Simple Q&A - Stock market investing

[RetireJapan]

QQ: I see a lot of US investors talking about different tax rates for "short term" and "long term" investments, is that a thing here? I.e. consider the two following examples:

1. Buy $AMZN at $3500 today, sell tomorrow at $4000.
2. Buy $AMZN at $3500 today, sell in 1 year at $4000.

Are these taxed differently? I take it in the US it's to disincentivise day trading by applying a higher tax bracket on gains, but I haven't seen anything in JP. Have I missed something?

Capital gains on stocks are always taxed at the same rate in Japan (except in NISA/iDeCo): 20.315%

Real estate in Japan has different rates for short and long-term gains though.

[Tkydon]

Capital gains on stocks are always taxed at the same rate in Japan (except in NISA/iDeCo): 20.315%

If they stocks/mutual funds/etc. are held in a Tokutei account with a Broker in Japan, the Broker will withhold Capital Gains Tax at 20.315%.
If the total Taxable Income (Other than Employment Income or Pension) is less than Y200,000 in the year, then a Kakutei Shinkoku is not necessary. The Tax has already been paid.
If the total Taxable Income (Other than Employment Income or Pension) is greater than Y200,000 in the year, then a Kakutei Shinkoku IS necessary. The paid tax can be claimed as an allowance, BUT the filer will have to make the choice between the Aggregate Taxation Method at the filer's Marginal Tax, or the Separate Taxation Method at 20.315%. This is not automatic.

If Capital Gains Tax at 20.315% is NOT withheld at source, then a Kakutei Shinkoku IS necessary. The filer will have to make the choice between the Aggregate Taxation Method at the filer's Marginal Tax, or the Separate Taxation Method at 20.315%. This is not automatic.

[Mirei]

Hi guys, looking for an advice for investing outside of NISA & iDeco, particularly on Tokutei account.

Currently my setup is as follows. Though all these are still in procedures and not effective yet.
Tsumitate NISA : 100% eMAXIS Slim 全世界株式
iDeco : 90% Global (ex.Japan) + 10% Japan

Would it be a good idea to put monthly spare funds into even more 100% eMAXIS Slim 全世界株式?
Or would it be better to put it into different places... 100% Vanguard Global, or perhaps a completely different eMaxis market such as Developed Countries?
May I kindly ask your recommendations and why?

Thank you in advance!

[zeroshiki]

I personally tend to set aside some money for "fun" investments where it might not be the most efficient, its a little bit of betting on sectors of the market. I have money in S&P500, NASDAQ and even some themed eMaxis Neo funds and a China fund that tanked massively.

Basically, do the safe thing for the investments that you expect to hold for a long time like T-NISA and iDeCo and replicate that for the taxable ones but don't feel like you shouldn't try out other funds that you find interesting. It might not be the most efficient or safe but sometimes you got to scratch that itch (spoiler: more often that not you lose that bet)

[RetireJapan]

Hi guys, looking for an advice for investing outside of NISA & iDeco, particularly on Tokutei account.

Currently my setup is as follows. Though all these are still in procedures and not effective yet.
Tsumitate NISA : 100% eMAXIS Slim 全世界株式
iDeco : 90% Global (ex.Japan) + 10% Japan

Would it be a good idea to put monthly spare funds into even more 100% eMAXIS Slim 全世界株式?
Or would it be better to put it into different places... 100% Vanguard Global, or perhaps a completely different eMaxis market such as Developed Countries?
May I kindly ask your recommendations and why?

Thank you in advance!

If you are happy with your current portfolio, I don't see any problem with buying more eMaxis Slim all-country in your taxable account. That is my approach -buy the whole world, don't really make any judgements as to which countries will do better but own all of them.

Personally I like dividend stocks so I put some of my portfolio into that. But most of it is in global index funds.

[EmaxisSlim Cultist]

Hi guys, looking for an advice for investing outside of NISA & iDeco, particularly on Tokutei account.

Currently my setup is as follows. Though all these are still in procedures and not effective yet.
Tsumitate NISA : 100% eMAXIS Slim 全世界株式
iDeco : 90% Global (ex.Japan) + 10% Japan

Would it be a good idea to put monthly spare funds into even more 100% eMAXIS Slim 全世界株式?
Or would it be better to put it into different places... 100% Vanguard Global, or perhaps a completely different eMaxis market such as Developed Countries?
May I kindly ask your recommendations and why?

