US Expat in Japan looking for options

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
saishowaguu2
Posts: 3
Joined: Mon Oct 02, 2017 9:26 am

US Expat in Japan looking for options

Post by saishowaguu2 » Mon Oct 02, 2017 9:42 am

Hello.

I am a 33 year old US Expat living in Japan.
My wife is disabled and we have two children, so I don't really have much free time for active trading (plus I don't think I have the chops for it). :oops:

My goal is really to put some money away for retirement.
My options are limited, I know, but I don't want to get sucked into something like RL360.
From what I could gather, Japan doesn't have something like Vanguard or Schwab, or something where can they offer managed portfolios.

(I do have a US address and active US bank accounts/US credit cards, but no drivers license, so I don't think I could even open an account back home with all the restrictions and checks.)

Looking to start putting away $1500 a month to start.
Is there anything simple out there for me as an expat? Not looking for anything too fancy.

I know ETFs might be an option, so would something like emulating a Vanguard Target-Date Retirement Fund (but as ETFs) work? :confused

Like for example, the Vanguard Target Retirement 2045 uses these funds:

1 Vanguard Total Stock Market Index Fund Investor Shares 54.0%
2 Vanguard Total International Stock Index Fund Investor Shares 36.0%
3 Vanguard Total Bond Market II Index Fund Investor Shares† 7.0%
4 Vanguard Total International Bond Index Fund Investor Shares 3.0%

If I invested in these, but as ETF, would that be similar? If so, what kind of return (guestimate) am I looking at after 30 years if the market is relatively steady?
Am I completely off base here? Please help.

a__
Posts: 10
Joined: Sun Aug 27, 2017 12:09 am

Re: US Expat in Japan looking for options

Post by a__ » Mon Oct 02, 2017 10:26 am

I'm an American living in Vietnam - no family here, but I have similar investing goals as you do.

There are several threads here cautioning against US citizens citizens from purchasing mutual funds. It doesn't appear to be illegal per se, but Vanguard may not really like it. See this link: https://thunfinancial.com/us-brokerage- ... osed-2015/

Anyway, building the same portfolio in ETFs achieves exactly the same goal, and you don't have to reach the minimum initial purchase amounts. The downside is that you can't set-up automatic investments, so you'll have to go online each time to want to make a purchase.

You should be able to open an account using your US address without any trouble...though I'm not sure if they'll ask for your drivers license number...

Each ETF/mutual fund profile page will explain the average returns. But for your specific portfolio, it's a bit complicated, and impossible to predict. Over time it should be a composite of the underlying funds. You can try some scenarios here: https://www.portfoliovisualizer.com/

User avatar
Hyperborea
Posts: 291
Joined: Sat Apr 15, 2017 10:31 am
Location: Silicon Valley

Re: US Expat in Japan looking for options

Post by Hyperborea » Mon Oct 02, 2017 12:36 pm

There is a Bogleheads wiki page on investing while in Japan - https://www.bogleheads.org/wiki/Investing_in_Japan

Something to think about in planning this is how long do you plan to be in Japan? If it's short term (a few years) then pick solutions that will be easier to transport when you go. If it's long term then pick solutions that will be easy to deal with where you are.

bungalow10
Posts: 2030
Joined: Sat Apr 09, 2011 6:28 am
Location: Amsterdam

Re: US Expat in Japan looking for options

Post by bungalow10 » Mon Oct 02, 2017 12:49 pm

huh. So I'm an Expat in the Netherlands and I fully intend to keep contributing to my Roth IRA while I'm here.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

User avatar
Hyperborea
Posts: 291
Joined: Sat Apr 15, 2017 10:31 am
Location: Silicon Valley

Re: US Expat in Japan looking for options

Post by Hyperborea » Mon Oct 02, 2017 1:02 pm

bungalow10 wrote:
Mon Oct 02, 2017 12:49 pm
huh. So I'm an Expat in the Netherlands and I fully intend to keep contributing to my Roth IRA while I'm here.
I would check the laws of the country you are in to verify how Roth type accounts are treated. Not every country treats them as tax exempt accounts. You may owe taxes on activity within the account and withdrawals.

