1. All Country has ~50% US exposure so its not like you're free of the US.
2. The really big US companies (P&G, Microsoft, J&J, etc) are globally diversified anyways.

I don't necessarily subscribe to this idea but I understand the logic of it. The S&P500 has out tracked the index that All Country uses consistently. We don't know what will happen in the future but, really, any downturn in the American market means a downturn in the global market anyways so I'm honestly kinda suspicious about the amount of protection buying All Country over S&P500 will give you.

zeroshiki wrote: ↑Sat Jul 31, 2021 3:44 pm There's 2 main arguments to be made for S&P500:
1. All Country has ~50% US exposure so its not like you're free of the US.
2. The really big US companies (P&G, Microsoft, J&J, etc) are globally diversified anyways.

Not sure how convincing that is.

Twice as much exposure to something is a lot more

And while the source of earnings of big companies is globally diversified, we are talking about the stock prices. And most of the recent stock market growth in the US has been driven by the tech sector (Amazon: P/E 57.9; Netflix P/E 53, etc.).

As a counterpoint I was surprised to find just now that Alphabet and Facebook have P/Es in the high twenties, a lot more reasonable than I expected.

Again, I don't know. But it seems reasonable to remain agnostic and buy the world. You're getting a real bargain at the moment with emerging markets, and Europe/Asia are also cheaper than the US.

We're probably splitting hairs here, as either approach could work out better, and neither are terrible.

RetireJapan wrote: ↑Sun Aug 01, 2021 12:01 am

zeroshiki wrote: ↑Sat Jul 31, 2021 3:44 pm There's 2 main arguments to be made for S&P500:
1. All Country has ~50% US exposure so its not like you're free of the US.
2. The really big US companies (P&G, Microsoft, J&J, etc) are globally diversified anyways.

Not sure how convincing that is.

Twice as much exposure to something is a lot more

And while the source of earnings of big companies is globally diversified, we are talking about the stock prices. And most of the recent stock market growth in the US has been driven by the tech sector (Amazon: P/E 57.9; Netflix P/E 53, etc.).

As a counterpoint I was surprised to find just now that Alphabet and Facebook have P/Es in the high twenties, a lot more reasonable than I expected.

Again, I don't know. But it seems reasonable to remain agnostic and buy the world. You're getting a real bargain at the moment with emerging markets, and Europe/Asia are also cheaper than the US.

We're probably splitting hairs here, as either approach could work out better, and neither are terrible.

Indeed, in fact, the S&p500 would not even be your best choice IF you wanted to invest only in America. (VTI>VOO)

Here is an excellent video breaking down the argument. https://youtu.be/RR7e1Y-HJxQ

(Spoiler: Invest globally).

Thanks guys. Since this is my first ever purchase, I just want to check a couple of things with you before I hit the GO button.

I'm doing a "Spot" buy, and there's a choice for 分配金コース (Distribution Course). The English translation says:

After tax, the distribution will be credited to the "deposit" of the securities account if it is a receipt type, and will be automatically reinvested if it is a reinvestment type.

1. What does it mean by "distribution" when buying ｅＭＡＸＩＳ Ｓｌｉｍ 全世界株式（オール・カントリー）? Something to do with dividends? Which option would you recommend, receipt type (受取型) or investment type (再投資型)?

2. The other option I have is "general" (一般口座) or "specifc" (特定口座). Specific is the way to go, right?

Sorry for the noob questions. If I don't ask, then I'm just left guessing.
Cheers.

nickr wrote: ↑Sun Aug 01, 2021 2:38 am Thanks guys. Since this is my first ever purchase, I just want to check a couple of things with you before I hit the GO button.

I'm doing a "Spot" buy, and there's a choice for 分配金コース (Distribution Course). The English translation says:

After tax, the distribution will be credited to the "deposit" of the securities account if it is a receipt type, and will be automatically reinvested if it is a reinvestment type.

1. What does it mean by "distribution" when buying ｅＭＡＸＩＳ Ｓｌｉｍ 全世界株式（オール・カントリー）? Something to do with dividends? Which option would you recommend, receipt type (受取型) or investment type (再投資型)?

2. The other option I have is "general" (一般口座) or "specifc" (特定口座). Specific is the way to go, right?

Sorry for the noob questions. If I don't ask, then I'm just left guessing.
Cheers.

1. So distribution or reinvestment relates to dividends that pay out for these funds, however, if you're investing in the eMaxis Slim mutual funds, many (all?) of them are set to be 'deposit/reinvest' only, regardless of what you select.

