750,000¥ remaining in 2017 NISA allowance - how to best use?

[N00bster]

Hi there,

Thanks to the great information on RetireJapan I have started managing my investments myself, opening accounts for the usual suspects (Theo, NISA and iDeco) with NISA being managed by Rakuten.

However I now realize that I have played the NISA card quite poorly so far and am still clueless about what to do. My account was opened in the first quarter of the year, and I have bought some US indexes (VTI) and decided to wait a bit, betting on a market or at least USD/JPY downturn.

None of that happened, and now we are almost 3 months from the end of the year. It would be silly to lose the allowance, but on the other hand I cannot help but think that this bull market has become kind of crazy and I am not sure how to use it in a conservative way. What would RetireJapan readers recommend to do in such a situation? What funds are less exposed to the USD/JPY change rate which is quite high at the moment?

[RetireJapan]

Great topic! I'm going to wait and see what people say before commenting

(also I'm in Helsinki airport so don't have long)

[Jamo]

I'm still new to this too, but I'll add my thoughts When you're starting out it can be tempting to try and time the market. And this has its place if you're looking at individual stocks and have done your research. But for something like a world stock index (or any stock for that matter), for significant gains/losses you should be thinking long term (several years). And considering that you're here I'm assuming you are...?

Don't be too concerned about trying to time the market, or fluctuations in exchange rates. There's a reason that the saying "time in the market counts, not timing the market" exists.

If you let us know a bit more about your situation we could probably answer your question better. How old are you? What's your risk tolerance? What do you mean by "conservative"? Etc.

[Tony]

I believe most of the people on here are hold and buy style investors, first pioneered by John Bogle. A big part of his policy is "Don't try to time the market". So don't wait for things to turn before you buy or sell, just buy when you can, and hold it. So I would say use up the rest of your allowance buying low-cost etf's.

PS. Typed this up before actually reading Jamo's comment, and its basically the same advice. So yeah, what he said.

[N00bster]

Thanks for the replies!

To tell more about my situation, I am in my late thirties, planning to stay in Japan forever, good income and a significant amount (3000万) of not-yet-invested assets on the side, waiting (foolishly?) for the right time to jump in, and dripping them in little-by-little meanwhile through Theo, NISA and iDeco.

My risk tolerance is shaped by my negative experience with financial advisors. I started doing business with one and it took me one year to realize that this was basically an overpriced scam that would at best result in zero returns. On top of that he made some terrible decisions with my assets (selling during the 2015 dip) that resulted in losses that could have been easily avoided. I got out and lost a small portion of what I had in, not too much thankfully but that made me more wary now. And so is the current shape of the market.

(as an aside, if Ben is looking for a reader profile, I may be willing to do it! )

Regarding NISA, my plan unless I get better advice here is to use all my remaining allowance to buy some of the funds listed in this very informative topic: http://www.retirejapan.info/forum.html# ... a-5422200/.

... and just sit on it for years. Especially 1550 and 1348 look reasonable.

[RetireJapan]

Hey, I would love to run your reader profile.

Also, if you have 30m sitting around in cash, I wouldn't worry about investing 1.2m a year at the wrong time

The US seems overvalued, but international and emerging markets may not be.

[N00bster]

Ah you're right, I am just worrying too much and that makes me miss every good opportunity. That will be the focus point of my profile if you want to run it (just send me a PM when you have time).

So unless someone tells me this is stupid, I will just invest the remainder of the allowance into 1550, 1348 and maybe 1343 for REIT in order to make some passive income. Then bye-bye NISA until next year!

Thanks everyone for the insightful input!

[eyeswideshut]

I am in the same position as you. I have invested my NISA bond component already and am waiting for the market to fall to invest the rest into stocks. I think stocks are pricey and we are due for a downturn so I am biding my time. They may or may not fall before the end of the year but I see no harm in waiting until December to see how it plays out. So long as I fill my NISA allowance within this year it is all good. If I am proven right I make a little bit more money (and bragging rights); if I am proven wrong I will eat my humble pie and miss out on 11 months of gains. At the end of the day, it is only a drop in the bucket.
You have done very well for yourself if you are sitting on that much cash savings in your late 30's! If all of that money is just sitting in Yen in your Japanese bank account I might suggest that you consider at least diversifying into other currencies (maybe a short term global bond fund or money market fund) to hedge the currency risk and also I would consider higher interest long term deposits. The rates are abysmal in Japan but at least better than 0.
Also, your Japan Yen deposits are insured only up to 1000 man by the JDIC (which is actually pretty good) so if you bank goes belly up at some point you may lose a significant chunk of savings. Also, unless I am mistaken, foreign currency deposits in Japan are not covered by the JDIC.