Best broker for NISA?

[ChapInTokyo]

I can’t decide whether to open my NISA account at Monex, Rakuten, or SBI.

I’d like to keep things simple by having my taxable and NISA and possibly also iDeCo at the same broker but while comparing the NISA funds on offer at the main brokers and also comparing their USD exchange rates, cost of transferring in from and out to banks, and which particular banks allow transfers at zero cost, whether dividends from US ETFs can be automatically reinvested or not, and whether there is a way of setting up scheduled withdrawal of funds from mutual funds on a percentage basis as well as yen amount basis and so on I’m finding it quite difficult to decide which factors are the most important ones to have.

So I’m wondering which broker all of you on this bbs went with and what you like about that broker. Thanks!

[RetireJapan]

I have all three but mainly use Rakuten, largely out of laziness

[ChapInTokyo]

I have all three but mainly use Rakuten, largely out of laziness

The zero yen conversion from dollars to yen that Rakuten offers is very appealing too. I think Prestia still allows you to have USD remittances sent to your account free of charge so I’ll probably sell off a good chunk of my holdings at Firstrade and reinvest at Rakuten via Prestia. If I understood their system correctly I should be able to send the USD incurring only a 1000 yen fee from Prestia to Rakuten and then buy assets there in both USD and JPY without incurring any currency exchange cost?

[RetireJapan]

I have all three but mainly use Rakuten, largely out of laziness

The zero yen conversion from dollars to yen that Rakuten offers is very appealing too. I think Prestia still allows you to have USD remittances sent to your account free of charge so I’ll probably sell off a good chunk of my holdings at Firstrade and reinvest at Rakuten via Prestia. If I understood their system correctly I should be able to send the USD incurring only a 1000 yen fee from Prestia to Rakuten and then buy assets there in both USD and JPY without incurring any currency exchange cost?

I switched to only buying mutual funds in 2022 and haven't looked back I'm afraid. Don't know how dollar purchases work now

[ChapInTokyo]

I have all three but mainly use Rakuten, largely out of laziness

The zero yen conversion from dollars to yen that Rakuten offers is very appealing too. I think Prestia still allows you to have USD remittances sent to your account free of charge so I’ll probably sell off a good chunk of my holdings at Firstrade and reinvest at Rakuten via Prestia. If I understood their system correctly I should be able to send the USD incurring only a 1000 yen fee from Prestia to Rakuten and then buy assets there in both USD and JPY without incurring any currency exchange cost?

I switched to only buying mutual funds in 2022 and haven't looked back I'm afraid. Don't know how dollar purchases work now

I’ll maybe ask Rakuten support to clarify just in case.

I mean, zero commission currency exchange sounds too good to be true so I suppose I must have got it wrong somehow.

I mean, the tie up with Prestia at the cheap USD transfer fee (discounted to 1000 yen from their standard fee of 7000 yen!) must be based on the assumption that customers will do their currency conversion at Prestia (at 1 yen on the dollar) so if Rakuten allowed conversion from USD to JYE and back at no commission, there’d be nothing in it for Prestia… hmmm…

[ChapInTokyo]

I looked again at the Rakuten site, and it seems that as of 4 December 2023, they did away with charging a fee for "real time currency conversion" between usd and yen. SBI Securities soon followed suit by announcing that as a part of their Zero Kakumei programme they too will no longer charge a fee for real time currency conversion starting 1 December 2023. Looking at the small print in both these announcements though, the spread between their TTB and TTS rates will still apply, albeit these will be the narrow spreads applied within the currency exchange industry players (with no added service fee for the brokerages).

So it seems that as for currency conversion costs, there is not a lot to choose between Rakuten and SBI. Monex on the other hand apparently charges a 0.25 yen commission when changing USD to JPY so even though they have 0 yen commission from JPY to USD, that is something to bear in mind.

At the current state of play though, I guess Rakuten has the edge on the others because while the SBI Sumishin Bank charges a lifting charge ( unless the remitted amount is more than 50,000 USD) of 25 USD=approx 3850 yen? to receive remittances in USD, Prestia doesn't apply lifting charges to their non-commercial customers. Since Rakuten has a deal with Prestia to discount foreign currency transfers from the exorbitant 7,000 yen ---> 1,000 yen per transfer, this does seem to be the better deal at the moment.

[ChapInTokyo]

I've just discovered that Monex has something that neither Rakuten or SBI have.

Their Monex Vision protfolio optimization app is totally amazing. It's like myindex.jp on steroids.

It's just a shame that I'd already sent off the paperwork for iDeCo and Nisa accounts to Rakuten before I discoverd that Monex has a portfolio management app built on mean variance and Black-Litterman model algorithms that's integrated into Monex' fund sales and purchase functions.

So what do you know? Not all brokers are basically the same!

[beanhead]

I have a Monex account but never use that Vision tool. Set it up, looked at it briefly at first but then just ignored it.
The recommendations it offers are quite conservative. It is always telling me I am underweight in JP stocks and REITs, for example.

[ChapInTokyo]

It suggests I rebalance for more Japanese and Emerging Market stocks too. But as I am going to be drawing my pension from next year, I am thinking that overweighting Japanese stocks might not be such a bad thing since it'll lower the portfolio's exchange rate risk ?

When I backtested the 'balanced' allocation below as suggested by Monex Vision into myINDEX.jp, with data from the past 10 years, the portfolio showed an average return of 8.4% a year with a risk of 8.5% and a sharpe ratio of 0.99. This is not bad when you consider that a 60:40 portfolio of 60% Vanguard Total World Stock ETF + 20% Vanguard Total Bond Market ETF + 20% Vanguard Total International Bond ETF backtested using data from the past 10 years at portfoliovisualizer.com shows a return of 6.17% a year with a risk of 9.83% and a sharpe ratio of 0.49. Of course, in real life the yen went from around 106 yen to the dollar in 2014 to over 150 yen to the dollar nowadays so the 60:40 portfolio with much lower allocation to Japan would've performed super well in yen terms...

Incidentally, the balanced allocation that Monex Vision suggested for a risk appetite of 10% per year was 20% Japan stocks, 22% Japan bonds, 15% US stocks, 8% developed market stocks, 2% emerging market stocks, 22% Japanese bonds, 16% developed market bonds, 5% emerging market bonds, 6% Japanese REIT, 2% developed market REIT, and 4% gold.

For what it is, I think it's not a bad piece of software. It even allows you to simulate the draw down result just in case you get to live until you're 100! The only quibble I have with it is that it doesn't let me add the more esoteric funds and etfs that I have over in my Firstrade account (because some of them are too granular to fit neatly into the provided asset class boxes). But that quibble also goes for myINDEX.jp and of course portfoliovisualizer.com doesn't know anything about Japanese mutual funds so I guess nothing's perfect. If anyone uses other sites which can provide better efficient frontier guidance for Japanese and US funds, etfs and stocks, please share!

[captainspoke]

...
Incidentally, the balanced allocation that Monex Vision suggested for a risk appetite of 10% per year was 20% Japan stocks, 22% Japan bonds, 15% US stocks, 8% developed market stocks, 2% emerging market stocks, 22% Japanese bonds, 16% developed market bonds, 5% emerging market bonds, 6% Japanese REIT, 2% developed market REIT, and 4% gold.
...

Even if I skip japanese bonds once, listed there twice?, I still don't get 100%...