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Re: Convincing fears on investing for now?

At best, I decided not to invest more than 30% in stocks at this time. That's a perfectly reasonable allocation decision except for the last bit... "at this time." What's important to realize is that the uncomfortable feeling in the pit of your stomach that you're feeling right now is you...
by Karamatsu
Mon Aug 18, 2014 8:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Convincing fears on investing for now?
Replies: 34
Views: 3142

Re: Interesting article on CEOs, BODs and stock performance

I've often wondered about this, the degree to which funds engage in due diligence when voting the shares purchased with their customers' money. It's not something they seem to document.
by Karamatsu
Wed Aug 13, 2014 8:56 pm
 
Forum: Investing - Theory, News & General
Topic: Interesting article on CEOs, BODs and stock performance
Replies: 1
Views: 371

Re: A financial “guru” for world travelers?

Besides, people like that are often even less interesting than the khaki-clad business guys.
by Karamatsu
Mon Aug 11, 2014 10:21 pm
 
Forum: Investing - Theory, News & General
Topic: A financial “guru” for world travelers?
Replies: 18
Views: 1978

Re: Boglehead-style Investing for a Yen-based Income Earner

Welcome to the forum! The way I deal with the FX issue is to decide on a ratio between USD and JPY investments. In fact the ratio I use is 70/30, but if you used 50/50 you'd be naturally hedged. Any exchange-rate-based increase in one half will be precisely offset by a decrease in value of the other...
by Karamatsu
Sun Jul 27, 2014 8:16 pm
 
Forum: Investing - Help with Personal Investments
Topic: Boglehead-style Investing for a Yen-based Income Earner
Replies: 12
Views: 1208

Re: Another Schwab Question

I think it's a good plan. Schwab has the knowledge and infrastructure to handle international accounts, and the Schwab Funds ETFs have been fine. I can't think of any problems. The big issue with cross-border investment is always just dealing with the tax rules in both countries.
by Karamatsu
Sun Jul 27, 2014 7:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Another Schwab Question
Replies: 11
Views: 1033

Re: Sshwab vs. Vanguard for index funds

I think they both have advantages and disadvantages, but if you're already at Schwab, the simplest thing is just to stay put and just change the investments. Schwab is an excellent brokerage and I'm sure they would help you do that.
by Karamatsu
Sun Jul 27, 2014 7:21 pm
 
Forum: Investing - Help with Personal Investments
Topic: Sshwab vs. Vanguard for index funds
Replies: 15
Views: 1659

Re: Have a million to transfer, thinking of doing 100% stock

Is it objectively a bad idea to invest 100% into stocks... It depends on what you mean by "objectively." We're dealing with the future, and it's impossible to speak objectively about the that because it doesn't exist yet. All we can do is look at the past and try to divine some wisdom tha...
by Karamatsu
Sat Jul 26, 2014 6:57 am
 
Forum: Investing - Help with Personal Investments
Topic: Have a million to transfer, thinking of doing 100% stocks
Replies: 38
Views: 3777

Re: Afraid of Bonds

There will never be a time when these kinds of uncertainties don't exist. Rates can always rise. The equity market can always fall through the floor. Of course, one of the reasons people mix equities and bonds is that they tend to move in different directions, so if there is a sustained "correc...
by Karamatsu
Sat Jul 26, 2014 6:17 am
 
Forum: Investing - Help with Personal Investments
Topic: Afraid of Bonds
Replies: 28
Views: 2298

Re: Do you split your VEU (into VEA+VWO) & VEA (into VGK+VPL

I'm now more inclined towards VTI (for all US) + VSS (for small cap) + VEA (Global Developed x US) + VWO (Emerging). Although these days new investments go to the Schwab equivalents, this is pretty much what I have except I also tilt the US toward small value by splitting it between US TSM and VBR,...
by Karamatsu
Tue Jul 22, 2014 7:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Do you split your VEU (into VEA+VWO) & VEA (into VGK+VPL)?
Replies: 37
Views: 1782

Re: Question about Vanguard ETFs for non-US investors

Unless you're an expatriate US citizen, or someone who otherwise plans to retire in the US, the most useful might be bonds in your home country. If you wanted to invest in US bonds, then you'd probably want to find a bond fund that is hedged into your home currency, otherwise, with interest rates so...
by Karamatsu
Mon Jul 21, 2014 7:48 pm
 
Forum: Investing - Help with Personal Investments
Topic: Question about Vanguard ETFs for non-US investors
Replies: 6
Views: 708

Re: US car rental insurance for foreign tourist ?

