RetireJapan

Hello all,

Let me start by saying I am a complete newb. Thanks to a lot of good information on this site, I have set up my iDeCo and NISA and am getting to grips with the basics.

I am mid 30's, so aiming for long term, low risk investment.

I am thinking a small percent of bond index funds and a the remainder in eMAXIS Slims like S&P500 and オール・カントリー.

With that being said, in Millionaire Teacher it recommends that an investor should always hold an index in their home country. For Japan this could be a TOPIX index?

...but I have seen very little talk of people getting Japan index funds. Is there any upside or reason to get involved with the seemingly worse performing Japanese domestic index funds?!

All-country includes Japan, so you only need to add a separate Japan fund if you want to overweight Japan (ie you expect Japan to outperform other countries).

If you have:
- salary in yen
- bank savings in yen
- emergency cash fund in yen
- Japanese pension (kokumin nenkin or kosei nenkin)
it could be argued that this is decent enough exposure to the Japanese economy. The All-Country allocation to Japan should therefore be plenty.
Some of the Japanese financial bloggers actually advise buying the eMaxis Slim global fund without Japan for this reason.

I am thinking about Japanese bonds in the future. At the moment I have a small amount of the developed-country eMaxis Slim bond fund, but at 55 or 60 or so I will think again about fixed income/bonds and domestic vs overseas.

beanhead wrote: ↑Sat Aug 28, 2021 5:05 am
I am thinking about Japanese bonds in the future. At the moment I have a small amount of the developed-country eMaxis Slim bond fund, but at 55 or 60 or so I will think again about fixed income/bonds and domestic vs overseas.

Why Japanese bonds specifically? The rates are pretty horrible.

I also have a developed-country eMaxis Slim bond fund allocation as well (4%), and plan to pair it with a hedged international bond fund when I approach middle-age.

Thank you RetireJapan. I see.

I do have those things in yen, beanhead. Thanks for the information & perspective.


I am also thinking of ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス for my bond allocation. I would also be interested in the possible reasons for getting Japanese bond funds, I had a look and they seemed pretty bad.

It's easy to focus on yields and overlook the reason why you buy bonds in the first place. I'm probably in the minority here, but I think that the bonds part of your portfolio is exactly where you shouldn't be taking risks. If you're buying bonds for stability, then I think at least some of that allocation should be in Japanese bonds. My bonds are about 50/50.

Yields on Japanese bonds are far from attractive, but that's becoming a worldwide thing. Actually, the EmaxisSlim fund recommended in this thread is about 40% Euro bonds. Yields there are as bad as in Japan.

fools_gold wrote: ↑Sat Aug 28, 2021 9:25 am It's easy to focus on yields and overlook the reason why you buy bonds in the first place. I'm probably in the minority here, but I think that the bonds part of your portfolio is exactly where you shouldn't be taking risks. If you're buying bonds for stability, then I think at least some of that allocation should be in Japanese bonds. My bonds are about 50/50.

Yields on Japanese bonds are far from attractive, but that's becoming a worldwide thing. Actually, the EmaxisSlim fund recommended in this thread is about 40% Euro bonds. Yields there are as bad as in Japan.

Another advantage of Japanese bonds is no currency risk (or no hedging expense).

RetireJapan wrote: ↑Sat Aug 28, 2021 10:41 am

fools_gold wrote: ↑Sat Aug 28, 2021 9:25 am It's easy to focus on yields and overlook the reason why you buy bonds in the first place. I'm probably in the minority here, but I think that the bonds part of your portfolio is exactly where you shouldn't be taking risks. If you're buying bonds for stability, then I think at least some of that allocation should be in Japanese bonds. My bonds are about 50/50.

Yields on Japanese bonds are far from attractive, but that's becoming a worldwide thing. Actually, the EmaxisSlim fund recommended in this thread is about 40% Euro bonds. Yields there are as bad as in Japan.

Another advantage of Japanese bonds is no currency risk (or no hedging expense).

If that was your concern, wouldn`t time deposits be a better option?

https://bankdeposit-sfp.com/interest/

I am not sure why J-bonds would be a better choice. I would still prefer Treasuries, Unhedged fund [Currency risk], Hedged-fund or time deposits [No -currency risk]. But I fear I am missing something.

Japanese bond yields are at like 0.05% right now. You'd actually do much better getting Rakuten Bank and linking it to Rakuten Securities and getting the 0.1% interest rates they're giving out. Your money is way more liquid with a better interest rate.