Some Tips and Considerations
We've been fielding a lot of questions recently about buying stocks in Japan, so here are some quick tips for your consideration :)
If you are an old hand at this, please correct any errors and share your stories in the comments (you must have made some mistakes in your time, eh?).
There are no prescriptions in this post, just a look at options. If you need more info, feel free to post in the Forum or in the comments below (but the Forum is better).
English or Japanese language?
Unfortunately we are not aware of any domestic provider that offers an English-language interface. If you absolutely need everything to be in English, one of your only options is Interactive Brokers. The downside of this option is that your tax reporting will be a bit of a pain.
Bank or broker?
You may feel that opening an account with your local bank might be more convenient or accessible. This might be true, but generally speaking the best option to buy stocks is to open an account with one of the large online brokers. They offer the widest range of products, the lowest fees, and once you figure out their interfaces are pretty easy to use. SBI, Rakuten, and Monex seem to be popular among the RetireJapan community.
Taxable or tax-advantaged account?
All things being equal, it is better to pay less tax. For that reason, we recommend you use tax-advantaged accounts (iDeCo and NISA) first, then invest anything extra in a normal taxable account.
Individual stocks or indexes?
Individual stocks can give you higher returns if you choose the right ones. They can also provide higher dividends if that is what you are after. However, the consensus seems to be that you will do better over the long run by investing in indexes. In Japan it is easy to buy Japanese index funds, Japanese ETFs (exchange-traded funds), or US ETFs.
Robo-advisor or DIY?
Robo-advisors like THEO or WealthNavi are a very simple solution, but you pay for simplicity and convenience with the relatively high fees. If you are willing to do a bit of reading you can invest for yourself and save the fee. Basically, if you would not invest otherwise it might be worth paying for a robo-advisor, but otherwise save yourself the fee and do it yourself.
Tax-reporting or normal account?
If you invest in a taxable account, you will have a choice when buying investments: you can put them in an ordinary (一般) account or a tax-reporting (特定) account. With the former you have to file and pay your own taxes. With the latter, your broker calculates, files, and pays your taxes for you. In principle you don't have to do anything at the end of the year.
These are just some of the more common enquiries we get here at RetireJapan. Remember, if you need more information, the Forum is a great place to get it. If you are looking for more personalized help, our coaching service may be of interest.
Any other questions or comments about investing in Japan? Please post them in the comments below :)