RetireJapan

Hi

I only started investing this year and I have a question about compound interest. So from what I understand is this is when you reinvest the interest? If I’m buying emaxis is this done automatically? Thanks

John_conner wrote: ↑Mon Jan 10, 2022 4:38 am Hi

I only started investing this year and I have a question about compound interest. So from what I understand is this is when you reinvest the interest? If I’m buying emaxis is this done automatically? Thanks

Yes eMAXIS does this all automatically - it reinvests dividends/interest/distributions etc within its stock/bond/REIT funds.

This is generally a good idea in the long run for tax efficiency given Japan's taxation rules.

John_conner wrote: ↑Mon Jan 10, 2022 4:38 am Hi

I only started investing this year and I have a question about compound interest. So from what I understand is this is when you reinvest the interest? If I’m buying emaxis is this done automatically? Thanks

Basically the eMaxis Slim funds do not pay you any interest as such.
The 'interest' is re-invested and you will see it as growth in the value of your funds.

In contrast, if you look at the alternatives to these funds, you will often see that a dividend is regularly paid (many ETFs, for example, and most (all?) REITs).
When the dividend is paid, this is your 'interest'. 2 disadvantages to this:

1) This dividend is taxed at just over 20%
2) You can re-invest this gain, (minus the tax), but you have to do it manually.
Funds which do not pay you a dividend are automatically re-investing any dividends for you. This is why for investors in Japan, these kinds of funds are seen as the most attractive and tax efficient.

A quick simple question.

I've been investing solely into eMaxis All Country so far on all of my iDeco, TNisa, Tokutei, just for simplicity's sake. No other variations at all.
To be honest I'm not sure if that's a good idea for long term reason.
So lately I've been tempted to spread a bit into individual stocks.
Thinking of buy-and-keep-forever kind of investing into any 1 of the big US player, again for simplicity.

Coming from a person who just wish to invest long term and keep it simple,
would you recommend me to start spreading resources into individual stock,
or perhaps just put more and more into eMaxis All Country? And why is that, if you don't mind.

Thank you!

Today's blog post might be of interest: https://www.retirejapan.com/blog/the-easy-portfolio/

RetireJapan wrote: ↑Tue Feb 01, 2022 12:50 pm Today's blog post might be of interest: https://www.retirejapan.com/blog/the-easy-portfolio/

Thank you! If I may ask, while everyone knows well about the go-to for stocks which is All-Country,
what would it usually be for bonds? Is it just another eMAXIS family?
i.e. eMAXIS Slim 先進国債券インデックス, eMAXIS 新興国債券インデックス, etc.

Mirei wrote: ↑Tue Feb 01, 2022 3:28 pm
Thank you! If I may ask, while everyone knows well about the go-to for stocks which is All-Country,
what would it usually be for bonds? Is it just another eMAXIS family?
i.e. eMAXIS Slim 先進国債券インデックス, eMAXIS 新興国債券インデックス, etc.

eMAXIS Slim 先進国債券インデックス : this is what I buy.
Same reasons as the other eMaxis products. Costs are low and it is well diversified. It is developed countries only, obviously.
If the idea of the bond fund is to provide ballast, stability, my view is that the developed economies can do this better than developing economies.

I think this eMAXIS 新興国債券インデックス is much more volatile, isn't it?
Also, not a Slim product so 0.66% fee.

beanhead wrote: ↑Tue Feb 01, 2022 3:50 pm

Mirei wrote: ↑Tue Feb 01, 2022 3:28 pm
Thank you! If I may ask, while everyone knows well about the go-to for stocks which is All-Country,
what would it usually be for bonds? Is it just another eMAXIS family?
i.e. eMAXIS Slim 先進国債券インデックス, eMAXIS 新興国債券インデックス, etc.

eMAXIS Slim 先進国債券インデックス : this is what I buy.
Same reasons as the other eMaxis products. Costs are low and it is well diversified. It is developed countries only, obviously.
If the idea of the bond fund is to provide ballast, stability, my view is that the developed economies can do this better than developing economies.

I think this eMAXIS 新興国債券インデックス is much more volatile, isn't it?
Also, not a Slim product so 0.66% fee.

With bonds you have a few decisions to make.

1. Hedged or unhedged? (為替ヘッジ) (為替ヘッジあり）

With low returns on bonds over the last decade, this needs to be seriously considered.

2. What type of bonds?

Sovereign debt or corporate debt?

3. Safety vs Yield?

Soverign -> American Treasuries (safest) vs Emerging market bonds (risky)
Corporate -> AAA vs C

4. Reason for the investment?

For instance, if you are looking for something that is the most uncorrelated to American stocks you should choose 20-year treasuries.


2621 iシェアーズ 米国債20年超 ETF（為替ヘッジあり） or TLT on NYSE

....................................................................

Best options

Emaxis Slim Advanced Government Bonds /ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス

https://www.rakuten-sec.co.jp/web/fund/ ... 90C000END3

Rakuten Total Bond Index 楽天・全世界債券インデックス（為替ヘッジ）ファンド

(This is Vanguard BNDW, but hedged and in yen).

https://www.rakuten-sec.co.jp/web/fund/ ... 90C000HBG4

....................................................................

(Mostly assembled from info from this board and Japane finance

Haystack wrote: ↑Wed Feb 02, 2022 1:10 am
4. Reason for the investment?

For instance, if you are looking for something that is the most uncorrelated to stocks you should choose 20-year treasuries.

I'm not sure why people think this, because actually foreign bonds are correlated to stocks. For us, the only things that are uncorrelated are Japanese bonds . J-REITs are also weakly correlated. Here are some links showing the correlations:

https://emaxis.jp/special/sokan.html

https://moneyworld.jp/news/03_00014448_news

fools_gold wrote: ↑Wed Feb 02, 2022 6:59 am

Haystack wrote: ↑Wed Feb 02, 2022 1:10 am
4. Reason for the investment?

For instance, if you are looking for something that is the most uncorrelated to stocks you should choose 20-year treasuries.

I'm not sure why people think this, because actually foreign bonds are correlated to stocks. For us, the only things that are uncorrelated are Japanese bonds . J-REITs are also weakly correlated. Here are some links showing the correlations:

https://emaxis.jp/special/sokan.html

https://moneyworld.jp/news/03_00014448_news

I thought It was evident that I was talking about US stocks, but I added a clarification.

4. Reason for the investment?

For instance, if you are looking for something that is the most uncorrelated to American stocks you should choose 20-year treasuries.

It maters why you want bonds in your portfolio, and what your appetite for risk is.