Yeah, I think it's probably better to work that out before leaving home. Same thing with health insurance, by the way. Japanese national health insurance doesn't provide coverage when we're abroad, so it's often advisable to buy some kind of short-term medical coverage, especially in a place like th...
by Karamatsu
Sun Jul 20, 2014 10:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: US car rental insurance for foreign tourist ?
Replies: 9
Views: 827

Re: Japan's Lost Decades in One Chart

I really don't think there's a lot to be learned with simplistic graphs of price or PE. Placing two lines on a graph like that ignores huge contextual differences between the ways equities are used in the two countries, and the the ways they were used in different time periods even within the same c...
by Karamatsu
Sat Jul 19, 2014 10:25 pm
 
Forum: Investing - Theory, News & General
Topic: Japan's Lost Decades in One Chart
Replies: 23
Views: 2913

Re: Should non-US investors buy US-listed REITS?

You might want to look into options for reducing or offsetting US withholding taxes. If your country has a tax treaty with the US, that may reduce the tax owed right there. Also the US has a form W-8BEN that may allow you to reduce your taxes withheld. Alternatively you may be able to claim a refund...
by Karamatsu
Thu Jul 17, 2014 8:26 pm
 
Forum: Investing - Theory, News & General
Topic: Should non-US investors buy US-listed REITS?
Replies: 41
Views: 2886

Re: Overseas Residents And the Affordable Health Care Act

Karamatsu, I read the revocation of FEIE differently. If he has never used it he will have no trouble filing without it and using it in the future. That is, he doesn't have to revoke it if he's never used it. Oh, I agree. I just meant to point out that you can't switch freely between the two option...
by Karamatsu
Wed Jul 16, 2014 7:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Overseas Residents And the Affordable Health Care Act
Replies: 10
Views: 1085

Re: Do preferred stock dividends get favorable tax treatment

You have to be careful. Some preferred stocks are wrappers around bonds and so their distributions are paid as interest rather than dividends. However the tax treatment of those that do pay dividends seems to be largely the same, so to reduce taxation you'd want to limit your choices to those paying...
by Karamatsu
Wed Jul 16, 2014 7:28 pm
 
Forum: Investing - Theory, News & General
Topic: Do preferred stock dividends get favorable tax treatment?
Replies: 3
Views: 710

Re: Overseas Residents And the Affordable Health Care Act

You should probably declare your income on a tax return even if you won't owe any tax. It's not unusual to have no documentation from some kinds of employment. After all nobody (or at least, nobody I know) gives the waiter a tax document when they leave a tip. If reporting the income means you DO ha...
by Karamatsu
Tue Jul 15, 2014 7:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: Overseas Residents And the Affordable Health Care Act
Replies: 10
Views: 1085

Re: No New Schwab Accounts for US Expats in Japan

Hmmmm... Interesting. It would be an option for people to try, not just with Schwab but with any other bank or broker, especially if they have such a relationship. It would be interesting if solicitation were the issue. From the wording I suspect the problem is the overhead and risk of all the bilat...
by Karamatsu
Fri Jul 11, 2014 7:45 am
 
Forum: Investing - Theory, News & General
Topic: No New Schwab Accounts for US Expats in Japan
Replies: 3
Views: 808

Re: Online classes?

You might check out Coursera . The classes they offer are all through regular universities, and the one I took was both rigorous and excellent. They're also free, which is pretty amazing. I'd avoid any class or workshop offered someone who wants to sell you something (which often includes brokers). ...
by Karamatsu
Thu Jul 10, 2014 7:55 pm
 
Forum: Investing - Theory, News & General
Topic: Online classes?
Replies: 14
Views: 1796

No New Schwab Accounts for US Expats in Japan

On the heels of Fidelity's announcement it was starting to look like Schwab might be the only choice for US expatriates. Recently I got a PM from another member who mentioned that, in a discussion with Schwab, they said they were no longer opening new accounts for US citizens in Japan. On the chance...
by Karamatsu
Thu Jul 10, 2014 7:48 pm
 
