moustachianism...

[tense-eye-man]

I see the mrmoneymoustache blog is on the retirejapan further reading page, I've been reading a lot of that over the last couple of months (it's very entertaining) and it fits pretty well with our lifestyle as a family already (we've always been pretty frugal - just the one kei car, buying second hand where possible, and we've already paid off the mortgage) so we are discussing ramping up our frugal muscles and saving hard to achieve some level of FI - within the next 7-10 years (depending on how well the frugality goes, and how our income-expansion efforts go: apparently the key figure is % saving rate: http://www.mrmoneymustache.com/2012/01/ ... etirement/). )

A significant motivation is that although I've been doing my current work (hijoukin lecturer) for over 10 years so there is an amount of stablilty, I don't really have any proper job security (it's just year-to-year contracts) so achieving even part-way FI would be a nice insurance policy against any unexpected drop in my employment rate.

Anyone any thoughts on how best to achieve this in a Japan context?

I'm 43 now and the wife is 40, so thinking about it IDECO might not be the best choice since you can't access it until 60. Tho alternatively since there is a limit to how much you can pay in (23,000 for the wife, 68,000 for me), perhaps it's worth doing anyway....

NISA and then either robo-advisors (THEO?) or else doing my own investing (haven't read MIllionaire Teacher yet, will be ordering soon) seem like the way forward, but I really know nothing about personal finance (to say I don't have much of a head for figures would be about right, but I'm working on it, trying to draw lots of diagrams since visual representations I can kind of follow) so as a total newbie I welcome anyone's thoughts.

thanks!

[Dan]

iDeCo is definitely worth it for the tax benefit.

Investing through a robo advisor effectively means adding an extra - unnecessary, in my eyes - fee layer. In addition to that, it will pay to keep exchange rate risks in mind when using Japanese robo advisors. I would recommend educating yourself about investing and then primarily doing it by yourself.

[Akatani]

First step imo is start reading millionaire teacher. That one is quite good. The second book wasn't useful imo.
Start the ideco process with SBI or Rakuten. It takes months to set up so sooner is better. Start the NISA process with SBI or Rakuten.

After you finish reading millionaire teacher, identify what your general portfolio will look like. ie stocks vs bonds (if any) percentage. Then in stocks figure out the percentages you want of each region. ie if you get kokusai, you'll get world coverage except for Japan. So then you might want to pick up a Japan index fund. Then decide whether mutual funds or etf's work better for you.
Read through the threads on here, and ask questions (to the people smarter than me!)

[RetireJapan]

Agree with everything so far. iDeCo is worth it because of the income tax savings. If you will be here until 60 anyway it is a no-brainer.

If your wife pays income tax she can also use iDeCo efficiently. If not the argument is not as compelling.

After that simple investing with NISA accounts is a great option. You can open an account for each family member and potentially invest quite a lot of money tax free.

Robos are nice but as mentioned probably too expensive. If you are not willing to do some homework and invest for yourself they are a decent plan B though (better than nothing).

Post questions here at each stage, and we'll help you through. The key is to get started, and continue down the personal finance road until you reach your destination

[tense-eye-man]

thanks so much for the replies, and the encouragement, I confess I'm feeling a bit at sea and out of my depth with all this talk of personal finance and investing. It doesn't really help that I've never had much affinity for numbers, my wife was running me through some calculations she made and I could hear the words she was saying but they were losing meaning, had to ask for more diagrams!

Speaking of which, she seemed to have calculated that because of the amount of tax we pay it's not worth paying the full amount into ideco because we'd be getting (if I understood correctly) more of a tax break than we can use (which didn't seem possible, we must pay more tax than that, but that's what she was saying). I can get some figures for that later this evening.

I understand the point about robo-advisors, they'd be an easy plan B but they don't solve anything a bit of study and learning wouldn't also solve. And I'd be investing in something I don't really understand, never a good thing. So I really need to knuckle down and try to understand this stuff, got some library books coming (in Japanese so both i and my wife can read then discuss) and I will also order Million Dollar Teacher.

And I will doubtless be back with questions! As you say, the key thing is to get started.....

(also, thanks for the tip that ideco and nisa take months to set up, we'll get to ordering the sign up kits even as we continue our research)

much gratitude, どうも、どうも、ありがとうございました[礼]

[RetireJapan]

Speaking of which, she seemed to have calculated that because of the amount of tax we pay it's not worth paying the full amount into ideco because we'd be getting (if I understood correctly) more of a tax break than we can use (which didn't seem possible, we must pay more tax than that, but that's what she was saying). I can get some figures for that later this evening.

I'm not sure that makes sense. The money that you pay into iDeCo reduces your taxable income. It's not a tax break per se. You can do a simulation of how much that will reduce your income taxes here: http://dc-center.jp/checker/

However, that is only half the benefit of iDeCo. The other half is that you don't pay any tax on your investments as they compound over the years, and get a generous tax-free allowance when you eventually cash out.

Do post back though if I am misunderstanding things! We can figure it out together

[tense-eye-man]

We think we understand what you're saying - the money I pay into ideco is subtracted from my income BEFORE tax is calculated - me and wonderwife have had a look at my 源泉徴収票　and p59 of the takegawa book and seem to now be satisfied... (tho when I ran the simulation you linked to it gave a much higher figure, we think that must be because there was no place in the simulation to input the various subtractions (生命保険、故郷納税などなど）.

So we're getting a better understanding, slowly, thanks for the help, I'm sure I'll be back with more questions....