iDeCo Rakuten or SBI

[jcarrera01]

Hi everyone, this forum helped and encouraged me a lot to start investing through iDeco and NISA systems.
I'm finally setting up my iDECO account first, so I need some help deciding which bank to use and which funds to invest.

I am 35 years old and working as a freelancer so I'm planning to pay the maximum ¥68,000/month. I have been here for more than 10 years now and planning to retire in Japan for now.

I want to start iDeCo with 100% equity on a low-cost fund, and then add bonds when I get closer to retirement.

I have both Rakuten sec and SBI sec accounts since a few years ago, as I have been investing through them using my 特定口座. As most of the people here said, Monex might be the best choice in terms of funds and fees, but as I already have these 2 active accounts, I want to keep it simple and not open another extra account on Monex.

I want to go with the most simple All World fund, so I was thinking:

Rakuten's 楽天・全世界株式インデックス・ファンド
https://www.rakuten-sec.co.jp/web/fund/ ... i=ddiZL24E

or

SBI's ｅＭＡＸＩＳ　Ｓｌｉｍ　全世界株式（除く日本）
https://site0.sbisec.co.jp/marble/insur ... rch_result

After this, I also want to start setting up my NISA account and maybe keep the same provider to make everything a bit easier to operate.

Questions:

1. Should I go for SBI or Rakuten? I'm really used to Rakuten environment as I use their bank, sec, card, market, etc, and having the bank linked to my Rakuten sec helps a lot as it keeps the money flow pretty simple. But their fee on the All World fund it's much higher (0.212%) and almost doubles the one in SBI sec (0.1144%).

2. Apart from the 2 All World funds I mentioned here, is there any other simple option I should go for?

3. Do you think my investment strategy is ok?

Thanks!

[RetireJapan]

Both decent choices!

One extra fact: with Rakuten Securities iDeCo is integrated into the regular website, but for SBI it is a separate website.

Makes very little difference, but just FYI.

[zeroshiki]

Alot of it boils down to personal preference tbh. Even the one fund to rule them all eMaxis slim all country is not guaranteed to be the *best* (seems like SBI is gunning for emaxis Slim with all the new low cost funds for example).

Rakuten All World is a good choice. I don't have an iDeCo because I'm on a company DC but even just for the convenience of it, I'd do it on Rakuten if I could.

[adamu]

Check out the iDeCo Platforms section here: https://retirewiki.jp/wiki/IDeCo#iDeCo_Platforms

Also, the Global Funds article, epsecially the notes on taxes on US ETF wrappers: https://retirewiki.jp/wiki/Japanese_global_index_funds

eMaxis Slim All Country is not available in iDeCo for Rakuten or SBI. So a single global iDeCo fund would be:

Monex: eMaxis Slim All Country
Rakuten: Rakuten wrapper of VT
SBI: SBI wrapper of SCHB, SPDW, SPEM.

Alternatively, on SBI at least you can replicate All Country by buying the eMaxis World ex-Japan (the fund you linked to) and Japan funds.
On Rakuten, it looks like you'd have to mix Tawara Developed, Nikko emerging markets, and Mitsui Sumitomo TOPIX funds.

[jcarrera01]

Both decent choices!

One extra fact: with Rakuten Securities iDeCo is integrated into the regular website, but for SBI it is a separate website.

Makes very little difference, but just FYI.

Noted on this. Thank you!
It's a very little difference but a good thing if I'm going to use it for 25 years.

[jcarrera01]

Alot of it boils down to personal preference tbh. Even the one fund to rule them all eMaxis slim all country is not guaranteed to be the *best* (seems like SBI is gunning for emaxis Slim with all the new low cost funds for example).

Rakuten All World is a good choice. I don't have an iDeCo because I'm on a company DC but even just for the convenience of it, I'd do it on Rakuten if I could.

Thank you for your opinion! I guess none of them is guaranteed to be the best, but I feel investing in any of the All World fund is a secure inversion if I'm going to be investing on it for the next 25 years.

Rakuten All World seems like one good choice for me as I'm a Rakuten user.
But I think the fee is very high compared to the All World funds on SBI and Monex which are 0.1% lower?