Forum: Investing - Theory, News & General
Topic: No New Schwab Accounts for US Expats in Japan
Replies: 3
Views: 808

Re: US citizens abroad cannot invest through [Fidelity]

My understanding is that, when you have a MTM loss in a given year, you can take a deduction equal to the lesser of (a) the amount of the loss, or (b) your net gains in the PFIC stock since it was first acquired. You then reduce your basis by the amount recognized. If you have no unreversed inclusio...
by Karamatsu
Mon Jul 07, 2014 7:39 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

Thought experiment: Buy $10,000 worth of PFIC, and it doubles by the end of the year. Then it stays constant at $20,000 for the next few years. Under your scenario, every year one would have to declare a $10,000 gain? (Because the basis never changes.) That would be unreasonable in a different dire...
by Karamatsu
Mon Jul 07, 2014 7:00 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

I think the notion of MTM as an instantaneous sale/repurchase at the end of the year may be a useful analogy but isn't entirely accurate. The form, at least, asks only for the market value of the PFIC stock and the end of the year and your adjusted basis at the end of the year. If you consider the w...
by Karamatsu
Mon Jul 07, 2014 6:35 am
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

So let's use another example: Let's say a US citizen invests $1 million in an offshore mutual fund, and in year 1, it drops -90% to $100,000. PFIC losses can't be carried forward, so that loss is a pure loss. Then in year 2, it jumps back to $1 million, and assuming around 35% ordinary income tax r...
by Karamatsu
Mon Jul 07, 2014 12:57 am
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

From what I understand, PFIC mark-to-market is a disaster No thanks to the IRS, but it's not quite that bad. It's true that TurboTax doesn't handle Form 8621 , but completing the mark-to-market option doesn't require a tax accountant or 100 extra pages. All you do is tick the box for the MTM option...
by Karamatsu
Sun Jul 06, 2014 8:56 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

But this is really ridiculous. What am I supposed to do with my IRA if I decide to live abroad for a couple of years? Or permanently? I can't believe that all the many US expats don't have 401ks and IRAs. It is ridiculous, but there's not much we can do about it at the moment except write to the ap...
by Karamatsu
Sat Jul 05, 2014 11:17 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

Where you live (expatriate or not) has no bearing on US PFIC rules. They apply to any US taxpayer with an investment in a foreign-based passive investment entity. So for most of us, as ordinary retail investors, that would mean a foreign-based mutual fund, ETF, or REIT. Of course, someone living abr...
by Karamatsu
Sat Jul 05, 2014 11:04 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

That's quite a horror story. The only thing worse would be if they put you on the no-fly list, too.
by Karamatsu
Sat Jul 05, 2014 5:02 am
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: Some rebalancing questions

It's really up to you, but if you're on board with the idea of choosing percentages to allocate the different asset classes, then you'd probably want to sell shares of the US fund to buy shares of the international one. The idea is just to keep your asset allocation at something close to the chosen ...
by Karamatsu
Sat Jul 05, 2014 4:55 am
 
Forum: Investing - Help with Personal Investments
Topic: Some rebalancing questions
Replies: 3
Views: 284

Re: [Poll] If all active funds have ER= 0.05%, will you buy

Although I'm not dogmatic about it, I don't think active funds really suit me because, on average, I'm not convinced that there is any advantage to them (except to the fund managers). The only exception I can think of would be if a low-cost "active" fund gave me near-passive access to an a...
by Karamatsu
Thu Jul 03, 2014 8:06 pm
 
Forum: Investing - Theory, News & General
Topic: [Poll] If all active funds have ER= 0.05%, will you buy any?
Replies: 55
Views: 2687

Re: Help Starting Portfolio for Young Ex-Pat

In your case, with your salary absorbed by the FEIE, then as long as you buy and hold, you probably won't pay any US taxes at all, since you can realize investment income up to the standard deduction + exemption tax-free. If that's the case, then tax efficiency comes down to minimizing host country ...
by Karamatsu
Thu Jul 03, 2014 7:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help Starting Portfolio for Young Ex-Pat
Replies: 4
Views: 429

Re: US citizens abroad cannot invest through [Fidelity]

I don't think the risks of deceiving someone about my country of residence are worth it. Vanguard, at least, is very clear that their services are for US residents. When I asked them if I could set up an account using the address of a family member in the US, they simply reiterated their legal boile...
by Karamatsu
Thu Jul 03, 2014 8:39 am
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

