Simple Q&A - Stock market investing

[captainspoke]

Another factor is that a little over 40% of sales of the companies in the S&P500 are international. So to some degree, it's an international fund.

(not sure about the nasdaq100, google isn't giving me quick answers)

[Ax6isB]

great read thank you.
Since I will be starting my iDeco account soon, and than invest monthly, I think for now, the lump sum is best kept in my bank. The market is high. But than again, looking at the S&P 500 throughout the times, it has only been going up, with a few downs..

So I could wait for a dip, and make a bit more money, or just start now, and still in the long run make money....

Hummmmm....

Waiting for a dip isn't usually a good idea. The market could go up a lot more before it correct. On the other hand it could drop like a stone tomorrow. We just don't know.

Worth noting that you are highlighting “the market”. The overall market, not FANG or Tesla or energy stocks or some other stock here. Your’s and Kanto’s comments have that very subtle but very important delineation of “the market” marches one.

It’s good advice and I suppose I should initiate a position in ITOT or something similar.

[Viralriver]

Saw a comment on facebook that us expats will be taxed twice on earnings in our investment accounts (once by JP and once by our home country). How 'true' is this comment?

[RetireJapan]

Saw a comment on facebook that us expats will be taxed twice on earnings in our investment accounts (once by JP and once by our home country). How 'true' is this comment?

Mostly not true, probably. Only country that taxes non-resident citizens is the US. For anyone else, a Japanese broker account will only be taxable in Japan.

If you are investing through a foreign broker the country it is domiciled in may tax you? Possibly?

[dangocurry]

just a quick question which came to my mind!

If a non-US person buys US domiciled funds and stocks while residing in Japan through an international broker, he/she only gets taxed on the dividends that his portfolio has(which is done by withholding taxes from US). Unless and until there's an event of sale, he/she would not be taxed by Japan, right?

I read that it is kind off mandatory to pay dividends in US on holdings, but if someone chooses reinvesting them, and just keeps buying, he will be taxed by US only, right? until he sells them and if his country of residence is different from US at that point.

[RetireJapan]

If a non-US person buys US domiciled funds and stocks while residing in Japan through an international broker, he/she only gets taxed on the dividends that his portfolio has(which is done by withholding taxes from US). Unless and until there's an event of sale, he/she would not be taxed by Japan, right?

They would also have to declare the dividends in Japan and pay tax on them (assuming they were permanently tax resident -ie have been living here for five years).

[dangocurry]

If a non-US person buys US domiciled funds and stocks while residing in Japan through an international broker, he/she only gets taxed on the dividends that his portfolio has(which is done by withholding taxes from US). Unless and until there's an event of sale, he/she would not be taxed by Japan, right?

They would also have to declare the dividends in Japan and pay tax on them (assuming they were permanently tax resident -ie have been living here for five years).

I see, so only if they have lived in japan for 5 years, then they have to declare the dividends, other wise not.

[captainspoke]

Saw a comment on facebook that us expats will be taxed twice on earnings in our investment accounts (once by JP and once by our home country). How 'true' is this comment?

ah..., the facepalm echo chamber.

–> Are you US?

One aspect is that it depends on how much you're making in your investment account, another is whether your income is fully covered by the FEIE (or you're making more than that).

Personally, I generally never paid tax in the US on investment income when using the FEIE. Sure, you have to file, but it was just paperwork. Tho I reported and was taxed on US investment income by japan, on the US side it was kind of like having an IRA (tax free, and without the IRA strings attached).

Then I retired and switched to the FTC. That, combined with turmp's tax law changes, along with having taken some gains in 2019, meant that I paid some US tax for that tax year (paid in 2020, and I've just claimed that on my 2020 tax filing here).

Some high earners here (US expats with income exceeding the FEIE), and those with significant investment income will end up paying in both countries--tho to some extent the tax bill in one place can be used to offset the bill in the other.

**

I read occasional comments to the effect of, "Oh, you poor americans and your funky tax obligations."

Personally, I wouldn't have it any other way--the advantages of having a US investment account are many. And it's one of the reasons that I have not considered naturalizing. At the 'cost' of filing a US tax return, I get access to the world's best/broadest market, great service, free trades, a card that is usable worldwide with zero ATM fees and spot f/x rates, and much more.

[Kanto]

I read occasional comments to the effect of, "Oh, you poor americans and your funky tax obligations."

Personally, I wouldn't have it any other way--the advantages of having a US investment account are many. And it's one of the reasons that I have not considered naturalizing. At the 'cost' of filing a US tax return, I get access to the world's best/broadest market, great service, free trades, a card that is usable worldwide with zero ATM fees and spot f/x rates, and much more.

Do you see these benefits as being unique to Americans? I am curious how things compare.

As a Canadian, I can invest here in Japan and utilize NIsa and iDeco.

I also have a free bank account in Canada and an investment account.

However, there is an automatic 25% tax on capital gains for non-residents. But, I do not need to file a Canadian tax return.

[captainspoke]

Besides US, I'm sure there are other angles and perspectives, that comment comes from a US person's (narrow!) POV.

US people are taxed on canadian stocks (eg, banks, ENB). I held ENB for a while, first div was taxed at 25%, was then able to submit a form stating I was a US filer, it dropped to 10%.