Types of accounts
The so-called 'standard' investment advice :
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follows a Bogleheads approach of investing in low cost passive diversified index funds,
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prioritize using both the ideco and Nisa tax advantaged accounts,
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opening them at a low cost brokerage like SBI or Rakuten (instead of with more fees and less products offered),
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and filling them with the widely popular 'eMaxis slim all countries' fund, a global equity fund with low fees (0.05%) (with the 'eMaxis slim SP500' being also popular)
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does not applies to US Taxpayers
Strategy
Bogleheads is a well established, well-documented, and globally popular recommendation for approaching a long term investment strategy.
Several studies shows that lump-sum ("LS" ie investing all funds as soon as funds are available) is a significantly better way to invest money on the world equities markets than voluntary spreading the amount over a period of time ("DCA" aka dollar cost averaging).
2022-04 Do I need a Financial Advisor ?
Long-term/risk-adjusted investing
Tax advantaged Accounts : iDeCo
iDeco is a very popular, heavily tax-advantaged investment account.
Disadvantages includes funds locked until 60 years old, and the fund choices are restricted per provider. As of time of writing, the popular eMaxis Slim All Country fund is available on Monex iDeCo. Various other iDeCo providers have their own globally diversified mutual funds.
Contributions are tax free, and gains are also tax free for several years. Contributions maximum varies between 0.1 and 0.8 MJPY per year depending on eligibility.
Note that some company DC or DB pension plan interfere with eligibility for iDeCo. Your ability to use the iDeCo will depend on the implementation done by your employer, and opening an iDeCo normally requires asking your employer HR to fill paperwork. Depending on your DC plan, it might also not be beneficial to change from a corporate DC to an iDeCo.
iDeco will be changed from 2022, extending age and contributions.
See this post about the beneficiary of your DC account.
Tax advantaged Accounts : NISA
NISA (see also, old NISA) is a tax advantaged investment account. It is modeled after the UK's ISA accounts.
You can purchase up to a fixed amount per year, and income (capital gains and dividends) in the account is tax free. As of 2024, an adult can have one NISA account. Previously a choice had to be made between a "regular" (aka General) NISA and a "tsumitate" NISA. These options have have been merged into a single "new" (aka "shin NISA", "atarashii NISA") NISA. As of 2024, the Junior NISA (for children under 18 years old) has been suspended.
NISA is popular with those who want to invest more than iDeCo allows, or do not want the 60 years old age lock-in of iDeCo.
A NISA has three contribution limits.
- An annual limit on the regular portion of the NISA
- An annual limit on the tsumitate portion of the NISA
- A lifetime limit for total contributions in a NISA
Every year, an investor can contribute up to JPY 2,400,000 in the regular portion of their NISA, as well as up to JPY 1,200,000 in the tsumitate portion of their NISA. The annual limit is reset every calendar year. However, the NISA also has a lifetime contribution limit of JPY 12,000,000 for the regular and 6,000,000 for the tsumitate portion. The lifetime contribution limit can be replenished the year following selling assets in your NISA. It will be replenished by the book value of the sold assets (i.e. what you originally paid for the assets, regardless of their value at the time of sale).
A NISA can also be transferred between different financial institutions.
See the NISA FAQ Thread for details on the NISA.
Old NISA : Regular NISA
Until the year 2023 included, the 'former' ordinary NISA allowed 1.2 MJPY of purchase per year, for 5 years of tax-free growth.
After the 5 years are finished, the investments are automatically transferred to your regular investment account, at the market value they have at that time (so any growth during the last five years won't be taxed).
Old NISA : Tsumitate NISA
Until the year 2023 included, the 'former' tsumitate NISA allowed 0.4 MJPY of purchase per year, for 20 years.
It will end in 2042, final year 2061.
Old NISA : Junior NISA
As of 2021 the Junior NISA allowed 0.8 MJPY of purchase per year, for children under 20. It ended in 2023. Funds held in the Junior NISA will remain tax free until the child turns 18.
Unlike the regular and tsumitate NISA, the Junior account cannot move between providers and money cannot be taken out before 18 years old in principle.
General investment account (not tax advantaged)
A general investment account does not have limitation on amounts like iDecos or the NISAs have.
Upon creation, the way the tax tracking will be dealt with must be chosen. There are three options (特定預り/一般預り) depending on who tracks the profit/loss and who files the taxes, explained here : https://news.mynavi.jp/kabu/account-type/
Providers
As of 2021, the main popular low-cost providers for investment are SBI, Rakuten, and Monex. Kabu.com is another option, especially for AU or Mitsubishi UFJ users.
They offer low fees, large access to funds, and a variety of investment accounts (iDeco, NISAs, regular investment accounts etc).
However none currently offers an english interface.
Providers : SBI
How to transfer money to SBI. For #3, the money is sent to a dedicated account in one of three major banks, when transferring to this account it is important the 'remit from' name in the transfer matches the SBI account holder name.
How to purchase funds.
It is possible to set a direct debit from a bank account, however the funds take two weeks to arrive. This allows to automate a monthly investing purchase.
SBI also offers a credit card, which as of 2023 provides users with from 0.5% to 5% of points on up to ¥50,000 of monthly mutual fund purchases, depending on the kind of card you hold.
Providers : Rakuten
Rakuten also offers a credit card, which as of 2023 provides users with 1% of points on up to ¥50,000 of monthly mutual fund purchases.
Providers : Monex
Monex also offers a credit card, which as of 2023 provides users with 1.1% of points on up to ¥50,000 of monthly mutual fund purchases.
Providers : Kabu.com
Kabu.com also offers a credit card, which as of 2023 provides users with 1% of Ponta points on up to ¥50,000 of monthly mutual fund purchases.
Linking your Kabu.com account with your AU Jibun Bank account also provides you with a bonus 0.099% on your bank deposits.
Products
2021-05 Popular investment products. eMaxis Slim is a popular range of product, with the most popular being the Global Equity (all countries)), based on the MSCI World index (see comment on index and its currency basket ).
The MSCI World index, that emaxis slim is replicating, has its factsheet here showing its top 10 companies and geographical distribution (however most companies are multinationals), and a full list of the companies it includes (1000+) can be found here.
2021-05 Insurance as an investment
2021-05 Investing in JPY or USD