What is means is that the instead of paying out dividends annually, the fund reinvests these portions to grow the overall value of the fund (and therefore your overall investment). This means any gains are 'not realised' until you sell them, so there is no tax to worry about until you sell (unless you're American - which is a longer and more complicated story that I'll skip for now )

edit: to be clear, reinvest/deposit is what you want.再投資型

2. So, as a rule you'll want the 'specific' or Tokutei accounts as they will handle all the tax associated with these purchases at time of sale. For (simplified) example, if you buy at 100 and sell at 150, making 50 profit, less capital gains tax of 20% (10) means your account will be credited with 140 after the sale, and you won't need to do anything on your year end tax adjustment. If you pick the 'general' account then with the same example you would be paid out all 150, but would need to declare the 50 on your year end tax adjustment and subsequently pay 10 in capital gains tax as part of your adjustment.

edit: my recommendation would be 特定口座

(There's probably an argument in favour of the 'general' accounts in so much as you would hold the additional gains until the end of the tax year, so you could potentially do more with it, but paperwork is a hassle, so do with that as you will)


Final note, since this is a spot buy and you just want to get in the game, then go ahead with 特定口座, but going forward you might want to look into opening a NISA for ^reasons. There are plenty of threads about the benefits of NISAs, so I won't go into them here either, but summary: they are good and recommended for most folks.

@JapaneseMike, Thanks very much, that made things very clear and I've now completed my first purchase - hooray!

Regarding NISA and iDeCo, I intend to do iDeCo (as a self-employed Brit), putting in as much as they allow. I can only afford that because next month is my final mortgage payment - hooray again!

And then I want to put a little into Tsumitate NISA as well. I thought it would be best to do both of those from a Rakuten Bank account to take advantage of the points ecosystem, so I'm currently waiting for that to be set up. But if they don't approve me soon (two rejections so far) I'll just try to set them up (through Rakuten Securities) using my local bank.

Kanto wrote: ↑Mon Apr 05, 2021 1:41 pm
(b) If you want very simple but more aggressive, put

STOCKS

90% in this -> World Equity Fund (https://www.rakuten-sec.co.jp/web/fund/ ... 90C000H1T1)

I’m looking to stake a position tracking global markets via an ETF. I figure if I can’t beat this with my various picks, well, at least I’m not going down in flames. However, I’m having a hard time finding something that looks balanced and like a “global” ETF. I’ve discovered URTH but it’s Apple, MSFT, facebook, amazon and google for the top 5 holdings. And I can’t find any others.

If I pivot to just a US stock ETF like ITOT or SCHB, they are also Apple, MSFT, facebook, amazon and google for top 5 holdings. Even that doesn’t look like a healthy reflection of the US market (which I guess is irrelevant). Sort of perplexed about finding a balanced ETF to invest in to serve as a benchmark.

Ax6isB wrote: ↑Sun Aug 29, 2021 1:06 am

Kanto wrote: ↑Mon Apr 05, 2021 1:41 pm
(b) If you want very simple but more aggressive, put

STOCKS

90% in this -> World Equity Fund (https://www.rakuten-sec.co.jp/web/fund/ ... 90C000H1T1)

I’m looking to stake a position tracking global markets via an ETF. I figure if I can’t beat this with my various picks, well, at least I’m not going down in flames. However, I’m having a hard time finding something that looks balanced and like a “global” ETF. I’ve discovered URTH but it’s Apple, MSFT, facebook, amazon and google for the top 5 holdings. And I can’t find any others.

If I pivot to just a US stock ETF like ITOT or SCHB, they are also Apple, MSFT, facebook, amazon and google for top 5 holdings. Even that doesn’t look like a healthy reflection of the US market (which I guess is irrelevant). Sort of perplexed about finding a balanced ETF to invest in to serve as a benchmark.

https://retirewiki.jp/wiki/Japanese_global_index_funds

The two competing benchmarks are MSCI ACWI and FTSE ALL CAPS, they are all market-weighted.

And yes, Apple, MSFT and company will be the top holdings. The US is over 50% of the global stock market, and those companies really are that big.

Japanese mutual funds are a better choice than ETFS here in Japan (for non-americans), as they reinvest their dividends internally making them more tax-advantageous.

If you are buying international funds with IBKR, I would Suggest Vanguard funds. Vanguard VT is a great choice.

The MSCI ACWI Index, MSCI’s flagship global equity index, is designed to represent performance of the full opportunity set of large- and mid-cap stocks across 23 developed and 27 emerging markets. As of June 2021, it covers more than 2,900 constituents across 11 sectors and approximately 85% of the free float-adjusted market capitalization in each market. The index is built using MSCI’s Global Investable Market Index (GIMI) methodology, which is designed to take into account variations reflecting conditions across regions, marketcap sizes, sectors, style segments and combinations.

The FTSE Global All Cap Index is a market-capitalisation weighted index representing the performance of the large, mid and small cap stocks globally.