So it's possible that Fidelity is merely targeting non-US citizens. That's possible but unlikely given that other major brokers also refuse to allow US citizens abroad to trade mutual fund shares, and have for many years. I tried to verify by looking at Fidelity's site but the server that I got con...
by Karamatsu
Wed Jul 02, 2014 10:11 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: If you wouldn't buy (stocks), then you must sell

There's a rule that you shouldn't hold more than what you would buy right now if you weren't already in. The question is still useful in that it asks investors if their AA matches their real-life risk tolerance. If, with the equity market this high, you would be wary of investing a lump sum in your...
by Karamatsu
Wed Jul 02, 2014 9:05 pm
 
Forum: Investing - Theory, News & General
Topic: If you wouldn't buy (stocks), then you must sell
Replies: 32
Views: 3063

Re: US citizens abroad cannot invest through [Fidelity]

A US Citizen must have the same rights no matter where in the world he/she lives.


That is how it should be, but unfortunately it's not how things are.
by Karamatsu
Wed Jul 02, 2014 8:41 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

Just to emphasize, there is no ban on US expatriate investing. Fidelity's policy only applies to shares of mutual funds, and is bringing them into line with the policies of brokers like Vanguard. Expatriates can still trade other instruments just fine (stocks, bonds, REITs, ETFs...). Ironically this...
by Karamatsu
Wed Jul 02, 2014 8:39 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: US citizens abroad cannot invest through [Fidelity]

Except for expatriate Fidelity customers, this doesn't seem to surprising. As others have mentioned, restrictions on the purchase of mutual fund shares by US citizens abroad has been around for a long time. The surprise is more that Fidelity allowed it before... I wish I'd known! Restrictions have b...
by Karamatsu
Wed Jul 02, 2014 8:30 pm
 
Forum: Investing - Theory, News & General
Topic: US citizens abroad cannot invest through [Fidelity]
Replies: 97
Views: 8056

Re: International stock allocation: currency risk

I suppose I don't worry about currency issues too much when allocating equities. It's just another ingredient in the diversification blender, so I just use a simplified (whole-number) allocation that was roughly tuned to global market cap (as expressed in dollars) when I worked out my AA. Since I do...
by Karamatsu
Tue Jul 01, 2014 6:22 pm
 
Forum: Investing - Theory, News & General
Topic: International stock allocation: currency risk
Replies: 29
Views: 1358

Re: Case Study: Broker speed of dividend payments

Yep, all of the Vanguard ETF dividends (VTI, VEA, VWO, VSS) appear on the history page now. I'm not sure when that happened because I was away all day, and time zone differences make it even less clear. I don't have dividend reinvestment enabled for these so I can't guess what price they would have ...
by Karamatsu
Tue Jul 01, 2014 9:00 am
 
Forum: Investing - Theory, News & General
Topic: Case Study: Broker speed of dividend payments
Replies: 41
Views: 3560

Re: Case Study: Broker speed of dividend payments

Surprisingly, the Schwab "account history" page still does not list VSS dividends received, though I can now confirm that the cash balance in the account was increased since the weekend, presumably reflecting those dividends, but I'm not sure when that update occurred. It will be interesti...
by Karamatsu
Mon Jun 30, 2014 8:21 pm
 
Forum: Investing - Theory, News & General
Topic: Case Study: Broker speed of dividend payments
Replies: 41
Views: 3560

Re: What is simple enough to understand, and therefore inves

I think the advice not to invest in anything we don't understand is very wise, not just in the financial world but in politics, religion, you name it. But the OP is right that for most people, most of the time, that wisdom is ignored in favour of other priorities, and we make the best choices we can...
by Karamatsu
Mon Jun 30, 2014 8:06 pm
 
Forum: Investing - Theory, News & General
Topic: What is simple enough to understand, and therefore invest in
Replies: 27
Views: 1901

Re: Case Study: Broker speed of dividend payments

No mention of anything at Schwab yet. Well, I should say, nothing in the History information. I'm not sure what the cash balance was yesterday so no way to check if any funds have been deposited.
by Karamatsu
Mon Jun 30, 2014 1:08 am
 
Forum: Investing - Theory, News & General
Topic: Case Study: Broker speed of dividend payments
Replies: 41
Views: 3560

