Are mutual funds and ETFs enough?
This way of thinking is not wrong. For those who can decide their own investment policy, keep costs low, and continue for the long term, ETFs are a very rational choice.
However, for Japanese people living abroad,
judging solely by surface-level fees is insufficient.
Brokerage firms and platforms may charge not only trading fees but also currency spreads, account management fees, custody fees, internal fund expenses, bid-ask spreads, and remittance fees. In some cases, it is difficult to determine the actual total cost based solely on advertised fees.
Beyond costs, there are three things that should be particularly considered:
1. Inheritance and Probate
If something happens to you, your family may not be able to access funds in overseas brokerage accounts or financial assets immediately.
Depending on the country and financial institution, inheritance procedures, including probate, can be time-consuming and costly. Depending on the product or contract, it may be easier to organize the transfer of assets to family members through beneficiary designations.
However, since the conditions for this vary by product, prior confirmation is necessary.
2. A Partner to Help You Stay Invested
In long-term investing, it is important not only what you buy, but also whether you can stick to your plan even during market downturns.
Seeing short-term market news and getting scared into selling, or conversely, panicking and buying more during a rise—repeating these types of decisions can undermine the effectiveness of long-term investing.
There is value in having a third-party advisor who periodically reviews the situation and plays the role of bringing you back to your original goals and plans rather than making emotional decisions.
3. Flexibility Across Borders
It is not guaranteed that Malaysian brokerage accounts, fixed deposits, or local financial products can be maintained after returning to Japan.
There are cases where accounts are restricted due to returning to Japan or moving to another country, forcing you to sell your holdings. If this happens during a market downturn, you may be forced to sell at an undesirable time, which will affect your asset formation plan.
Expats need to confirm not only current investment results and yields, but also whether they can continue to hold their assets even if the country they live in changes in the future.
It is not that mutual funds and ETFs are bad.
The important thing is not just the cost, but
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Can your family receive your assets if something happens to you?
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Can you continue to invest even during a market downturn?
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Can you maintain those assets even after returning to Japan?
Make sure to include these in your comparison.
Asset formation for expats involves more than just choosing products.
Start with a small step.
If you are unsure where to begin or
are worried about building assets while living abroad,
please feel free to consult with us. We will support you from your first small step.
Three Sixty Financial
Tanaka