LukeTek wrote: âSun Dec 13, 2020 12:54 am
[*]you have limited choice about which underlying asset you can invest with
Nisa generally allows to invest in large variety of stock, etfs and funds (limit is the online broker). As a European the only where I have regret sometimes is the lack of European funds in Japan. The question is what do you need? Stocks? Options? Etfs? If I am wrong, the better, but when I was approached by those financial advisors, the investment products offered where active managed funds with high management fees (in those insurance wrappers). And out of these funds they may invest for you in more risk or less risk approach. I would be very surprised if they offer an "investment experience" like Interactive Broker or even a Japanese Online Broker. But I may be wrong on that.
LukeTek wrote: âSun Dec 13, 2020 12:54 am
[*]you are (very) limited in how much you can invest in them
But it is the only mechanism that exists that allows an investment that is tax free, why not use that first? If they say that those offshore investments are tax free - yes they are offshore, but that doesn't mean that they don't create a tax in Japan.
The funds usually offered, are managed in a wrapper (like Ideco) and you can change allocation on you monthly contribution, or switch existing funds. This would definitely be a taxable event (selling and buying) as soon as you are taxed on your foreign investments in Japan.
LukeTek wrote: âSun Dec 13, 2020 12:54 am
[*]the tax benefits are not going to last enough, meaning that you are limited to those 5/20 years for NISA. Which makes it kind of difficult to make long term investing plan, right?
There is no mechanism outside Idec/Nisa that has Tax benefits, so better to use that first. 20 years (Tsumitate Nisa) and until pension (Ideco) is pretty long term or not? Ideco (or the corresponding company plan) gives you a tax saving on the year you invest! And the saving on Nisa and Ideco until pension can be pretty huge (if you stick to a long term passive index fund strategy that is prevailing in this forum - of course that is not all the wisdom in long term investment).
It will be easier to compare once you know what their idea of long term investment is.
LukeTek wrote: âSun Dec 13, 2020 12:54 am
[*]I am 29 and even though I plan to stay here indefinitely I cannot be sure about it, therefore I have to prepare for the occasion I'll have to leave the country. AFAIK that would be an issue if I am in the middle of investing in NISA/iDeco
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That is indeed an issue - and if you leave permanently Japan selling and buying again on your new location will be a pain. As a good thing, Nisa and Ideco have no surrender fees. You can stop them any time. Surrender fees should be a question you should ask. At least the investment products I was offered had such large fees, that in case you wanted to stop and cash out, you would have had huge losses. This is not the case with Nisa and Ideco (the argument they will bring then, is that you can pause the product instead of stopping it).
LukeTek wrote: âSun Dec 13, 2020 12:54 am
this being said, of course I could invest in NISA/iDeco and also have some other kind of investment, but my point is: because all the above limitations, isn't it better to invest in a single plan that would last till my pension?
Those limitations are questionable, as there is just no better option, and you don't know the limitations of their solution yet. Also from a pure risk management perspective. You really want to put everything into an investment plan, that is managed in an offshore account in so called tax-heaven countries, with lose regulations, and who is more and more under attack from other countries due their dubious role in tax avoidance? Is this really better than investing first in whatever local pension saving is offered? I would at least no put everything on the same horse.
Again, this is my personal experience, and this may be different from you. But when I was invited but two of such companies, it felt cool. I got invited into their chic offices, like you in the first meeting they didn't went into details, but just took the status quo. Then I got the product with three or for possible payment plans over the next 25 years. Off-Shore investment in those tax heaven countries - that sounded great - I had to be important if they offered something like that to me. Fortunately I took the time to understand and read the brochure and especially the fees. The fees were so complicated, that not even the advisor understand it (or pretended to have known it). Some pushing confirmed to me in the end that I was correct. Internet research also found similar warnings and also stories that the companies offering those products (not the advisors in Japan) are actively looking for deleting negative feedback in the internet on their products. At that time I didn't even know the difference between passive and active managed funds, and I had no clue what the influence of 2-3% fund fee etc has on long term investment. In the end I declined, but I am pretty confident that this was the right decision.
Maybe there are people for whom such an offshore investment may be the right thing, but for the average salaryman (including foreigner) with the typical salary something like "unless you are a Japanese that speaks Japanese only, there are far better options than NISA/iDeco to invest with" is just not true. Ideco and Nisa are the best options to start with. If the costs in selling and buying again when moving out of Japan are a fear (like it is for me), you can start investing in an international broker like interactive brokers (that is what I do). This has its own hurdles and limitations (and some may disagree on that), but it gives me the peace of mind I want for the long term.
There has been a lot of comments and advise (also from me
), but in the end, as long as it is unclear what the exact product is, those comments may be moot. I think you got a feeling on what to ask next time and you will get a better feeling what it is. Hopefully we get an update then from you