eMaxi Slims with current exchange rate?

[pam5]

@mary44 Thanks for the post and sorry for the delayed reply.

I am living in Japan and am paid in JPY, my assumption is that given the poor exchange rate of JPY -> USD, any shares denominated, or with an underlying denomination in, USD are more expensive for me. For example, if 100 JPY = 1USD and 1 share of emaxi slim is $100 usd, then my cost is 10,000 JPY. However due to the poor exchange rate maybe now 100 JPY is .67 USD, which means that my 1 share of emaxi slim now costs me 14,700 JPY. Are you saying I don’t need to worry about the poor exchange rate if I’m holding for 20 years +?

 

[mary44]

@pam5 The currency doesn't matter nor the value of a single share of a particular fund. There are even similar index ETFs (tracking the same index such as S&P500 or Topix) with different denomination, then the better one would be the one with lower cost. What matters is the performance and expectations of the underlying index/assets, the broader diversified the less risky.

Eg. If you buy an AI fund that invests in leading AI companies, they probably hold a major stake of Microsoft and ChatGPT stocks. You can buy this fund in JPY and the USDJPY rate doesn't matter. Especially since those companies make money everywhere in the world, not just with customers that pay in USD.

 

[mika145]

@pam5 My DCA (monthly purchasing) is on hold this year, as I'm waiting to see if the BOJ will move to "normalize" its policy in response to the outcome of the spring wage negotiations. If policy tightens, the yen should strengthen, giving us Japan-based investors a better deal on the SP500 funds and other products whose underlying assets are overseas.

For what it's worth, Goldman is forecasting the SP500 will max out at 5,200 this year, and it's already at 5,137.

"Statistically lump sum is the best approach though."

I don't think those statistics took into account investors in our situation: buying foreign securities with an sharply weakened currency that has the prospect of strengthening in the very near future.

 

[newbeginning1996]

@mika145 So you’re doing a mixture of DCA and market timing? If you are investing for the long term, surely it’s better to just keep investing each month and let these differences iron themselves out on average?

 

[mika145]

@newbeginning1996 A very limited and simple type of "market timing." I'm waiting until around April to resume my DCA, given the likelihood that the money I use to buy US securities will be worth more. I believe that us investors in Japan earning yen are currently in a position that is outside the usual common sense of investing for retirement. (BTW, I don't plan to retire in Japan.)

The BOJ has stated they will wait until spring to decide on a policy path (that would strengthen the yen).

 

[newbeginning1996]

@mika145 You might want to read the other comments above. I’d say consistently averaging out the swings in stock market prices is more important than having breaks in DCA to wait for better currency rates. If you believe the strength of a nation’s currency reflects the strength of its economy over the long term, then any temporary rise in the yen in April is probably not a great reason to worry about the yen value of your overseas stocks, given the long-term outlook for aging Japan.

 

[jandolphrohnson]

@mika145

If policy tightens, the yen should strengthen, giving us Japan-based investors a better deal on the SP500 funds and other products whose underlying assets are overseas.

And if it loosens or stays the same then the yen will weaken further. Anything that's publicly known is already priced in, so unless you have an inside track on what the decision will be (and if you do, you could make a lot more money betting on that more directly), there's no way to beat the market.

 

[resjudicata]

@pam5 Just buy it lump sum .