Are you sitting down?
As a follow-up (as my friend abbreviates: ‘F/U’) to my post Where the Rubber Meets the Road, I am sharing my snail-paced progress on creating those retirement accounts.
With today’s technology you’d think that opening an account would be as easy as 1-2-3 but it is as difficult as 1-2-3-4-5-6-7-8-4-5-6-7-8-8-8-9-10.
It has been 4 months since I learned of the local Japanese vehicles for early retirement, and I have advanced at a snail’s pace and believe to be passing the 75% mark. If you read my mistakes, you might cut that wait time down by half at least. There is so much time for awaiting snail mail, applications, form processing, phone call confirmations and error-correcting forms that the only thing left to do is sit on my ass and write about the most exciting topic on the internet: hopeful early retirement.
Still reading? No cookies for you.
Starting with the latter, I visited the pension office with my spouse to initiate the extra payment, even though I believe pensions will go bust, only to find that I wasn’t eligible due to being a salaryman. Hard stop.
It took awhile to choose which brokers to use for the iDeCo and NISA based on key factors such as fees, but especially the list of funds available at each one. There are generally few funds available, tough for us local customers. Furthermore, I preferred longevity in an effort to avoid default risk – they are retirement accounts after all.
I had already put a small portion of capital to work in my zero-advantaged full capital gains taxable All Weather Portfolio. This was after starting the application process of my tax-advantaged accounts that I expected to take perhaps 2 weeks. With the iDeCo contributions being fixed monthly payments and not retroactive, I wanted to start as soon as possible (June 2019).
I had “requested information” for mailed packages on the offerings from 2 brokers. Little did I know, one of them had proactively went ahead and registered me and my soon-to-be-cancelled tax-advantaged accounts with the tax office.
While innocently continuing my research, I realized that zero of the top 5 brokerages offered commodity funds nor segments of termed bond funds, needed for the All Weather Portfolio. I did find a couple that had gold funds but with high fees (above 0.25%). The options for these tax accounts are limited to say the least!
Perhaps the portfolio is too complicated, or we citizens have limited options available to the average consumer.
Most brokerages here have foreign and domestic bond funds, foreign and domestic equity funds, and then a sprinkle of REITs, and gold funds are about as common to find as physical gold itself. That’s it, at least for the tax-advantaged accounts.
So I finally made my decision and started the application process for an iDeCo at one broker and the NISA at another (diversify everything!).
The iDeCo broker came back quickly saying that they couldn’t take deposits from my main bank. Boom, done. But they could accept deposits from the other broker I that had applied for the NISA with, or so I thought.
I know that you are on the edge of your seat at this point. Feel free to grab a stiff drink to take in the rest.
I waited and waited for the NISA. About 2 months went by. Finally, the tax office had rejected their application for me due to me already having a NISA account?! From one of the other brokers that I had requested a pamphlet from… apparently.
So I had to request official cancellation papers from the original brokerages, then submit these cancellation confirmations to the new broker to send to the tax office, and go through the whole application process all over again.
I started thinking about Franz Kafka’s The Castle. A quick blurb of the plot of the book is more interesting than the book itself.
A few weeks pass.
The Tsumitate NISA (20-year) is finally opened with SBI! Take my money now!
Well, this bank also doesn’t accept deposits from my main bank. Meanwhile, the iDeCo bank also doesn’t accept deposits from this newly opened account! I had to create a dummy savings account that could accept money from my main bank, and transfer money to these tax-free accounts. This was done through a version of the bank that I had already opened that is similar but not exactly the same.
And on and on.
I am still working through the actual transfers and fund purchases, all incomplete. I hope to have them fully completed by Christmas.
My initial research of funds available in each account and bank found that the bank with my NISA had a gold fund in it. After opening my 20-year NISA and ready to pull the trigger on some capital, it turned out that this gold fund was only available in the 5-year NISA, not the 20-year NISA. Also, one of the few but important differences in the terms is that 1.2M JPY can be deposited per year in the 5-year NISA, but only 400k JPY per year in the 20-year NISA.
I requested to change the 20-year NISA to a 5-year NISA…
At this point my early retirement enthusiasm and even excitement in June has turned into catatonia in October.
At least I finally decided on the portfolios. Already having a tax-full All Weather Portfolio established, I’ll do the Gloom Doom & Boom portfolio in the NISA, 25% in each of Stocks, Bonds, REITs, and Gold, and what I believe to be the Warren Buffet-recommended portfolio or perhaps traditional portfolio of 90% stocks and 10% bonds in the iDeCo, all due to the limited funds available in each of these accounts and brokers. Even my portfolios will be diversified.
Through all of this paperwork my credit card expired. I figured, hey, why not take a look at the local card offerings and get a good deal of direct savings like a cash-back card? I went to work again evaluating and re-evaluating the offers out there and finally pulled the trigger on one cash-back card application. The best these days is roughly 1% and there were just a couple of options to choose from at this highest rate that I could find. It actually had a somewhat convoluted points and conversion process but seemed tolerable. About two weeks later a letter from the company cited unspecified reasons for the rejection of my application.
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