RetireJapan

This is another one of my "please tell me if I might be doing something stupid" threads. (It should perhaps be in the "dummies" section--please feel free to move it if so.)

My wife has just opened her NISA account with Rakuten. She is even less knowledgeable about investing than me, and so it is up to me (for the time being at least) to choose the funds in which she will invest. (I think a few people here are in the same boat.)

Both I and my daughter (JR NISA) have almost exactly the same funds in similar proportions. Roughly speaking:

70% 1550 MAXIS Global Equity
15% 1348 MAXIS TOPIX ETF
15% 1681 Emerging Countries Equity

I decided on those funds after reading what people here were buying. After reading some of the recent threads, though, I am thinking that for my wife it might be good for her to buy mutual funds. Mainly for these reasons:

1. It seems that it would be a good idea to vary what we are holding across the family, rather than all three of us holding *exactly* the same three funds!

2. the discussions about the tax benefit (?) and simplicity with mutual funds because they have automatically reinvesting dividends seems to make sense. It might be better for her not to have to worry about dividends and tax complications as she is not money-savvy.

So based on what people here have said I am thinking of having her purchase:

70% eMAXIS Slim全世界株式（除く日本）(World)
15% eMAXIS Slim国内株式（ＴＯＰＩＸ）(or Tawara たわらノーロード日経225) (Japan)
15% eMAXIS Slim 新興国株式インデックス (Emerging)

I understand that "investment choices are a very personal decision" and all that, and that no one can tell anyone exactly what funds they should invest in, but I am a rank amateur handling the money of an even ranker amateur, and would greatly appreciate some personal opinions from the members on this.

Many thanks!

The usual generic advice would be to have 'your age in bonds' or something similar (your age minus ten in bonds?) to provide stability to the portfolio. You can't rebalance in NISA, but you can buy more of the lagging investment so could benefit slightly from the 'buy low' advantage that way.

Especially for someone less knowledgeable about investing it might be worth considering

(full disclosure: I don't own any bonds, but my wife has them in her portfolio, for precisely that reason)

Thanks RJ,

I also don't have any bonds at the moment--from what you have written in the past, I think our thinking on this is similar.

I am thinking about what to do about bonds going forward, but I guess in the meantime, I was really wondering what people thought of the choice of funds.

MyTime wrote: ↑Fri Jun 29, 2018 4:35 am 70% eMAXIS Slim全世界株式（除く日本）(World)
15% eMAXIS Slim国内株式（ＴＯＰＩＸ）(or Tawara たわらノーロード日経225) (Japan)
15% eMAXIS Slim 新興国株式インデックス (Emerging)

Looks good to me. I'd probably do something similar if I wasn't currently playing with the SBI global fund.

My main thought is why so heavy on Emerging Markets? eMAXIS Slim全世界株式 uses https://www.msci.com/acwi (although ex Japan yen base), which already includes emerging markets. I'm assuming you're also deliberately overweight on Japan. So unless you're deliberately gambling on emerging markets, you could simplify to:

85% eMAXIS Slim全世界株式（除く日本）(World)
15% eMAXIS Slim国内株式（ＴＯＰＩＸ）(or Tawara たわらノーロード日経225) (Japan)

Thanks Adamu--that's reassuring.

I realize that 15% is slightly overweight on Japan--I guess something like 10% would be more balanced (I'm assuming that the sekai fund has no Japanese stock at all).

I'm not particularly intending to gamble on emerging markets, but I remember reading that the 1550 global fund doesn't include emerging markets, so I was assuming that other global funds would be the same. (Although now that you've pointed it out, I don't know why I assumed that")

I guess the 全世界株式 fund will have sufficient exposure to emerging markets by itself and I don't need to buy an additional emerging market fund. Thanks for that info!

The particular funds you're using are fine. I'm using eMaxis for emerging myself. I chose tawara for local, but it's a tiny difference and could easily change(it seems there's a lot of competition for rates lately as the management costs have been cut on several funds recently)

Always read the prospectus and check what index is being used. As you mentioned, 1550 is on MSCI kokusai which is developed nations

What your allocation is really will just depend on how you feel about things as well as your risk tolerance. If you plan to remain in japan, the nikkei/topix indices don't open you up to currency risk, and for that reason I personally have overweighted on jp stocks somewhat.

I do think you should have at least some bonds in there, just because we're probably peaking out soon and you really want something to rebalance with. The next financial mess will probably mess with all the markets. You can't really time the market, but rebalancing regularly allows you to automate that without getting emotional about it(e.g. if stocks have been soaring for years, rebalancing would force you to put some aside to safer bonds, and when they finally do collapse, you'll have that bond money that will be overweighted and moved to stocks allowing you to "buy the dip")

Thanks Jcc!

Just to clarify--is the Tawara fund you chose the one that I mentioned?

I'd probably go for the TOPIX one over the Nikkei 225 just because I like the diversification. The cost is the same (0.18%):
http://www.morningstar.co.jp/FundData/S ... 2017032103

Thanks Adamu. I guess we will also go with yours and Jcc's recommendation and opt for the Nikkei 225 fund for Japan. Which would make it:

85% eMAXIS Slim全世界株式（除く日本）(World)
15% Tawara たわらノーロード日経225) (Japan)

At least for the time being until I figure out what to do for bonds.

I realize that 15% is overweight for Japan, but people generally seem to overweight their home country.

Just out of curiosity (and for those who feel like replying), what proportion of their portfolios is everyone of allocating to Japan and emerging markets?

I did a quick google for emerging markets, and the recommended percentage varied quite a lot depending on where I looked--some people said about 10-20% if you're in you 40s or younger, but some people said about 5% regardless of age.

Like I mentioned, both me and my daughter have about 15% each in Japan and Emerging with the rest (about 70%) in Developed world (ex. Japan). But I'm now starting to think that 15% may be a bit too much.

Thanks again everyone.