Suggestions for investments and savings [Newbie]

[goran]

TL;DR
Thank you for the blog, forum and the wiki.
Seeking suggestions to invest 300k JPY/month.
Seeking suggestions to invest JPY 1 million now.

Long version
Background
I came across this site and wonderful blog (and the wiki) about 6 months ago. Firstly, thank you for creating and maintaining this.
Next, I want to dip into the knowledge/opinion pool of diverse expertise in this forum for a few queries that I have regarding my savings/investment strategies and life/future in general.

I and my wife (both non-Japanese, non-US), 32 and 31 years old, have been living in Japan for about 6 years now. No children. Currently, we do not know if we want to retire here, back home or any other third country. We want to keep our options open. We recently found out that we are both eligible to apply for permanent residency. In line with keeping our options open, we plan to apply for that. (Although we might not retire here, it might be a good thing to have)

Right now, all our life savings are tied into real estate and stocks in our home country. It is a developing/underdeveloped country with a growing or fragile economy, depending on which media you follow. The problem with this is that although the growth is quite high (fixed deposit accounts in banks get over 11% interest rate, inflation officially is around 5-6%), legally it is not allowed to take any money out of the country, except for special conditions like college tuition fees. So, after reading numerous posts in this forum about retirement and relating them to my own life, I realized that we are sticking our life savings in a place from where we may not be able to take out if we retire in another country. We have assets of about 2-3 years’ worth income there. So, I think that should be enough, if we eventually do plan to retire in our home country. (Considering the cost of living there is also quite low and we'll also be taking any savings that we have here)

Coming to the point now, we have our expenses tracked for the past 4-5 years. So, with some calculation based on our expense data, we figured out that, on average, we can save/invest around JPY 400k per month. We still plan to continue to send about JPY 100k each month back to our home country, just in case.

Queries
So, that leaves us with JPY 300k every month to invest in something here. After reading through various posts in this forum, earlier this year, we started NISA (JPY 1.2 million per year kind) and started putting around JPY 50k/month each into emaxis Slim All country and emaxis Slim S&P 500 through Rakuten sec.

1. We do not know what to do with the remaining JPY 200k/month. Should we put in more on these two emaxis funds? It doesn’t seem right from a diversification perspective.

2. I have read people commenting about bonds. I am interested in them as well (maybe 20-25% of the amount into bonds) But I am not sure which ones are good, or what are the criteria that I need to look out for when selecting bonds. Any recommendations for any bonds through Rakuten sec.

3. We have about JPY 1-1.5 million in the bank just sitting there right now. (Excluding emergency funds) Considering USD/JPY right now, I don’t think it's wise to go all in with this amount into any international funds/ETF’s. Any recommendation for where to put this JPY 1 million in today’s climate is also highly appreciated.

Some other background information:
Both of us have a DC pension from our employers. We have not opted for any individual contributions to them.
We have not started iDeCo either. Not knowing where we’ll retire has been stopping us from getting into both of these.

Thank you once again to everyone for their dedication and the time they put in to help others out in this forum.
I will chime in with my experiences wherever I can.

[goran]

Also, I apologize if "RetireJapan for Dummies" is not the appropriate board for this kind of post.
Please move it to the suitable board, if this is the case.

[RetireJapan]

Welcome to the forum!

If you open two NISA and two iDeCo accounts you can save almost 300,000 yen a month into tax-advantaged accounts.

[beanhead]

1. We do not know what to do with the remaining JPY 200k/month. Should we put in more on these two emaxis funds? It doesn’t seem right from a diversification perspective.

In terms of equities, you are investing in an extremely diversified fund, which buys companies listed on the major stock markets in the world (All-Country).
You could argue that this is about as diversified as you can be...

Other asset classes, such as real estate (or crypto, or gold), could give further diversification in the event of a stock market crash.

However, given your ages, you should have plenty of time to recover from an inevitable fall in the next 30 years.
So my advice is to do exactly what you considered, and just buy more of the eMaxis Slim All-Country.

iDeCo is great as well, but if you are not going to retire in Japan, it may be complicated to get that money out, 30 years from now if living in another country. So I understand your reluctance there.

[zeroshiki]

You could put in 100k a month instead of 50k into NISA since you're using regular NISA. That will solve 100k of your 300k problem.

eMaxis Slim All Country and S&P500 are already diversified. If you're just afraid of putting all your eggs into eMaxis (its owned by Mitsubishi UFJ) then you could "diversify" by buying the SBI versions of all world and S&P500. Rakuten Vanguard All world would be the same general vein. There's minor differences (in the case of Vanguard actually pretty big differences) but the idea is similar.

One thing I learned when I first started out is the desire to somehow "beat" the market is strong but its pretty much just gambling unless you're a financial expert. In that sense, the bogleheads approach advocated by most people on this forum is the safest. Just buy safe low cost index funds and try to forget about it.

[goran]

1. We do not know what to do with the remaining JPY 200k/month. Should we put in more on these two emaxis funds? It doesn’t seem right from a diversification perspective.

In terms of equities, you are investing in an extremely diversified fund, which buys companies listed on the major stock markets in the world (All-Country).
You could argue that this is about as diversified as you can be...

