NISA - portfolio for the longest term

[ChapInTokyo]

You can turn it on or off. Unlike an etf. It is a more diversified stream unlike the REITs and dividend etfs often favored in Japan. Dividend payouts can be easily simulated and are absolutely not worth chasing.

You see, I’m retired so I definitely do not want to turn off the pay outs. So tax free dividends seem to make excellent sense since I will still keep the NISA account fully invested up to the limit while enjoying the income stream. Of course the account will increase in value if I keep reinvesting the dividends but then won’t I be a high net value individual but with less spending money? Surely at the end of the day the money should be spent, and spending it tax free seems like a good deal to me?

Seeking a fund simply because it pays out dividends is nonsensical when you can create that cashflow yourself. It would be just as tax-free.

Details: https://www.rakuten-sec.co.jp/web/rfund ... kyaku.html

The way I see it a dividend is better than selling shares for a simulated dividend because you will still have the same number of shares after getting the dividend. You will still remain fully invested up to the NISA quota limit rather than have a regularly diminishing NISA advantaged portfolio. There doesn’t seem to be any advantage to going the mutual fund route if I want to pay out the dividend equivalent amount by selling funds regularly. Am I missing something?

[Tsumitate Wrestler]

You see, I’m retired so I definitely do not want to turn off the pay outs. So tax free dividends seem to make excellent sense since I will still keep the NISA account fully invested up to the limit while enjoying the income stream. Of course the account will increase in value if I keep reinvesting the dividends but then won’t I be a high net value individual but with less spending money? Surely at the end of the day the money should be spent, and spending it tax free seems like a good deal to me?

Seeking a fund simply because it pays out dividends is nonsensical when you can create that cashflow yourself. It would be just as tax-free.

Details: https://www.rakuten-sec.co.jp/web/rfund ... kyaku.html

The way I see it a dividend is better than selling shares for a simulated dividend because you will still have the same number of shares after getting the dividend. You will still remain fully invested up to the NISA quota limit rather than have a regularly diminishing NISA advantaged portfolio. There doesn’t seem to be any advantage to going the mutual fund route if I want to pay out the dividend equivalent amount by selling funds regularly. Am I missing something?

Yes, an etfs NAV drops by the size of the dividend, post-dividend. Dividends are not free money. The fund will shrink when a dividend is paid out.

Share count is irrelevant, it's the total assets value that matters.

Mutual fund have "shares" 口, they are just very very small units.

[ChapInTokyo]

Seeking a fund simply because it pays out dividends is nonsensical when you can create that cashflow yourself. It would be just as tax-free.

Details: https://www.rakuten-sec.co.jp/web/rfund ... kyaku.html

The way I see it a dividend is better than selling shares for a simulated dividend because you will still have the same number of shares after getting the dividend. You will still remain fully invested up to the NISA quota limit rather than have a regularly diminishing NISA advantaged portfolio. There doesn’t seem to be any advantage to going the mutual fund route if I want to pay out the dividend equivalent amount by selling funds regularly. Am I missing something?

Yes, an etfs NAV drops by the size of the dividend, post-dividend. Dividends are not free money. The fund will shrink when a dividend is paid out.

Share count is irrelevant, it's the total assets value that matters.

Mutual fund have "shares" 口, they are just very very small units.

So does that not mean that the lower expense ratio of the iShares Core Nikkei 225 ETF will result in marginally better returns than say an eMAXIS Slim fund tracking the same index?

I do see that they’re pretty much the same thing in that the NAV will drop after a dividend is paid out of an ETF or when the same amount of mutual fund shares are sold off, so at the end of the day they’re pretty much the same except the ETF has a somewhat lower cost.

In any case the low cost mutual funds are getting closer to the cost of an index ETF so I do realize it’s nothing to sweat over. Incidentally my NISA broker is Monex so the fact that I can’t set up simulated dividends for mutual funds makes the ETF a bit more convenient in my particular situation!

[Tsumitate Wrestler]

The way I see it a dividend is better than selling shares for a simulated dividend because you will still have the same number of shares after getting the dividend. You will still remain fully invested up to the NISA quota limit rather than have a regularly diminishing NISA advantaged portfolio. There doesn’t seem to be any advantage to going the mutual fund route if I want to pay out the dividend equivalent amount by selling funds regularly. Am I missing something?

