Recommended products for overseas investment, advantages / disadvantages and risks!
Overseas investment
Foreign investment with high interest rates and abundant financial products is still very popular in Japan.
However, because it is an overseas product, there is little information such as purchasing methods and risks.
I think many people find it difficult to purchase.
This time, we will discuss the advantages and disadvantages (risks) of overseas investment, how to buy and types, and recommended products.
I will introduce you.
What is overseas investment?
There are two ways to invest overseas: purchasing from a domestic financial institution or purchasing directly from an overseas financial institution.
When purchasing overseas investment products in Japan
Purchase overseas financial products through domestic banks and securities companies. The biggest merit is that you can easily start overseas investment. In addition, even if the profit is usually obtained from overseas investment, it is necessary to file a tax return in Japan, but by opening a specific account at a domestic securities company, the profit obtained from overseas investment is automatically withheld. In some cases, the final tax return is not required.
When purchasing overseas investment products overseas
Purchase overseas financial products through overseas banks and securities companies. The biggest advantage is that you can purchase a wide range of overseas financial products. There are many attractive financial products overseas, but in Japan, regulations on financial products are strict and only some products registered by the Financial Services Agency can be purchased, so most of them are prohibited from selling in Japan. increase.
In addition, the commission is cheaper than when using a domestic financial institution, and you can purchase at a low cost.
Benefits of overseas investment
The following five are the merits of overseas investment.
High yield
Compared to Japanese financial products, there are many high-yielding financial products. Especially in emerging countries, economic growth is remarkable, and the yield will increase along with the growth rate of GDP.
For example, the New York Stock Exchange and the S & P 500, a stock index of 500 stocks listed on NASDAQ, have yields of 11.96% in 2016, 1.38% in 2015, 13.69% in 2014, and 32.39 in 2013. %, 2012 16.00%, 2011 2.11%, which shows that the average yield is high.
In addition, the low tax rate and compound interest effect, which will be described later, are added, and higher dividends can be expected.
Abundant financial products
There are many attractive financial products that are not found in Japan. As mentioned above, Japan has strict regulations on financial products, so it is a great advantage to be able to invest in various financial products that cannot be purchased domestically.
Low tax rate
In Japan, the tax rate is about 20% on investment income, but overseas, there are many countries where investment income is not taxed or the tax rate is low.
In particular, in long-term investment, when reinvesting with the profit obtained from the investment, there is also the compound interest investment effect described later, which is an even greater merit.
Currency diversification
Considering Japan's financial situation, it is risky to own only Japanese yen in the future.
It can be said that holding foreign currency by foreign investment is very important in terms of risk diversification.
Compound interest effect
There are two types of interest accrual in investment: "single interest investment" and "compound interest investment". With simple interest management, interest is accrued only on the accumulated amount. On the other hand, compound interest management is a method in which the interest accrued on the accumulated amount is incorporated into the principal of the next month, and not only the accumulated amount but also the interest is accrued on the next month's interest. As mentioned above, overseas, as mentioned above, there is not much tax on each investment return, so there is a great advantage in compound interest management, such as funded investment, in which the profits obtained from the investment are added to the principal and then reinvested. .. The figure below is an example of the yield of overseas funded investment when the monthly funded amount is 50,000 yen, the annual interest rate is 6.5%, and the investment period is up to 30 years. You can see that there is a big difference as the period becomes longer than the investment with normal simple interest management.
The difference starts to be noticeable after the 10th year, and after 30 years, the difference will be about 3 times.
Types of overseas investment
There are many types of overseas investment, but here we will introduce them by classifying them into four categories: "overseas investment trusts," "overseas funded investments," "overseas real estate," and "others." increase.
Overseas investment trust
It is a financial product that incorporates multiple overseas stocks and bonds. Investing in individual stocks overseas is a difficult product for individual investors because it is difficult to obtain information and diversified investment is also difficult.
Bonds are also not very suitable because of their large transaction unit. On the other hand, in the case of overseas investment trusts, various products are incorporated in the investment trusts themselves, enabling global diversified investment, and the overseas investment trusts themselves have a large number of products, so it can be said that they are suitable for overseas investment. .. There are REITs (Real Estate Investment Trusts) and ETFs (Exchange Traded Funds).
Overseas funded investment
Overseas funded investment is a type of overseas investment trust mentioned above, but on the premise of long-term investment such as 5 to 30 years, a certain amount is accumulated every month and money is received when the maturity is reached.
Since there are products with insurance and yield guarantee, compound interest management will be carried out for a long period of time, so it is possible to utilize it as annuity or insurance while taking advantage of overseas investment with a low tax rate.
Overseas real estate
This is also a product that is very popular with Japanese investors, and high profits can be expected due to the high population growth rate and rising prices unique to emerging countries. In addition, there is a tax-saving effect unique to real estate, so it may be a good idea to consider it once when investing overseas.
others
The above are popular products for overseas investment, but other than this We have a lot. Individual overseas stocks, overseas bonds, FX, etc. are still available, but detailed knowledge and experience are required, and considering the risks, it can be said that the hurdles for investment are quite high compared to the above.
