Customised investment strategy for Ideco ?
Posted: Sun Sep 30, 2018 3:05 pm
Dear investment gurus !,
I applied a little while back to join the ideco scheme, and am currently awaiting the
all clear to start investing. I am therefore thinking a little about what might be the best strategy
for Ideco investing, since it seems to have some special characteristics that distinguish it from
general investment in a taxable trading account, or tax-free investing in a NISA wrapper.
Among those special characteristics are: (i) the fact that you are locked out from accessing the
investment for several decades, at least until you are 60, (ii) the amount you can invest per
month is limited (iii) there is no problem switching / rebalancing (?) your investments,
and of course (iv) the investments grow tax free.
In my case I can only invest a maximum of 12000 yen per month, so even after a few
decades investment it will not amount to something that I will be relying on for living expenses
as a pensioner (I will have other pension income). As such, given that the investment has
to be held for several decades (i.e. there is no option to cash out in an emergency even
if an emergency (other than death!) arose), would this suggest that the best strategy, at least
at the outset, might be a 100% stock index portfolio, which, so far as I understand, will pretty
much always outperform other strategies over the long term. As the 10 year period at the
end of the investment (age 60 -70) approaches during which the investments have to be
cashed out, then re-balancing towards a less volatile portfolio can presumably then be
instigated, with timing etc. depending on market conditions.
In short, if the investment won't be relied on for any essential purposes and has to be held for such a
long time, why not select the strategy that is generally proven to yield the best returns over such a long period,
with a gradual reallocation of monies implemented say starting from age 55 or so, which allows a 15 year
period to exit the investments at appropriate times?
Has anyone else been thinking along similar lines with respect to ideco investing , or am I missing
something important ? Many thanks !
I applied a little while back to join the ideco scheme, and am currently awaiting the
all clear to start investing. I am therefore thinking a little about what might be the best strategy
for Ideco investing, since it seems to have some special characteristics that distinguish it from
general investment in a taxable trading account, or tax-free investing in a NISA wrapper.
Among those special characteristics are: (i) the fact that you are locked out from accessing the
investment for several decades, at least until you are 60, (ii) the amount you can invest per
month is limited (iii) there is no problem switching / rebalancing (?) your investments,
and of course (iv) the investments grow tax free.
In my case I can only invest a maximum of 12000 yen per month, so even after a few
decades investment it will not amount to something that I will be relying on for living expenses
as a pensioner (I will have other pension income). As such, given that the investment has
to be held for several decades (i.e. there is no option to cash out in an emergency even
if an emergency (other than death!) arose), would this suggest that the best strategy, at least
at the outset, might be a 100% stock index portfolio, which, so far as I understand, will pretty
much always outperform other strategies over the long term. As the 10 year period at the
end of the investment (age 60 -70) approaches during which the investments have to be
cashed out, then re-balancing towards a less volatile portfolio can presumably then be
instigated, with timing etc. depending on market conditions.
In short, if the investment won't be relied on for any essential purposes and has to be held for such a
long time, why not select the strategy that is generally proven to yield the best returns over such a long period,
with a gradual reallocation of monies implemented say starting from age 55 or so, which allows a 15 year
period to exit the investments at appropriate times?
Has anyone else been thinking along similar lines with respect to ideco investing , or am I missing
something important ? Many thanks !