Yes, an etfs NAV drops by the size of the dividend, post-dividend. Dividends are not free money. The fund will shrink when a dividend is paid out.

Share count is irrelevant, it's the total assets value that matters.

Mutual fund have "shares" 口, they are just very very small units.

So does that not mean that the lower expense ratio of the iShares Core Nikkei 225 ETF will result in marginally better returns than say an eMAXIS Slim fund tracking the same index?

I do see that they’re pretty much the same thing in that the NAV will drop after a dividend is paid out of an ETF or when the same amount of mutual fund shares are sold off, so at the end of the day they’re pretty much the same except the ETF has a somewhat lower cost.

In any case the low cost mutual funds are getting closer to the cost of an index ETF so I do realize it’s nothing to sweat over. Incidentally my NISA broker is Monex so the fact that I can’t set up simulated dividends for mutual funds makes the ETF a bit more convenient in my particular situation!

That is a shame, this is why I recommend against Monex vs SBI and Rakuten. Their currency rates are also very subpar.

The small differences in ER are pretty meaningless when weighted against the advantages of mutual funds. But I would still recommend against a Nikkei 225 funds vs a Topix funds. The 225 is viewed in much the way the DOW is. While TOPIX is more like the CRSP US.

[ChapInTokyo]

Yes, an etfs NAV drops by the size of the dividend, post-dividend. Dividends are not free money. The fund will shrink when a dividend is paid out.

Share count is irrelevant, it's the total assets value that matters.

Mutual fund have "shares" 口, they are just very very small units.

So does that not mean that the lower expense ratio of the iShares Core Nikkei 225 ETF will result in marginally better returns than say an eMAXIS Slim fund tracking the same index?

I do see that they’re pretty much the same thing in that the NAV will drop after a dividend is paid out of an ETF or when the same amount of mutual fund shares are sold off, so at the end of the day they’re pretty much the same except the ETF has a somewhat lower cost.

In any case the low cost mutual funds are getting closer to the cost of an index ETF so I do realize it’s nothing to sweat over. Incidentally my NISA broker is Monex so the fact that I can’t set up simulated dividends for mutual funds makes the ETF a bit more convenient in my particular situation!

That is a shame, this is why I recommend against Monex vs SBI and Rakuten. Their currency rates are also very subpar.

The small differences in ER are pretty meaningless when weighted against the advantages of mutual funds. But I would still recommend against a Nikkei 225 funds vs a Topix funds. The 225 is viewed in much the way the DOW is. While TOPIX is more like the CRSP US.

True. The 0.25 yen commission that Monex still charges for converting USD back to JYE is the one gripe I have about Monex. Now that both Rakuten and SBI have 0 yen commission for converting to USD and back to JYE, I expect Monex will follow suit at some time in the future but I guess Monex maybe doesn't have the same bargaining power against whichever bank they are actually subcontracting that conversion business to...

In the meantime, I've signed on to the SBI Connect programme at SBI Shinsei Bank to get instant Platinum stage status, so when I need to buy yen with USD, I can do so at 0.03 yen commission on the dollar. Of course, I could always send my dollar funds into SBI or Rakuten, change that to yen at 0 commission, and then withdraw that yen to use at Monex for buying Japanese mutual funds. A bit bothersome, but if I suppose that too is an option...

Thanks for the heads up on the Nikkei 225 versus TOPIX question. Maybe I should think about a 50:50 mix of Nikkei 225 and TOPIX?

[adamu]

Now that both Rakuten and SBI have 0 yen commission for converting to USD and back to JYE, I expect Monex will follow suit at some time in the future

More likely is that they'll bring back their 0.25 charge (or a higher one) once everyone is bought in to their platform. The current 0 rates are temporary campaigns to coincide with the New NISA as far as I understand.

[Tsumitate Wrestler]

Thanks for the heads up on the Nikkei 225 versus TOPIX question. Maybe I should think about a 50:50 mix of Nikkei 225 and TOPIX?