I'm an expat in the US from a country which used to treat Roths as not tax exempt and now does.

bungalow10
Posts: 2030
Joined: Sat Apr 09, 2011 6:28 am
Location: Amsterdam

Re: US Expat in Japan looking for options

Post by bungalow10 » Mon Oct 02, 2017 1:13 pm

Hyperborea wrote:
Mon Oct 02, 2017 1:02 pm
bungalow10 wrote:
Mon Oct 02, 2017 12:49 pm
huh. So I'm an Expat in the Netherlands and I fully intend to keep contributing to my Roth IRA while I'm here.
I would check the laws of the country you are in to verify how Roth type accounts are treated. Not every country treats them as tax exempt accounts. You may owe taxes on activity within the account and withdrawals.

I'm an expat in the US from a country which used to treat Roths as not tax exempt and now does.
That's fine. I won't withdraw while I'm here. I have the Netherlands 30% Rule so I don't have to worry about any taxes on assets.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

saishowaguu2
Posts: 3
Joined: Mon Oct 02, 2017 9:26 am

Re: US Expat in Japan looking for options

Post by saishowaguu2 » Mon Oct 02, 2017 8:00 pm

Sorry for my ignorance, but if I were to invest in those ETFs, how does it work exactly? (Like if I were to use Interactive Brokers)
If I needed to take money out of the investment or completely cash out, how does that work?

If I'm looking at a modest return for retirement investment, would the ETFs I mentioned be enough or should I be looking at other things/diversifying the portfolio more?

User avatar
Hyperborea
Posts: 291
Joined: Sat Apr 15, 2017 10:31 am
Location: Silicon Valley

Re: US Expat in Japan looking for options

Post by Hyperborea » Mon Oct 02, 2017 11:36 pm

saishowaguu2 wrote:
Mon Oct 02, 2017 8:00 pm
Sorry for my ignorance, but if I were to invest in those ETFs, how does it work exactly? (Like if I were to use Interactive Brokers)
If I needed to take money out of the investment or completely cash out, how does that work?

If I'm looking at a modest return for retirement investment, would the ETFs I mentioned be enough or should I be looking at other things/diversifying the portfolio more?
I'm not sure that you want to use Interactive Brokers in your case. First, you need a minimum of US$10K to open an account. Second, there is a monthly minimum of US$10 in fees (minus any commissions) until you are over US$100K. You also aren't trying to buy stocks on non-US markets which is one of the big plusses of Interactive Brokers. Schwab seems to be a brokerage that will take US expats. Their fees are pretty low. Maybe TD Ameritrade as well. There are possibly others too.

As for your investment plan it seems ok to me. It's simple enough which is a good thing. I would probably split the stock more evenly between US and rest of world. If you are planning to live long term in Japan then I would think about adding some "home market" bias to your portfolio. Some would say that you don't have enough bonds but at your age it's fine if you are willing to live with the roller coaster of stocks. I was 100% in stocks at your age in my investments until shortly before retiring - it works fine if you can stay the course.

Also, I'm not sure that 3% in International Bonds will make any meaningful difference to your portfolio. At your $1500 / month investment rate it's $45 / month in international bonds. I would simplify that further too and make it 10% bonds - either US if you are returning to the US or international if you are going to be long term outside the US. Later when you have more to work with or larger monthly savings maybe then you might diversify it.

So, given 10% in bonds I would simplify it to:
45% US Market
45% ROW
10% Bonds

Or if planning to live long term in Japan:
10% Japan
40% US
40% ROW
10% Bonds

You might be able to use the Schwab no fee ETFs to buy these without any purchase cost. I'm not sure which Schwab ETFs would work best for these categories. I'm not a Schwab customer.

If you don't like my suggestions then that's fine. There are a number of other possible reasonable portfolios and they will all have their adherents and all will work to a somewhat similar degree over the long run. Sometimes one approach will be better and another time the other one will be and we won't know in advance. The most important thing about the portfolio that you choose is that you believe in it. That you know why it is the way it is and that you really believe in it. If you don't then you will be wont to change it when it does badly or when you get a new idea or read an article about some other way to organize your portfolio. That chopping and changing is what leads many retail investors (i.e. small individual investors like us) to underperform the market.

For taking money out of the brokerage accounts you have various ways to do so depending on where it is going. You may also need to do some currency exchange. Each brokerage will have different ways of doing this.

