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Investing in stocks through Interactive Brokers
Posted: Thu May 16, 2024 6:00 am
by LucasVi91
Hello all,
I have opened my Interactive Brokers (IB) account in Japan and am looking to invest in ETF's/Indexes. I am a British citizen but that does not seem to allow me to invest in British options such as Vanguard etc. I have emailed the company and they said because I am based in Japan this is not possible.
I was wondering if anyone had any good options regarding IB because at the moment all I can see are stocks which are more risky.
A further question is if and when I choose to leave Japan, does anyone know the system by which I transfer my account to a new country? From what I have seen and read, Japan is a master of red tape and bureaucracy and I would like to avoid as much of this as possible.
Any support would be greatly appreciated.
Lucas
Re: Investing in stocks through Interactive Brokers
Posted: Thu May 16, 2024 6:32 am
by RetireJapan
Hi Lucas
You should be able to buy ETFs through IB Japan.
My understanding is that they may be able to transfer common stocks/ETFs to IB in another country. Probably best to confirm with them directly though.
Re: Investing in stocks through Interactive Brokers
Posted: Thu May 16, 2024 8:34 am
by ChapInTokyo
I don't have experience with IB but Firstrade lets its international customers buy pretty much any ETF you like (even the new Vanguard factor ETFs and active ETFs which are not available yet in Japan) so it might be worthwhile to check out Firstrade if IB Japan has some kind of legal restrictions.
What do I need to open an international account (at Firstrade)?
You can apply for an international account if you are not a U.S. citizen or permanent resident and do not have a Social Security Number or Tax ID Number. We currently only accept applications from these regions.
Austria
Belgium
China
Czech Republic
Denmark
Finland
France
Germany
Hong Kong
India
Ireland
Israel
Italy
Japan
Korea, Republic of (South)
Macau
Malaysia
Mexico
New Zealand
United Kingdom
https://help.en-us.firstrade.com/articl ... al-account
Re: Investing in stocks through Interactive Brokers
Posted: Thu May 16, 2024 9:02 am
by captainspoke
LucasVi91 wrote: ↑Thu May 16, 2024 6:00 am...does not seem to allow me to invest in British options such as Vanguard etc. I have emailed the company and they said because I am based in Japan this is not possible.
...
Are you trying for the British version of vanguard ETFs (assuming there is one), or the US?
Eg, ask if you can buy VOO.
Re: Investing in stocks through Interactive Brokers
Posted: Thu May 16, 2024 9:58 am
by adamu
LucasVi91 wrote: ↑Thu May 16, 2024 6:00 am
I have opened my Interactive Brokers (IB) account in Japan and am looking to invest in ETF's/Indexes. I am a British citizen
I think the Japanese online brokers (SBI/Rakuten/Monex) are better for that.
https://retirewiki.jp/wiki/Japanese_global_index_funds
Re: Investing in stocks through Interactive Brokers
Posted: Fri May 17, 2024 2:18 am
by ChapInTokyo
For the core index holdings, the low cost mutual funds offered by the Japanese online brokers are definitely the better deal.
However, the US ETFs still have much lower costs if for some reason you wish to track more skewed indexes with ETFs such as Vanguard's
VYM (ER 0.06% Yield 2.727%) which tracks the
FTSE® High Dividend Yield Index or
VSS (ER 0.08% Yield 4.516%) which tracks the
FTSE Global ex US Small Cap Index so imho using a non-Japanese online broker such as IB or Firstrade can be useful for fine tuning your portfolio. I am currently in the process of opening a NISA account at Monex and intend to buy the
eMAXIS Slim All Country mutual fund (ER 0.05775%) as my core equity holding, but am considering getting small cap US stocks exposure which the
eMAXIS Slim All Country misses out on by having a small trache of the
AVUV Avantis U.S. Small Cap Value ETF (ER 0.25%) at Firstrade (since
AVUV is not available at a Japanese online broker).
Having said that, Japanese online brokers do sell some of the more specialized Vanguard ETFs such as
VYM so I guess it's a case by case decision depending on whether you want DRIP or not, whether your trade is large enough to offset the trading costs that Japanese brokers charge, and whether currency conversion fees that you'd need to pay if you invest at a non-Japanese broker is acceptable since Japanese brokers like SBI and Rakuten and Matsui now allow zero commission currency conversion between yen and US dollars if you convert the money prior to trading.
https://shintaro-money.com/free-foreign-exchangefee/
Re: Investing in stocks through Interactive Brokers
Posted: Fri May 17, 2024 10:01 am
by ChapInTokyo
ChapInTokyo wrote: ↑Fri May 17, 2024 2:18 am
For the core index holdings, the low cost mutual funds offered by the Japanese online brokers are definitely the better deal.