[jcarrera01]

Check out the iDeCo Platforms section here: https://retirewiki.jp/wiki/IDeCo#iDeCo_Platforms

Also, the Global Funds article, epsecially the notes on taxes on US ETF wrappers: https://retirewiki.jp/wiki/Japanese_global_index_funds

eMaxis Slim All Country is not available in iDeCo for Rakuten or SBI. So a single global iDeCo fund would be:

Monex: eMaxis Slim All Country
Rakuten: Rakuten wrapper of VT
SBI: SBI wrapper of SCHB, SPDW, SPEM.

Alternatively, on SBI at least you can replicate All Country by buying the eMaxis World ex-Japan (the fund you linked to) and Japan funds.
On Rakuten, it looks like you'd have to mix Tawara Developed, Nikko emerging markets, and Mitsui Sumitomo TOPIX funds.

Thank you for the articles. I read them last week when I was searching for information on this.

Regarding the following quote on the second article:

"...for a US-domiciled fund or a Japanese-domiciled fund that is 100% reselling a US-domiciled fund, even tax-protected accounts will be paying two kinds of withholding tax on foreign non-US stocks (country of origin + US taxes)."

Does it mean that if I go for the 楽天・全世界株式インデックス・ファンド, apart from the 0.212% fee, I will be paying other fees to cover the two kinds of withholding tax on foreign non-US stocks (country of origin + US taxes)? Or US taxes are included in that fee? Also, does this apply to ideco?

It sounds complicated if I need to invest on Tawara Developed, Nikko emerging markets, and Mitsui Sumitomo TOPIX fund, and rebalanced them every year by myself.

[adamu]

Does it mean that if I go for the 楽天・全世界株式インデックス・ファンド, apart from the 0.212% fee, I will be paying other fees to cover the two kinds of withholding tax on foreign non-US stocks (country of origin + US taxes)? Or US taxes are included in that fee? Also, does this apply to ideco?

For iDeCo, my understanding is that the Rakuten and SBI funds pay US withholding taxes on 100% of the fund dividend, wheras eMaxis Slim and other Japanese funds only pay US withholding tax on US investments in the fund. iDeCo only protects you from Japanese taxes, not foreign dividend tax (actually VT may even pay Japanese dividend tax on the Japanese portion too, so you could be paying Japanese taxes on those funds even in an iDeCo. I'm not sure if this is the case). The problem with these US wrappers is that they cause US tax to be due on 100% of the dividend. Since these funds reinvest dividends, this would theoretically be reflected in poorer performance.

I don't know if this is a genuine problem, or if it's just academic. I'm hoping one day somebody will compare these wrappers to their underlying funds (with dividends reinvested), as well as to the index, and equivalent Japanese-domiciled funds, to see how it all works out.

[jcarrera01]

Does it mean that if I go for the 楽天・全世界株式インデックス・ファンド, apart from the 0.212% fee, I will be paying other fees to cover the two kinds of withholding tax on foreign non-US stocks (country of origin + US taxes)? Or US taxes are included in that fee? Also, does this apply to ideco?

For iDeCo, my understanding is that the Rakuten and SBI funds pay US withholding taxes on 100% of the fund dividend, wheras eMaxis Slim and other Japanese funds only pay US withholding tax on US investments in the fund. iDeCo only protects you from Japanese taxes, not foreign dividend tax (actually VT may even pay Japanese dividend tax on the Japanese portion too, so you could be paying Japanese taxes on those funds even in an iDeCo. I'm not sure if this is the case). The problem with these US wrappers is that they cause US tax to be due on 100% of the dividend. Since these funds reinvest dividends, this would theoretically be reflected in poorer performance.

I don't know if this is a genuine problem, or if it's just academic. I'm hoping one day somebody will compare these wrappers to their underlying funds (with dividends reinvested), as well as to the index, and equivalent Japanese-domiciled funds, to see how it all works out.

If Rakuten fund pays US withholding taxes on 100% of the fund dividend, then it will sure result in poorer performance. This all sounds very bad in the theory but it would be nice to know if this is happening for real....

Do you think it would be better not to open my ideco account on Rakuten (even I'm used to use their website and already have a bank account and Securities account with them) because of their higher fee of 0.2%, and choose to go with the SBI fund which is 0.1%?

[fools_gold]

I'm not sure if it makes a whole lot of difference in the end. There's a good writeup here with comparisons to other funds at the end.