Other asset classes, such as real estate (or crypto, or gold), could give further diversification in the event of a stock market crash.

However, given your ages, you should have plenty of time to recover from an inevitable fall in the next 30 years.
So my advice is to do exactly what you considered, and just buy more of the eMaxis Slim All-Country.

iDeCo is great as well, but if you are not going to retire in Japan, it may be complicated to get that money out, 30 years from now if living in another country. So I understand your reluctance there.

Thank you for the response and advice.

For gold, taxation reasons make us reluctant to invest in gold. (Do you actually purchase physical gold and store it somewhere? sorry for my naivety; lack of knowledge is also another barrier, clearly.)
For crypto, I wish I could learn more about it. But for now, the fear of the dark/unkown has been keeping us from jumping into this sector.

About iDeCo, that is exactly my concern; getting that money out if I am not in Japan when I am over 60 and the charges that would be incurred?
I think about this for kousei nenkin too.

[goran]

You could put in 100k a month instead of 50k into NISA since you're using regular NISA. That will solve 100k of your 300k problem.

eMaxis Slim All Country and S&P500 are already diversified. If you're just afraid of putting all your eggs into eMaxis (its owned by Mitsubishi UFJ) then you could "diversify" by buying the SBI versions of all world and S&P500. Rakuten Vanguard All world would be the same general vein. There's minor differences (in the case of Vanguard actually pretty big differences) but the idea is similar.

One thing I learned when I first started out is the desire to somehow "beat" the market is strong but its pretty much just gambling unless you're a financial expert. In that sense, the bogleheads approach advocated by most people on this forum is the safest. Just buy safe low cost index funds and try to forget about it.

Thank you for the advice. Diversification based on the management company of the funds may be another avenue. I will start looking into it too.

I read in the forum somewhere that dividends and/or gains from Vanguard funds could be taxed twice if one does not do the tax adjustment properly in Japan. If I choose this option, I might need to study more about the taxation.

Right now, we are more concerned about losing the value of invested amount than actually beating the market. But yes, I will stay on course and keep low cost index funds as the top most priority! Thank you once again!

[Beaglehound]

You could put in 100k a month instead of 50k into NISA since you're using regular NISA. That will solve 100k of your 300k problem.

eMaxis Slim All Country and S&P500 are already diversified. If you're just afraid of putting all your eggs into eMaxis (its owned by Mitsubishi UFJ) then you could "diversify" by buying the SBI versions of all world and S&P500. Rakuten Vanguard All world would be the same general vein. There's minor differences (in the case of Vanguard actually pretty big differences) but the idea is similar.

One thing I learned when I first started out is the desire to somehow "beat" the market is strong but its pretty much just gambling unless you're a financial expert. In that sense, the bogleheads approach advocated by most people on this forum is the safest. Just buy safe low cost index funds and try to forget about it.

Thank you for the advice. Diversification based on the management company of the funds may be another avenue. I will start looking into it too.

I read in the forum somewhere that dividends and/or gains from Vanguard funds could be taxed twice if one does not do the tax adjustment properly in Japan. If I choose this option, I might need to study more about the taxation.

Right now, we are more concerned about losing the value of invested amount than actually beating the market. But yes, I will stay on course and keep low cost index funds as the top most priority! Thank you once again!

If you are of a cautious mindset and wary of investing in things you don’t fully understand, then a target date fund may be a good option for you. These invest in a range of asset classes, with the ratio changing over time from more to less aggressive as you approach the target (i.e. withdrawal) date. It may help to simplify things.

[beanhead]

Thank you for the response and advice.

For gold, taxation reasons make us reluctant to invest in gold. (Do you actually purchase physical gold and store it somewhere? sorry for my naivety; lack of knowledge is also another barrier, clearly.)
For crypto, I wish I could learn more about it. But for now, the fear of the dark/unkown has been keeping us from jumping into this sector.

About iDeCo, that is exactly my concern; getting that money out if I am not in Japan when I am over 60 and the charges that would be incurred?
I think about this for kousei nenkin too.

I don't recommend crypto or gold. I don't understand why either of them should have any value that grows over time.
So these were not recommendations, just examples of how some people diversify away from the stock market. Real estate is another one.
Lots of people have made money in all of these things. Good luck to them.
I will stick to stocks (passive index funds) and bonds and assume that I will get a decent return over time.

In terms of iDeCo, it is a great scheme, but it is made for people retiring here.
Kosei nenkin - you have no choice here, you have to pay it if your company is a K.K.
Since iDeCo is optional, keeping your money in NISA and taxable accounts will give you much more flexibility.

Remember, though, that if you do leave Japan, you will generally have to close down your securities account, so there is always a small risk that you could be forced to sell your funds in a market downturn. Many people who know they will leave Japan choose to invest in an overseas broker instead of a Japanese one for that reason.

[goran]

If you are of a cautious mindset and wary of investing in things you don’t fully understand, then a target date fund may be a good option for you. These invest in a range of asset classes, with the ratio changing over time from more to less aggressive as you approach the target (i.e. withdrawal) date. It may help to simplify things.

Thank you. The problem is that we do not know clearly when we would want to withdraw the funds or leave Japan. But I would definitely like to learn more about this option. Could you point me to some sites or info about these options in Japan or keywords to Google?