August Financial Challenge Thread

[OkiBum]

So i thought i'd continue the trend and open a new thread.

Last month I made my first investment in NISA and bought 500 Rakuten Shares (4755) Almost 400K

This month I am going to invest 150K and looking to buy ETF since everyone seems to be recommending it over individual stocks. (over the next few days)

I am leaning towards the 1550 - Global ETF (But I am open to suggestions)

Since it will be my first ETF purchase, please correct me if I am wrong..I need to pay 0.15% in management fee during the time of purchase correct? Are there any other costs I should be aware of? Is the 0.15% going to be deducted from my NISA allowance? For example if I were to buy 1550 for Yen 2400 (around 60 units) will my NISA allowance be reduced by Yen 144,000 or 144216?

September - December: Plan is to invest around 150K/month so I can max out NISA for this year.

[RetireJapan]

I own 1550, it's a reasonable ETF I think. You might also want to look at mutual funds.

The annual fees come out of the profits/value of the ETF itself, so won't count as your NISA allowance and you won't need to pay them on top.

[OkiBum]

I own 1550, it's a reasonable ETF I think. You might also want to look at mutual funds.

The annual fees come out of the profits/value of the ETF itself, so won't count as your NISA allowance and you won't need to pay them on top.

So the 0.15% management fee is a recurring cost and not just a 1 time cost?

Regarding Mutual Funds, I am unable to find any, any suggestions on where to look because I clearly am looking in the wrong place...

[RetireJapan]

There are roughly three types of fees: purchase fees, annual fees, and redemption (sell) fees. You should try to avoid the first and the third, and minimise the second.

Mutual funds are in the 投資信託 section.

[fools_gold]

Since it will be my first ETF purchase, please correct me if I am wrong..I need to pay 0.15% in management fee during the time of purchase correct?

The total fees for 1550 are actually 0.27%. Mutual funds like the eMaxis Slim series are cheaper nowadays.

[OkiBum]

Since it will be my first ETF purchase, please correct me if I am wrong..I need to pay 0.15% in management fee during the time of purchase correct?

The total fees for 1550 are actually 0.27%. Mutual funds like the eMaxis Slim series are cheaper nowadays.

This might be a stupid question, but how is the eMaxis Slim different from the Maxis:1550?

Do they offer similar funds in their portfolio etc.?

[jcc]

This might be a stupid question, but how is the eMaxis Slim different from the Maxis:1550?

Do they offer similar funds in their portfolio etc.?

1550 is an ETF (exchange traded fund). It's structured somewhat differently from a normal fund. This structure gives it some advantages for internal costs, which in general *should* result in a lower cost so long as management is not greedy. By being exchange traded it is also open to being sold above or below its real value(Net Asset Value: the value of all the stocks held by it) as people speculate on it.

eMaxis slim is a normal fund. The main difference is that its value is determined at the end of the trading day, and you pay(or are payed) exactly what it is worth and that's the only value at which it trades hands(so you can sell it all at 1pm but it won't actually be sold until the end of the day, and it will be sold at the price at the end of the day). You can't really panic sell it(since it will only get sold at the end of the day), but you don't need to worry about speculation.

An interesting feature of japanese mutual funds(but not ETFs) like eMaxis slim is that some of them are releasing zero dividends and instead reinvesting those dividends internally(increasing the value of the held funds). This allows you to defer taxation on dividends and only pay it at the end in the form of capital gains. In holding for long periods of time this can make a somewhat significant difference, but in short periods(lets say 5 years) the difference is minuscule.

You can look up the real costs of funds on a site like http://www.morningstar.co.jp . This is 1550's backing fund: http://www.morningstar.co.jp/FundData/C ... 2010112201 and this is emaxis slim: http://www.morningstar.co.jp/FundData/C ... 2017022703

In theory ETFs like 1550 should have lower costs, but in practice the price competition in japan seems to be happening in mutual funds and with the added benefit of deferring taxation, my personal opinion is that the funds are better(at least if you plan to be a long-term investor)

[Akatani]

I was happy with 1550 and 1348 (for Japan) but after checking out the eMaxis slim line, I am going to be switching everything over.

[jcc]

I was happy with 1550 and 1348 (for Japan) but after checking out the eMaxis slim line, I am going to be switching everything over.

I made the exact same mistake. It's not a huge difference, so I left my NISA stuff as is because I don't want to lose that tax-free slot. Moved everything else over though

[OkiBum]

This might be a stupid question, but how is the eMaxis Slim different from the Maxis:1550?

Do they offer similar funds in their portfolio etc.?

1550 is an ETF (exchange traded fund). It's structured somewhat differently from a normal fund. This structure gives it some advantages for internal costs, which in general *should* result in a lower cost so long as management is not greedy. By being exchange traded it is also open to being sold above or below its real value(Net Asset Value: the value of all the stocks held by it) as people speculate on it.

eMaxis slim is a normal fund. The main difference is that its value is determined at the end of the trading day, and you pay(or are payed) exactly what it is worth and that's the only value at which it trades hands(so you can sell it all at 1pm but it won't actually be sold until the end of the day, and it will be sold at the price at the end of the day). You can't really panic sell it(since it will only get sold at the end of the day), but you don't need to worry about speculation.

An interesting feature of japanese mutual funds(but not ETFs) like eMaxis slim is that some of them are releasing zero dividends and instead reinvesting those dividends internally(increasing the value of the held funds). This allows you to defer taxation on dividends and only pay it at the end in the form of capital gains. In holding for long periods of time this can make a somewhat significant difference, but in short periods(lets say 5 years) the difference is minuscule.

You can look up the real costs of funds on a site like http://www.morningstar.co.jp . This is 1550's backing fund: http://www.morningstar.co.jp/FundData/C ... 2010112201 and this is emaxis slim: http://www.morningstar.co.jp/FundData/C ... 2017022703

In theory ETFs like 1550 should have lower costs, but in practice the price competition in japan seems to be happening in mutual funds and with the added benefit of deferring taxation, my personal opinion is that the funds are better(at least if you plan to be a long-term investor)

Thank you so much for the detailed explanation. After reading the above it seems like the Mutual Funds are the way to go rather than the ETF's. I also had a look at the morning star link which you shared to get an idea of the costs.

The e-maxis slim seems very new as most of the funds are less than a year or just 1 year old whereas the ETF's seem to have been in the market for a few years.