However, the US ETFs still have much lower costs if for some reason you wish to track more skewed indexes with ETFs such as Vanguard's
VYM (ER 0.06% Yield 2.727%) which tracks the
FTSE® High Dividend Yield Index or
VSS (ER 0.08% Yield 4.516%) which tracks the
FTSE Global ex US Small Cap Index so imho using a non-Japanese online broker such as IB or Firstrade can be useful for fine tuning your portfolio. I am currently in the process of opening a NISA account at Monex and intend to buy the
eMAXIS Slim All Country mutual fund (ER 0.05775%) as my core equity holding, but am considering getting small cap US stocks exposure (which the
eMAXIS Slim All Country misses out on) by having a small trache of
AVUV Avantis U.S. Small Cap Value ETF (ER 0.25%) at Firstrade (since
AVUV is not available at a Japanese online broker).
Having said that, Japanese online brokers do sell some of the more specialized Vanguard ETFs such as
VYM so I guess it's a case by case decision depending on whether you want DRIP or not, whether your trade is large enough to offset the trading costs that Japanese brokers charge, and whether currency conversion fees that you'd need to pay if you invest at a non-Japanese broker is acceptable since Japanese brokers like SBI and Rakuten and Matsui now allow zero commission currency conversion between yen and US dollars if you convert the money prior to trading.
https://shintaro-money.com/free-foreign-exchangefee/
Re: Investing in stocks through Interactive Brokers
Posted: Thu Aug 15, 2024 2:11 pm
by Relik
I have been looking into this as well and it seems it is possible to move ETFs bought with Interactive Brokers Japan to say Interactive Brokers Australia.
However the selection of ETFs on Interactive Brokers Japan is very limited outside US ETFs (puts you at risk of estate tax?) and Japan ETFs (not as good as Mutual funds).
Try this link for a full list:
https://www.interactivebrokers.co.jp/en ... nges.php#/
So it does raise the question, is it better just to sell everything and start again when leaving Japan or invest in subpar ETFs so you can move them across when you leave?
Difficult question that I haven't figured out the answer to yet but will continue to research and would recommend you review the discussion on the post by AussieinJapan that has lots of good info.
Re: Investing in stocks through Interactive Brokers
Posted: Sun Aug 18, 2024 7:13 am
by ChapInTokyo
Relik wrote: ↑Thu Aug 15, 2024 2:11 pm
I have been looking into this as well and it seems it is possible to move ETFs bought with Interactive Brokers Japan to say Interactive Brokers Australia.
However the selection of ETFs on Interactive Brokers Japan is very limited outside US ETFs (puts you at risk of estate tax?) and Japan ETFs (not as good as Mutual funds).
Try this link for a full list:
https://www.interactivebrokers.co.jp/en ... nges.php#/
So it does raise the question, is it better just to sell everything and start again when leaving Japan or invest in subpar ETFs so you can move them across when you leave?
Difficult question that I haven't figured out the answer to yet but will continue to research and would recommend you review the discussion on the post by AussieinJapan that has lots of good info.
I had a look at the ETF offerings at your IB Japan link. It seems to be the case that the US ETFs are pretty much the same US ETF offerings that you can get at Monex, SBI or Rakuten (ie. they have VT, BND, BNDX, BSV and VPU but no BNDW, SGOV, VNQ or VNQI for instance). The main advantage to investing in US ETFs at IB Japan instead of the Japanese brokers seems to be the ability to automatically re-invest your ETF dividends under IB's DRIP plan since you would have the ability to file for foreign tax credit when you do your tax returns, as well as the ability to have your dividends automatically re-invested. Now, if IB allows you to DRIP the dividends from the Japanese ETFs too, that might be quite a useful function.
As for the question of Estate tax, it seems that both Japan and the UK have Estate Tax treaties with the US so you probably do not need to worry about that.
ETF domicile recommendations by country of residence and domicile
https://www.bogleheads.org/wiki/Nonresi ... _US_stocks
Re: Investing in stocks through Interactive Brokers
Posted: Sun Aug 18, 2024 12:22 pm
by captainspoke
ChapInTokyo wrote: ↑Sun Aug 18, 2024 7:13 am... The main advantage to investing in US ETFs at IB Japan instead of the Japanese brokers ...
The main advantage for US persons is that IB will accept you as a US person, with no limitations (c.f, japanese brokers) for what they will or will not sell you. For Americans, who want to invest in US things, I think it's the only game in town.