Re: Help- Foreign Earned Income: Roth and Traditional IRA/40

Regarding the IRA, I'm not a tax expert but what I think you can do is recharacterize your Roth contributions as contributions to a traditional IRA. If you're over the tIRA limits, you can make the contributions non-deductible and file Form 8606. Doing it that way would probably allow Vanguard to mo...
by Karamatsu
Thu Jun 26, 2014 8:40 am
 
Forum: Personal Finance (Not Investing)
Topic: Help- Foreign Earned Income: Roth and Traditional IRA/401k
Replies: 2
Views: 253

Re: Vanguard Intl. Small - ETF vs Fund

I've wondered about that sort of thing myself. It seems odd to charge different fees for the same thing.
by Karamatsu
Thu Jun 26, 2014 8:30 am
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard Intl. Small - ETF vs Fund
Replies: 9
Views: 670

Re: NISA Providers (Japan)

Yes, I think the banks will probably try to steer most people toward their own CDs or high-cost funds where they act as an agent and take a cut of the ER. For greatest flexibility, a brokerage would probably be better. Personally I use SMBC (Nikko), but have never compared them to any of the others....
by Karamatsu
Wed Jun 25, 2014 7:26 pm
 
Forum: Investing - Help with Personal Investments
Topic: NISA Providers (Japan)
Replies: 11
Views: 754

Re: Exchange Rates and International Returns

As long as the exchange rate doesn't change between purchase date and sale date, it should be a wash, shouldn't it? The rate you'll use to buy shares is the same rate you'll use to convert pesos back to USD when you sell. But of course... surprise devaluations do occur and have cost people a lot of ...
by Karamatsu
Tue Jun 24, 2014 8:24 pm
 
Forum: Investing - Theory, News & General
Topic: Exchange Rates and International Returns
Replies: 2
Views: 204

Re: Is it impossible to buy individual foreign treasuries?

In principle it's not difficult to purchase Japanese Government Bonds. The system is different from that of the US in that individuals cannot participate in auctions, and there is no Treasury Direct equivalent. So in Japan you get them by going to a securities dealer, a bank, or to post offices that...
by Karamatsu
Sat Jun 21, 2014 8:02 am
 
Forum: Investing - Theory, News & General
Topic: Is it impossible to buy individual foreign treasuries?
Replies: 9
Views: 502

Re: Schwab: interesting failure that can cost clients $

FWIW I sold some ETF shares at Schwab yesterday by Specific ID, and all worked as advertised: just a click on the "Change" link for the cost basis method to shift from my default to Specific ID for that trade, then it brought up a menu listing each tax lot, number of shares, etc, and let m...
by Karamatsu
Mon Jun 09, 2014 8:59 pm
 
Forum: Investing - Theory, News & General
Topic: Schwab: interesting failure that can cost clients $
Replies: 19
Views: 3265

Re: Schwab: interesting failure that can cost clients $

I don't see any information about my current cost basis method, or an option to change it, when I call up information about my mutual funds. Ah, so assuming we're talking about Schwab rather than Vanguard, perhaps a different procedure is needed. It might be good to send them a note and ask about t...
by Karamatsu
Sun Jun 08, 2014 9:44 pm
 
Forum: Investing - Theory, News & General
Topic: Schwab: interesting failure that can cost clients $
Replies: 19
Views: 3265

Re: Schwab: interesting failure that can cost clients $

Schwab's system doesn't seem to be capable of doing specific lot identification via their UI. This isn't true. I'm not sure about mutual funds since I don't own any, but it's easy to do specific lot identification when selling shares of stocks or ETFs. On the "trade" panel where you enter...
by Karamatsu
Tue Jun 03, 2014 8:44 pm
 
Forum: Investing - Theory, News & General
Topic: Schwab: interesting failure that can cost clients $
Replies: 19
Views: 3265

Re: IRS saying timely excess IRA removal is taxable.

Just FWIW, in an earlier dispute with the IRS, I tried going around and around with them with letters, but they never appeared to actually read them, and never once met their own deadline for sending a reply. In some cases they never replied at all. It was like trying to communicate with someone who...
by Karamatsu
Sun Jun 01, 2014 7:28 am
 
Forum: Personal Finance (Not Investing)
Topic: IRS saying timely excess IRA removal is taxable.
Replies: 31
Views: 2430
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