Rookie wanting to invest

[FIRE-Rookie]

To me, that's a disadvantage for long-term investing. The fund price can fluctuate based on market factors other than the value of its underlying assets. ETFs can also be bought and sold instantly during trading hours, whereas a mutual fund is traded once a day. For long term investments the price fluctuations within a single day are of little meaning, and having to wait a few days for a mutual fund order to settle is a boon that saves you from making rash decisions.

Not to mention that with mutual funds you can use every last yen of your NISA / iDeCo allowance, but with ETFs in a NISA there will always be a little change leftover.

Why are you sold on the Fidelity ETFs? For example, there are also great ETFs by Vanguard, Schwab, iShares, etc.

I am with you 100% so once I am maximized on the NISA (can't do iDeco per company policy) then I will put others funds in other areas. Unfortunately Rakuten is still reviewing my NISA application.

The only reason I am considering ETFs is is that I am diversifying the risk as well.
The fact that ETFs can be traded during trading hours serves a purpose for me.

I read this article lately and it made me reconsider things a bit:
https://www.lynalden.com/index-funds/?f ... KIfYngpjgY

Let's say there is 1% chance that Index or Mutual Funds market crash (highly unlikely) then I would at least be able to short fast. I realize that during these times emotions will be up in the air but again, it comforts me knowing that I have some sort of control over a portion of my funds.

Finally, I am not set on FIL so to speak but as non-American, I noticed that the only platform that can accept me is IBKR which actually trades ETFs by FIL & Vanguard as far as I know. If you know other platforms that offer the same flexibility to non-Americans then I would love to know

[adamu]

Let's say there is 1% chance that Index or Mutual Funds market crash (highly unlikely) then I would at least be able to short fast. I realize that during these times emotions will be up in the air but again, it comforts me knowing that I have some sort of control over a portion of my funds.

On the contrary, they are very likely to crash and will do so many times over the course of decades. We had a 30% crash this year (now recovered). Rather than shorting, which has an equal risk of loss if the market suddenly recovers, the best thing to do if you have a diversified portfolio is just to hold steady - the market always goes up in the long run.

[Kanto]

Let's say there is 1% chance that Index or Mutual Funds market crash (highly unlikely) then I would at least be able to short fast. I realize that during these times emotions will be up in the air but again, it comforts me knowing that I have some sort of control over a portion of my funds.

On the contrary, they are very likely to crash and will do so many times over the course of decades. We had a 30% crash this year (now recovered). Rather than shorting, which has an equal risk of loss if the market suddenly recovers, the best thing to do if you have a diversified portfolio is just to hold steady - the market always goes up in the long run.

I 100% agree. The markets will crash again, but the LONG TERM investor needs to remain calm and cool and not sell.

I was listening to the Vanguard Investors podcast. It seems 90% of the job is managing people's emotions and convincing them to be patient during a crash.

The long term investor in a crash will often sell their fixed-income assets and adjust back to an appropriate Bond/Stock ratio. Those with cash on the sidelines will "buy the dip". However, they will not sell. That is the beauty of broad market funds and long term investing.

[FIRE-Rookie]

the market always goes up in the long run.

I 100% agree. The markets will crash again, but the LONG TERM investor needs to remain calm and cool and not sell.

Thank you so much both and again, I do apologize for the delay of reply on my end. I tend to do excessive research before making decisions which is rather counter-productive in case of investing.

On a final note, for the sake for diversification, would you suggest a "Magic Formula" investment even within like 5-10% of the whole portfolio investment or this is rather pre-historic technique before ETFs became a thing?

[Kanto]

the market always goes up in the long run.

I 100% agree. The markets will crash again, but the LONG TERM investor needs to remain calm and cool and not sell.

Thank you so much both and again, I do apologize for the delay of reply on my end. I tend to do excessive research before making decisions which is rather counter-productive in case of investing.

On a final note, for the sake for diversification, would you suggest a "Magic Formula" investment even within like 5-10% of the whole portfolio investment or this is rather pre-historic technique before ETFs became a thing?

Cheap high "high value" stocks often come with risk. See -> https://www.investopedia.com/terms/v/va ... e%20period.

There is an argument for purchasing Value companies, but usually small-cap value is what is shown to outpreform. Very difficult to pick a winner.

However, an ETF can help you out here. VBR and VIOV are good options.
https://www.rakuten-sec.co.jp/web/info/ ... 10-01.html

I think 10% Low-Cap value would make sense. I am considering VIOV myself.

[FIRE-Rookie]

Cheap high "high value" stocks often come with risk. See -> https://www.investopedia.com/terms/v/va ... e%20period.

There is an argument for purchasing Value companies, but usually small-cap value is what is shown to outpreform. Very difficult to pick a winner.

However, an ETF can help you out here. VBR and VIOV are good options.
https://www.rakuten-sec.co.jp/web/info/ ... 10-01.html

I think 10% Low-Cap value would make sense. I am considering VIOV myself.

morningstar-style-box.png

Awesome, thanks again and again, this little piece of info on "Value Trap" made me research 3 days in a row on how to avoid them.
I got a better idea but of course, some information out there are hard to decipher for a rookie like myself.

On the good end, I just got approved for NISA yesterday (Yabba-Dabba-Doo!)

I will consider the following the current portfolio as such:
1- Index Fund (65%) - (EMaxis) -- All NISA
2- ETFs (35%) -- Out of NISA

I will get all the NISA covered by Monday and wait a bit on ETFs will December because I am worried the market prices might change again.

[sutebayashi]

wait a bit on ETFs will December because I am worried the market prices might change again.

I recently found myself thinking similar thoughts after gaining control of some pension money, and googled about investing all at once, or spreading it out over time.

According to this (and other things I read), it's better to just invest all at once at be in the market 100%:
https://investor.vanguard.com/investing ... t-lump-sum

Interesting, as previously I'd always thought it better to invest gradually over time dollar-cost averaging style. (I guess that's the case when one is investing over time.)

That said, I decided to split my investment over 3 installments in 3 months, even though the research says I'd probably be better to just invest it all straight away. I plan to try invest the 3rd installment after the dust of the US election has blown up (before it has settled!)

[FIRE-Rookie]

even though the research says I'd probably be better to just invest it all straight away. I plan to try invest the 3rd installment after the dust of the US election has blown up (before it has settled!)

That plus Corona 2nd or 81246128461th wave predictions are probably why I am worried.
Too much emotions in play for a Rookie!!

[RetireJapan]

The question of whether to invest a lump sum all at once or to split it up over time comes up over and over again.

The answer seems to be mathematically it makes sense to invest it all at once, but psychologically many people find it easier (and less chance of regret) to put it in gradually.

Personally, I would probably split a lump sum into at least 2-3 installments.

[FIRE-Rookie]

Personally, I would probably split a lump sum into at least 2-3 installments.

Roger that, probably that will be my strategy for 2021 but for now, I have a quick question for you. I am trying to buy 400K worth of EMaxis (All Country) in Tsumite NISA for this year as I don't want miss out.

Rakuten is rejecting me saying that I can invest 33,333 yen a month only so if I do a monthly rolling payment then that sums up to 66,666 yen till end of this year. Which means, I will be missing out on 333,334 yen. Is that true or there is something I am messing up with the purchase order?