Volkdancer
Posts: 112
Joined: Sun Sep 07, 2008 3:37 pm

Re: US Expat in Japan looking for options

Post by Volkdancer » Tue Oct 03, 2017 1:06 am

A suggestion for when you do act: install a VPN for communicating with whatever US company you choose to work with. That will help to keep your information private. A second advantage is that you can choose which of the servers your VPN provider provides so that the investment company sees your data passing through a US site although I do not know if that has legal ramifications. Even if you decide to route your communications as coming from Japan, at least one VPN provider, PIA VPN, offers the option of routing through Japan. That would help maintain the security of your data.

Karl V

User avatar
peterinjapan
Posts: 272
Joined: Fri May 15, 2015 8:41 am
Location: Japan!
Contact:

Re: US Expat in Japan looking for options

Post by peterinjapan » Tue Oct 03, 2017 2:48 am

Hello, nice to talk to you, OP. I'm also an expat living in Japan for 25 years.

Basically, investing from the U.S. side is "best" but only if you have a support network there, and some legal address. I have a company and several properties so it's easier for me. You do have to be careful with American companies who want to pretend that you having a passport removes you right to invest like any other American. Vanguard was downright hostile to me, and I quit them as soon as I could.

For you, you might just go with Rakuten, at https://www.rakuten-sec.co.jp. It might be hard-ish to set up, but they shouldn't deny you if you're a resident here. You will have the basic options, the top 20-30 ETFs from Vanguard and iShares, though not everything. Most stocks can be purchased directly, too, though not all. You will have to use the website in Japanese -- I've learned a lot of investing terminology in Japanese -- but it's not too hard to get the hang of.

saishowaguu2
Posts: 3
Joined: Mon Oct 02, 2017 9:26 am

Re: US Expat in Japan looking for options

Post by saishowaguu2 » Wed Oct 04, 2017 5:45 am

Thanks for the advise guys.

I think I'll be starting out with the portfolio spread percentage as suggested by Hyperborea.
I'm also open to any other suggestions for ETFs that you guys think might be good for a simple retirement investment plan.

(Also, it is amazing to me to get advice from Peter. I was buying products from his website years ago, when I was still in high school in the US :beer .)

I talked to Schwab, but they wont deal with someone residing in Japan (unless I am in the US at least 6 months out of the year, which I am not :annoyed ).

Interactive Brokers may be my only english-based option at the moment. (Unless you guys know of any other options out there.)

I also started the process to open an account with Rakuten, so we'll see how that goes.

User avatar
Hyperborea
Posts: 291
Joined: Sat Apr 15, 2017 10:31 am
Location: Silicon Valley

Re: US Expat in Japan looking for options

Post by Hyperborea » Wed Oct 04, 2017 11:38 am

saishowaguu2 wrote:
Wed Oct 04, 2017 5:45 am
Thanks for the advise guys.

I think I'll be starting out with the portfolio spread percentage as suggested by Hyperborea.
I'm also open to any other suggestions for ETFs that you guys think might be good for a simple retirement investment plan.
You can still use Vanguard for many of those by buying their ETFs.

US Market - VTI Vanguard Total Market
ROW - VXUS Vanguard Total International
Japan - EWJ iShares MSCI Japan
US Bonds - BND Vanguard Total Bond Market
International Bonds - BNDX Vanguard Total International Bond

However, some brokerages have no transaction fee funds which are similar to these and that might make suitable replacements. Also, from what Peter said about Rakuten's limited ETF offerings you may have to switch fund choices - perhaps an iShares ETF instead of a Vanguard one.
saishowaguu2 wrote:
Wed Oct 04, 2017 5:45 am
I talked to Schwab, but they wont deal with someone residing in Japan (unless I am in the US at least 6 months out of the year, which I am not :annoyed ).
If you are going to open an Interactive Brokers account you will need to wait 6 months or so ($10K minimum / $1500/month). You might try seeing if TD Ameritrade will deal with you. If not then at your investment rate you will cross the $100K line in about 5.5 years just on contributions so the monthly maintenance won't be too much of a burden over the long run to retirement but it might still be north of $500 over the initial years.


Edit: I remembered something that I came across recently that seemed an interesting way for a Japanese investor to make a little extra return. There are a number of Japanese companies that offer gifts of various kinds to their stockholders. For example Aeon offers purchase discounts of a couple of percent with the amount based on share holdings. If one shopped at Aeon for groceries anyways then this could be worthwhile. 100 shares of Aeon would get you 3% cash back on all purchases.

Here's a site that covers a lot of those - http://kabuyutai.com It might be worth it to consider some of those for a small amount of your investment money.

Post Reply