RetireJapan

Hey folks, I've been lurking for a bit and I have some fundamentals on how this whole investments/economy thing works in general, but I feel like I'm totally lost when it comes to the actual practical side of things. I've been in Japan for a bit over a year and I'm planning to stay here for good so these are probably long term plans with regards to personal finance and investment. I'd love if you all could give your opinions about them.

About me, I'm a 30 year old guy (not american, so there's no issue with US taxes) with a decently paying job (both salary and stock, stock is in US market).

I know I've never really invested when I should have, so I'm a bit behind on the curve and I'm slapping myself for it, I'm aware a lot of my money is allocated in a not very profitable/useful manner (which is why I'm here).

My current savings are something like this (generic figures, don't want to go into too many specifics):

• Personal savings in EU bank account, around ~40K EUR

• Personal savings in JP bank account, around 8-9mil JPY

• Crypto: around ~30k EUR between a few currencies

• Company stock: something around 100-200k USD (+ unvested stock too)

Pension and iDeco contributions are already being maxed by my employer, so those are not a worry.

So here's my considerations:

1) NISA vs tsumitate NISA.

I've read this https://www.retirejapan.com/blog/on-tsumitate-nisa/ and I was considering tsumitate NISA, but then it was brought to my attention that normal 5-year NISA has a tax-free rollover option (if I decide to roll over) which sounds very interesting to me as it would let me to re-invest (assuming the investments are going well) more than 1.2mil JPY/yr tax-free after 5 years are up. I have no issues maxing out the 1.2mil JPY/yr requirements for the first 5 years, and then it would basically just be feeding itself.
Would this be a good plan?
Should I rather invest 400,000JPY in tsumitate NISA and leave the 600,000JPY difference for smarter allocations (see point 3-4 below) instead?

2) What platforms to use?

I've seen https://www.monex.co.jp/ being recommended around here, but I'm a bit confused on how it works exactly. Does it let me handle stuff like NISA/tsuNISA + ETF/Bonds + individual stock trading (see next point) all in a single platform?
If I wanted to start investing/trading individual stocks, would I need to use another platform too?

3) Individual stock/fun trading

This is kinda on the wave of the whole GameStop stuff, not really interested in meme stocks or whatnot but I've been considering for a while to set aside some funds (maybe ~$20k to get started) to trade around and have fun without caring too much if I lose them. I know the general risks of doing this so that's not the issue. What I'm concerned with is how it works here in Japan where a lot of the companies are US companies/market. I assume there's local brokers that let you buy and sell stock without having to move your funds outside and then remit them back into the country, right? I already have a US trading account for my company stock but I'd like not to mess with that too much because of potential tax implication (world-wide income + remittance if I need to check out) and I'd like to just deal with local brokers for that, if possible.

4) Current plans / summary / ETF-Bonds

I'd like to do some proper longer term boglehead-style planning.
Ideally, my personal split would be something like this:
- some EU safety funds (in case of emergency), maybe keep 10-20k in EU
- keep company stock* there mostly untouched, I'd like to keepthis as extra emergency funds/stuff to cash out in case I need a meaty downpayment to buy a house/mortgage (it's in consideration in 1-2 years probably, after covid settles)
- local emergency fund (1-2mil JPY?), this would be both my fun budget/everyday expenses/emergency in case I lose my job/something happens/etc
- keep BTC/crypto untouched as is, I don't care about it, just HODL
- get $10~20k (1-2mil JPY?) for fun trading stuff, as mentioned above
- Max my NISA/tsuNISA (whichever I decide)
- Put everything else that is not counted above (I guess something like 7-8mil JPY maybe? I haven't done accurate math) into bonds/ETF and split my wage into it as well every month. My personal allocation plan is probably 70% ETF - 30% Bonds (typical for my age)

* - One note about company stock, so far it's been going really well and it's on a constant rise, that's why I've been keeping it there. It's hassle-free/no tax worry (until I sell/remit) so I don't mind leaving it there as an extra cushion that keeps growing anyway.

