New to iDeco?! What should I do?

[Hárbarðr]

Hi everyone

So i just started a Rakuten Security account, alongside an iDeco account. (though the waiting time to get the account is very long).

I Have a few questions for all the veterans on this forum.

- Because the time it actually takes to open an account with Rakuten Security, and that I really want to start investing, could I start investing with my current Bank and than transfer those investments to RS when the account is ready?

- With the iDeco account, seeing as my maximum amount is 23000 yen per month, is that an amount I HAVE to invest with every month, or can it be lower/ different month to month?

- With iDeco, what if I suddenly have money trouble, and investing becomes less of a priority, can I cancel the iDeco account, or put on hold, or as the question above states, pay less then 23000 yen a month?

- Lastly, and I know this is a tough one. What would YOU invest in in your iDeco account? What kind of investments (Stocks, ETFs, Funds, etc...)

I hope I am not asking too much and truly appreciate any help given.

Regards

[Dabitto]

Hi Hárbarðr
Although I do not consider myself a veteran on this forum at all, I think I can answer your questions.

- Because the time it actually takes to open an account with Rakuten Security, and that I really want to start investing, could I start investing with my current Bank and than transfer those investments to RS when the account is ready?

You can only transfer funds from one iDeco account to another. Starting an iDeco account at your bank takes just as long as starting one at Rakuten Security, because your application needs to go through the same governmental body (the National Pension Fund Association). It is normal that the application takes about 3 months to finish. Also, I would not advise you to start an iDeco account at your bank, as their fees are ferocious + switching from them to another iDeco provider will cost you money and ‘precious’ investing time as you will be out of the market for about a month or two. The simple advice is to file the iDeco application at Rakuten (or another cheap online securities’ provider) and to wait it out.

- With the iDeco account, seeing as my maximum amount is 23000 yen per month, is that an amount I HAVE to invest with every month, or can it be lower/ different month to month?

No, you do not have to. You can choose an amount you are comfortable with (per 1000 yen). However, it is important to know that you can only change this amount once per calendar year and that the minimum amount is 5000 yen per month. Thus, once you started an iDeco account you CANNOT opt out and will HAVE TO invest a minimum of 5000 yen per month until at least age 60 OR till you move to another country.

- With iDeco, what if I suddenly have money trouble, and investing becomes less of a priority, can I cancel the iDeco account, or put on hold, or as the question above states, pay less then 23000 yen a month?

Again, you will not be able to cancel the account and are stuck to investing at least 5000 yen per month. You can change your monthly amount only once per calendar year.

- Lastly, and I know this is a tough one. What would YOU invest in in your iDeco account? What kind of investments (Stocks, ETFs, Funds, etc...)

As I am no professional financial advisor, I think it is against the law to give you any advice on the specific funds you should invest in. However, try to stick with cheap well diversified passive index funds. As I have an iDeco account at SBI, am young, and have quite a high-risk appetite, I am 100% in eMAXIS All World (ex. Japan). Although this fund is not available on Rakuten (as iDeco fund), there are Rakuten funds that follow the same principals. However, I am NOT telling you to copy my strategy. Ultimately, you will have to decide your own portfolio or ask professional financial advice tailored to your specific circumstances and risk appetite. It is important to choose a strategy that you will stick to, even during severe crashes or the strongest of bull markets.

I hope to have helped you out. Please do not hesitate if things are not clear or if you have any further questions!

[KyushuWoozy]

it is important to know that you can only change this amount once per calendar year

Somehow I had it in the back of my mind that this rule had been relaxed but I may be wrong. It's relevant to me at the moment because me and Mrs Woozy need to scale back our investment (from maxing out 23,000 per person to minimizing out 5,000 per person) due to the horrible effect effect this virus is having on our company. Pity, because now seems like a buying opportunity. We are in the middle of the process now but it's not just a click of a button. You have to request a form and fax or mail it back.

[Dabitto]

it is important to know that you can only change this amount once per calendar year

Somehow I had it in the back of my mind that this rule had been relaxed but I may be wrong. It's relevant to me at the moment because me and Mrs Woozy need to scale back our investment (from maxing out 23,000 per person to minimizing out 5,000 per person) due to the horrible effect effect this virus is having on our company. Pity, because now seems like a buying opportunity. We are in the middle of the process now but it's not just a click of a button. You have to request a form and fax or mail it back.

Hey KyushuWoozy!
It is very unfortunate to hear that your business got hit by the effects of the Corona virus... I hope things will turn around again for you very soon.

I just did a quick Google search and found this:
https://faq.rakuten-sec.co.jp/faq_detai ... d=10001107

　■毎月定額で拠出されている方
　　毎年12月分（1月引落分）～翌年11月分（翌年12月引落分）の間で1回のみ変更可能です。

It means that the once-per-calendar-year rule still exists and that their definition of the 'calendar year' is from the deposit of December of the previous year till the deposit of November of the following year.
I have also checked some other iDeco providers and they are all having this exact same policy.
So unfortunately, this rule is still in place.

Hope to have helped you out!

[KyushuWoozy]

Good info, thanks for taking the time to check it out ... and for your kind words too.