RetireJapan

I was wondering if anyone can share common misconceptions they have heard, or perhaps formally have had themselves, when it comes to investing in Japan.

The ones I normally see are:

1. People choosing TSE ETFs over Japanese mutual funds. (MF can be more tax-efficient due to dividend reinvestment).

2. Similar to 1, people avoid REITs due to fears of taxation. (which can be avoided with a MF).

3. Not using Nisa/ideco or using expensive app. based brokers.

Investing is dangerous and just saving cash is the way to go.

Investing in Japan is so difficult I need to let some guy in a suit with a script and a PDF steal most of my money.

Funds that pay out monthly are the best way to generate income.

I'll just work until I die.

Nenkin is a scam and no one will receive a pension.

RetireJapan wrote: ↑Mon Sep 20, 2021 2:12 pm

I'll just work until I die.

That is the position of the government according to the Asahi Shimbun

The central government has reiterated that Japan needs to have a “society where people stay active and never retire,” encouraging senior citizens to continue working.

Beaglehound wrote: ↑Mon Sep 20, 2021 2:38 pm

RetireJapan wrote: ↑Mon Sep 20, 2021 2:12 pm

I'll just work until I die.

That is the position of the government according to the Asahi Shimbun

The central government has reiterated that Japan needs to have a “society where people stay active and never retire,” encouraging senior citizens to continue working.

Which is an admission that they are unable to make significant enough changes to encourage more women to work after marriage and therefore to have more children.
Sad...

EmaxisSlim Cultist wrote: ↑Mon Sep 20, 2021 1:46 pm I was wondering if anyone can share common misconceptions they have heard, or perhaps formally have had themselves, when it comes to investing in Japan.

The ones I normally see are:

1. People choosing TSE ETFs over Japanese mutual funds. (MF can be more tax-efficient due to dividend reinvestment).

2. Similar to 1, people avoid REITs due to fears of taxation. (which can be avoided with a MF).

3. Not using Nisa/ideco or using expensive app. based brokers.

With foreigners living in Japan I think most of the misconceptions seem to come about from thinking that what is written in American investment blogs and forums can just be applied to Japan. The broad ideas are the same, but the details can be different. Hence 1 and 2.

For many Japanese people investing in the stock market is seen as risky, and the people who do invest often chase returns and dividends.

A few months ago my wife's friend asked us about how to invest, so we told her all about iDeco, NISA, and index funds. In the end they opened a J-NISA for their son. The husband started iDeCo (presumably to invest in the fixed return options), but didn't open a NISA because investing in stocks is "dangerous". The wife, on the other hand, decided not to buy index funds because her other friends are into day-trading and persuaded her to buy individual stocks instead.

fools_gold wrote: ↑Tue Sep 21, 2021 5:19 am The wife, on the other hand, decided not to buy index funds because her other friends are into day-trading and persuaded her to buy individual stocks instead.

Yikes!

That reminds me...chasing shareholder benefits.

With the possible exception of one or two situations, (I heard Aeon`s 3% can be worth it if it`s your local supermarket), it is a terrible reason to invest.

EmaxisSlim Cultist wrote: ↑Tue Sep 21, 2021 6:14 am

fools_gold wrote: ↑Tue Sep 21, 2021 5:19 am The wife, on the other hand, decided not to buy index funds because her other friends are into day-trading and persuaded her to buy individual stocks instead.

Yikes!

That reminds me...chasing shareholder benefits.

With the possible exception of one or two situations, (I heard Aeon`s 3% can be worth it if it`s your local supermarket), it is a terrible reason to invest.

That old geezer with the bicycle has a column on Rakuten's news magazine thing. Insane...

fools_gold wrote: ↑Tue Sep 21, 2021 5:19 am With foreigners living in Japan I think most of the misconceptions seem to come about from thinking that what is written in American investment blogs and forums can just be applied to Japan.

But can't they? I hear a lot about just investing into S&P and I think that's fantastic advice. (Well I kinda came from r/bogleheads)

MajesticSoup wrote: ↑Fri Oct 01, 2021 10:34 pm But can't they? I hear a lot about just investing into S&P and I think that's fantastic advice. (Well I kinda came from r/bogleheads)

That's right but the details can be different. For example, Vanguard ETFs are often recommend ed on blogs and forums, but mutual funds might be a better idea for investors in Japan because they accumulate dividends.

fools_gold wrote: ↑Sat Oct 02, 2021 12:30 am

MajesticSoup wrote: ↑Fri Oct 01, 2021 10:34 pm But can't they? I hear a lot about just investing into S&P and I think that's fantastic advice. (Well I kinda came from r/bogleheads)

That's right but the details can be different. For example, Vanguard ETFs are often recommend ed on blogs and forums, but mutual funds might be a better idea for investors in Japan because they accumulate dividends.

The broad strokes, the philosophy is the same. Not the funds or mechanics.

ETFs are uniquely tax-efficient in America, this is not the case here in Japan. (Though congress is looking into changing this).

REITS are a much better deal in Japan when held in non-distributing funds. Most Bogleheads avoid them for tax reasons.

Munis and I/EE bonds aren`t possible. There are limited fixed-income options here in Japan.

Here is what a Boglehead portfolio might look like here:

A Japanese Boglehead (traditional).
60% Emaxis Slim All Country
40% Emaxis Slim Developed Country bonds

A Japanese Boglehead (Modern/Younger).
100% Emaxis Slim All Country

A Japanese Boglehead (Core/4).
60% Emaxis Slim All Country
30% Emaxis Slim Developed Country bonds
10% Emaxis Slim Developed Country REIT