So, does this make sense? Which platform would you recommend to get started on ETF/Bonds purchasing? Does monex work, or should I be better off looking for something else? (I heard rakuten would work as well but I'm not sure)

Sorry if it's a lenghty/kinda free form post, but I've been thinking about this for a bit and I really need to get my thoughts a bit more in order so please ask me anything and I can go in more details.

Welcome to the forum! In general it is better to break posts up so you just have one question per post. If you write a PhD thesis with multiple questions it can put people off replying, whereas they might have replied to each of the single question posts

To quickly answer some of your questions:

1. the ordinary NISA accounts will end soon, and be replaced by New NISA. These are broadly similar, but seem to be pushing people towards tsumitate so there is a good chance tsumitate will be the only option when New NISA ends. This doesn't prevent you from using ordinary NISA for now, but it may not be possible to roll over in the future.

2. Monex is generally recommended for iDeCo, because they offer eMaxis Slim all-country. In practice for NISA and taxable the big brokers are pretty similar. I have accounts with Rakuten, Monex, and SBI, and spend the most time on Rakuten.

3. You can trade US stocks with all the big brokers.

4. Looks fine! The most important thing is to invest consistently in sensible things over the long term. You should be pleasantly surprised.

RetireJapan wrote: ↑Thu Jan 28, 2021 12:30 am Welcome to the forum! In general it is better to break posts up so you just have one question per post. If you write a PhD thesis with multiple questions it can put people off replying, whereas they might have replied to each of the single question posts

Yeah, I agree. I guess I just wanted to get it all out in a single post also as a good way for myself to get my bearings a bit, apologies for that.

RetireJapan wrote: ↑Thu Jan 28, 2021 12:30 am 1. the ordinary NISA accounts will end soon, and be replaced by New NISA. These are broadly similar, but seem to be pushing people towards tsumitate so there is a good chance tsumitate will be the only option when New NISA ends. This doesn't prevent you from using ordinary NISA for now, but it may not be possible to roll over in the future.

Hmm, yeah I keep hearing about NISA ending soon (2023 was it?). I guess I'll give it a test run for a couple of years and then transition to tsumitate (or the new plans) if things change.

RetireJapan wrote: ↑Thu Jan 28, 2021 12:30 am 2. Monex is generally recommended for iDeCo, because they offer eMaxis Slim all-country. In practice for NISA and taxable the big brokers are pretty similar. I have accounts with Rakuten, Monex, and SBI, and spend the most time on Rakuten.

Since iDeCo is already being taken care of by my employer, do you think it's worth it to still go on Monex? Or would you recommend Rakuten? I heard from a Japanese friend of mine that SBI is kinda bad/has some annoyances and they are thinking of moving to something else so I'll probably skip them.

RetireJapan wrote: ↑Thu Jan 28, 2021 12:30 am 3. You can trade US stocks with all the big brokers.

Just to be clear, this doesn't count as foreign income/foreign capital gain, right? There's no remittance into foreign accounts (and back) when it comes to tax calculations, it's all taken care of by the broker fees, correct?

And on a more practical question, the recommended "big brokers" would be those mentioned in my previous question (Monex/Rakuten/SBI/etc)?

RetireJapan wrote: ↑Thu Jan 28, 2021 12:30 am 4. Looks fine! The most important thing is to invest consistently in sensible things over the long term. You should be pleasantly surprised.

Awesome, thanks a lot!

Since iDeCo is already being taken care of by my employer, do you think it's worth it to still go on Monex? Or would you recommend Rakuten? I heard from a Japanese friend of mine that SBI is kinda bad/has some annoyances and they are thinking of moving to something else so I'll probably skip them.

Did your friend share any specifics?

SBI is currently the most popular with new Japan investors. Aside from what I think are rather frequent and generous weekend maintenance windows I find the platform very stable.
Probably due to the amounts I've transacted but I found it helpful to have several free furiokomi transactions each month from the linked SBI Net Bank. (which has a really nice interface.).

I think they had some criticism due to the limited multi-party authentication services they offer at the moment. But I understand they are working on those.

Moneymatters wrote: ↑Thu Jan 28, 2021 4:27 am Did your friend share any specifics?