Would you 50/50 between a dow/S&P500? Topix is the whole Japanese market, while Nikkei is just skimming the top.

[ChapInTokyo]

Now that both Rakuten and SBI have 0 yen commission for converting to USD and back to JYE, I expect Monex will follow suit at some time in the future

More likely is that they'll bring back their 0.25 charge (or a higher one) once everyone is bought in to their platform. The current 0 rates are temporary campaigns to coincide with the New NISA as far as I understand.

I agree that what's driving this is Rakuten and SBI's cut throat competition to lock down as many NISA customers as soon as possible.

But it does seem that both Rakuten and SBI are making this 0 commission USD-JPY currency conversion a permanent feature because this table from Rakuten's site specifically points out that the Monex and Matsui’s "0銭/ドル commission" on yen to dollar conversion are not permanent rates (※プログラム期間中） which by inference means that both Rakuten and SBI's are.

It's interesting though that even though they're making a song and dance about their 0 commission dollar yen conversions, the small print does say that there is actually a BID-ASK spread (※1 当社リアルタイム為替取引の手数料は０銭ですが、提示する買レート・売レートは、外国為替市場における業者間レートを採用しており、買レート・売レートには乖離があります。).

[ChapInTokyo]

Thanks for the heads up on the Nikkei 225 versus TOPIX question. Maybe I should think about a 50:50 mix of Nikkei 225 and TOPIX?

Would you 50/50 between a dow/S&P500? Topix is the whole Japanese market, while Nikkei is just skimming the top.

I hadn’t really given it much thought to be honest, so I asked Bing “ is investing in the Dow jones industrial average index better than investing in the s&p500?” and this is what Bing came up with. So maybe it’s like if I can’t be sure which is the winner, invest in both?

Investing in the Dow Jones Industrial Average (DJIA) versus the S&P 500 depends on your investment goals and preferences. Here's a comparison to help you decide:

**DJIA**:
- Tracks **30 of the biggest American companies**¹.
- Price-weighted index, meaning companies with higher share prices have a greater effect¹.
- Represents a variety of sectors except utilities and transportation¹.
- Historically, the DJIA is America's original stock index and includes household names like Johnson & Johnson and Microsoft¹.

**S&P 500**:
- Tracks **500 large-cap American stocks**¹.
- Market-cap weighted, where the weight of each component is determined by its market capitalization².
- Represents all sectors of the economy and is selected by a committee based on specific criteria¹.
- Dominated by information technology, healthcare, and financials¹.

Both indices offer a big-picture view of the stock market and have similar long-term performance². The **DJIA** might be preferred for those looking for a narrower focus on highly established companies. In contrast, the **S&P 500** offers broader diversification across more sectors and companies.

Ultimately, the choice between the two should align with your investment strategy, risk tolerance, and the specific sectors you want exposure to. It's also worth considering that many investors choose to diversify by investing in both indices.

ソース: Copilot との会話、 28/05/2024
(1) Dow Jones Industrial Average vs. S&P 500 - Investopedia. https://www.investopedia.com/ask/answer ... nd-sp-500/.
(2) Head-to-Head: Dow vs. S&P 500 (And The Shocking Results). https://www.stlouistrust.com/insights/h ... g-results/.
(3) Comparing Iconic Indices: The S&P 500® and DJIA®. https://www.spglobal.com/spdji/en/educa ... -and-djia/.

[captainspoke]

...
I hadn’t really given it much thought to be honest, ...

My impression is that you might spend too much time on some of these meanderings.

... so I asked Bing “ is investing in the Dow jones industrial average index better than investing in the s&p500?” and this is what Bing came up with. So maybe it’s like if I can’t be sure which is the winner, invest in both?

Investing in the Dow Jones Industrial Average (DJIA) versus the S&P 500 depends on your investment goals and preferences. Here's a comparison to help you decide:
snip...

My Comment: (since I seem to have botched the editing of the quotes)

So bing is absolutely no help. (who'da thought!!)

And since ALL/100% of the dow is contained in the S&P500, buying both would be a great example of over-diversification.

"Over-diversification, or "di-worsification," occurs when additional investments diminish returns without lowering risk significantly."

And the same situation with Nikkei/Topix