Thank you in advance!

If you are happy with your current portfolio, I don't see any problem with buying more eMaxis Slim all-country in your taxable account. That is my approach -buy the whole world, don't really make any judgements as to which countries will do better but own all of them.

Personally I like dividend stocks so I put some of my portfolio into that. But most of it is in global index funds.

Global Equities are always a good bet. The rule of thumb, of sticking with diversified, low-cost funds is always a good one.

The Vanguard fund will cost you a few more bips, but it comes with exposure to 5000 more stocks, including more small-cap exposure. More Emaxis is also a good call.

You could consider

1. REIT allocation (The allocation in a Global equity fund is only 2-3%)
2. If you are over 50, you may want to look at bond funds.

......

On the note of "fun money", I am not a fan of picking individual stocks, as the data is very clear that is a bad idea.

Instead, I focused on leveraged index funds and risk parity. Basically, taking a passive strategy, and adding a bit of juice.

[Mirei]

Thanks everyone! I think I will try to play it simple for now as a newbie and do more All Country. I'll definitely try more diversification someday.

A bit of follow up questions if you don't mind.

1. I believe I read somewhere about this particular option on "how to pay out the gains(?)" 分配金支払方法,
   and the general consensus is to reinvest 再投資する instead of credit it out 再投資しない（お預り金入金）.
   May I just confirm about it (better to reinvest), and what are the differences in the end anyway?
2. I also see this option under purchase amount before purchasing. 受渡金額指定 & 約定金額指定
   The 1st option is available for both NISA & Tokutei accounts, as the 2nd is only available for NISA.
   Although I could understand the literal explanation, I couldn't really comprehend what they do in the end.
   Could anyone please kindly elaborate what they actually do?

   Code: Select all

   購入金額	10000円	【購入単位】:10,000円以上1円単位
    受渡金額指定
   ※ご指定の購入金額の中からお申込手数料（税込）をいただきます
    約定金額指定
   ※ご指定の購入金額とは別に、お申込手数料と手数料に係る消費税等相当額をお支払いいただきます
   ※NISA口座の場合のみ指定ができます

[adamu]

I believe I read somewhere about this particular option on "how to pay out the gains(?)" 分配金支払方法,
and the general consensus is to reinvest 再投資する instead of credit it out 再投資しない（お預り金入金）.
May I just confirm about it (better to reinvest), and what are the differences in the end anyway?

Someone literally asked about this yesterday if you have a search through recent posts. For All country, there is no dividend, so it's an irrelevant choice. Which to choose for funds that pay a dividend is a personal choice, I think. Do you want dividends to grow more of the same investments, or do you want to collect dividends and do something else with them?

I also see this option under purchase amount before purchasing. 受渡金額指定 & 約定金額指定
The 1st option is available for both NISA & Tokutei accounts, as the 2nd is only available for NISA.
Although I could understand the literal explanation, I couldn't really comprehend what they do in the end.
Could anyone please kindly elaborate what they actually do?

Code: Select all

購入金額	10000円	【購入単位】:10,000円以上1円単位
 受渡金額指定
※ご指定の購入金額の中からお申込手数料（税込）をいただきます
 約定金額指定
※ご指定の購入金額とは別に、お申込手数料と手数料に係る消費税等相当額をお支払いいただきます
※NISA口座の場合のみ指定ができます

Sorry I don't really fully understand your 2nd question either. But if you are buying All Country, there is probably no fee, so it might not matter. I *think* it means (but don't quote me):

受渡金額指定 -> you specify the amount, they deduct the fee, and the remainder is invested
約定金額指定 -> you specify the amount to be invested, and they add the fee (and tax) on top of that amount, and then deduct the full amount

[zeroshiki]

Of the 3 big securities companies we always recommend here, none of them charge fees for purchasing mutual funds so this should be moot. eMaxis Slim also doesn't have any fees to purchase.

[Moneymatters]

Investment account outside Japan not subject to tax withholding.

In period Jan-Dec 2021 I'll get equivilant of 40,000yen in dividend payments.

I hold stock in the same account, that have fallen in value since purchase by 40,000yen.

If I sell that stock to realize the loss I will have made no money, profit, income or gains in this account for 2021.

Question:
If this is a net zero event.
Do I need to report the above transactions in my kakuteishinkoku? (I'm obligated to file each year.).