Unfortunately I have no specifics, I didn't dig deeper into what they meant, they just said they weren't happy with the direction the service had gone. Might be UI/features available related though, and not strictly the service itself.

AnkiDude wrote: ↑Wed Jan 27, 2021 11:44 am - Put everything else that is not counted above (I guess something like 7-8mil JPY maybe? I haven't done accurate math) into bonds/ETF and split my wage into it as well every month. My personal allocation plan is probably 70% ETF - 30% Bonds (typical for my age)

70/30 stock/bond split is an old standard. It can expose you to the inherent volatility of stocks and it does not include precious metals and commodities which might be very useful if you believe we are headed for inflation. I’m not sure how a 70/30 incorporates REITs either. Again, it’s not a bad mix but it’s dated and many people flog it with no thought about what their goals are and what their risk tolerance is. It’s easy to say “I’m investing for the long term” but how do you respond when you see a draw down like last spring? Or like what might be coming soon . It might be worth digging around and seeing what folks are using for current portfolios mixes.

Your intention to take action is awesome!

Ax6isB wrote: ↑Thu Jan 28, 2021 8:36 am 70/30 stock/bond split is an old standard. It can expose you to the inherent volatility of stocks and it does not include precious metals and commodities which might be very useful if you believe we are headed for inflation.

That's a good point, but I'm personally not too convinced on precious metals. I'll take a look at the historicals and read up a bit more if it makes sense to integrate them in my portfolio, but I'm not convinced. And inflation-wise, I feel having assets in three currencies (USD, EUR, and JPY) at least in the short term should be enough unless the whole economy collapses or something major happens... and even then, I don't know.

Ax6isB wrote: ↑Thu Jan 28, 2021 8:36 am I’m not sure how a 70/30 incorporates REITs either.

That's a good point, I hadn't considered REITs. I'm not sure about the Japanese market though, but I assume I could buy foreign REITs. But, again, I'll do some more research and look at historicals. I'm not too convinced on this either to be honest.

Ax6isB wrote: ↑Thu Jan 28, 2021 8:36 am Again, it’s not a bad mix but it’s dated and many people flog it with no thought about what their goals are and what their risk tolerance is. It’s easy to say “I’m investing for the long term” but how do you respond when you see a draw down like last spring? Or like what might be coming soon . It might be worth digging around and seeing what folks are using for current portfolios mixes.

Oh, yeah, that's fair, but I'm not really phased. Actually I'm still slapping myself in the head for not getting into it last spring with the downfall of the market. I don't see the problem, the lower the market, the more bang I get for my buck I'm still young and I'm not going to be retiring anytime soon, I probably have another 30-35 years until I'll have to transition into a less volatile/more stable allocation, and between here and there there's going to be a lot of ups and downs anyway. If I survived a couple of bitcoin crashes without issues I think I can deal with a few years of downswings here and there.

In general I wouldn't say I like risk, I'm quite risk adverse to be completely honest, but also I don't *care* about money as much so I don't really feel that phased when stuff goes down. Obviously, it's easier said than done but... yeah I do appreciate the advice though.

Not gonna look it up, but the S&P500 is 2.5-3.0% REITs, and some kind of total index fund which holds a lot of stocks outside the S&P500 will include a much larger percentage (since they're small caps...). The russell 2000 (IWM) is over 20% financials, and I think a reasonable portion of that will be one or another flavor of REIT.

And AnkiDude, if you have 30-35 years, my suggestion would be to skip bonds altogether. Maybe when you're 55 or so?

Ax6isB wrote: ↑Thu Jan 28, 2021 8:36 am It’s easy to say “I’m investing for the long term” but how do you respond when you see a draw down like last spring?

Ignore it completely. Or buy more as the market goes down. It was an interesting stress test for investors, someone's reaction to that would give them useful information about themselves.

captainspoke wrote: ↑Thu Jan 28, 2021 10:00 am And AnkiDude, if you have 30-35 years, my suggestion would be to skip bonds altogether. Maybe when you're 55 or so?

I'm not sure, I don't think this fits well in my risk planning, probably. I'll give it a bit more thoughts though.