Investing in Japan: Opening a Securities Account

So you want to start investing in Japan, maybe you know exactly what to do in your home country, but now you’ve decided to live in Japan a little longer than originally expected and want to put your money to work. Not the 0.000001% your bank’s savings account is going to give you, but real returns that are actually going to compound over time giving you at least something for your time and hard work here.

I found myself in this situation a few years back, so I read a few blog posts about investing in stock, ETF’s, mutual funds etc, chatted to some friends about strategies, then thought “okay, I got it!” I’ll open a securities account and make the big dollars… 2 months later, still no account and only emails back from security companies, that I put through Google translate to find they were “very sorry, but my application had been denied” with no specific reason – after trying numerous times.

Here’s my story and what I learned – hopefully it will save you some time or at very least be mildly entertaining. I do want to make clear this is sharing my story and in no way is providing investment advice (go see someone far more educated than me for that).

There are many security firms to choose from (not to mention apps now) that we can choose from. When I started researching I found the firm “Monex”, and thought – “hey! their branding looks kind of international/globally minded – I’ll sign up with them!”. I mean how hard could it be? well I’m happy now I have an account and have been happily investing for a few years now – but setting up soon became a much bigger challenge than I initially thought.

Looking back at how crazy a chicken & egg type situation now is funny story to tell, but during it I can’t say I was laughing that much. Once deciding to open an account with them I went to work and filled in the lengthy form, with all my details in Japanese name and all, job, income, a copy or my residence card and all the rest – after some heavy use of Google translate and a sense of satisfaction I hit submit on my application. “I’m done!!!” I thought, now let the money start rolling in… well not quite, a few days later I got a nicely worded automatic email saying my application was decline and no reason given. “Hmm, I thought – maybe I made a mistake”, off I went again and got that new application in, a few days later… “we’re sorry but your application has been declined”. Okay one more time, surely it was just user error – ummm nope, AGAIN!. At this point after sinking a couple of hours into filling in forms, I was close to giving up. But once I’m on something, I hate dropping it (possibly why I have become an above average marathon runner – some sick love of pain and then hitting goals). I emailed them directly in my best Japanese and got a reply, “your name you entered didn’t match your ID” was the answer… Well of course it doesn’t match the Japanese form would not let me put in Roman characters, so my Katakana spelling had to do! .

Not to fear though, this helpful sales person would post me out the paper forms! oh, that would be much simpler.. right? well kind of. I don’t know about you, but somehow I manage to make mistakes left right and center on forms, I guess the pressure of making mistakes gets to me. If you’ve filled in any bank forms before here, you’ll know any mistake that doesn’t have a line crossing it out and your hanko beside that, that form is just gonna come right back to you! So a few back of forth’s over a period of about month and finally, I got my account opened! wow – what an accomplishment – everything in done in Japanese, emails, form filling even my own name (even though I’m not Japanese) I felt like a hero! all this time invested in this, finally paying off.

The day arrived and this pretty yellow envelope was delivered to my house… the problem being it’s the type of thing you need to be there to sign for and on that particular day I happened to be out. No problem, it was left conveniently at our nearest Post Office, so all I needed to do was take my ID down there, show who I was and done! I’ll get my account information and all done! – start making that money!

Well you’ve probably guessed it already, but as I hand over my ID to the local Post Office clerk with a sense of satisfaction – and he dutifully starts to check every character on the letter and on my ID, he doesn’t need to look for long to quickly find that this name on the letter is all in Japanese (katakana) and this ID name is all in English. “This doesn’t Match” was the reply I got – outwardly in this moment I remained calm, but inside I was imagining throwing his computers and possibly him through the front window – literally a couple of months of process and I finally get accepted and then this over zealous box ticker is going to stop me? Of course the name doesn’t match, I’m a foreigner, my name uses the alphabet! and their systems are in Japanese and use Katakana for foreign words… I reasoned with the, please this is my id in English and this here is my name written in Japanese. He looked at me, wanting to help, but inside knowing that handing it over goes against all he’s trained to do (make sure the name on the letter matches the name on the id). Finally he realizes I’m not going away and some solution needs to come of this, so he speaks to his manager and they agree that they will hand this letter over to me after photocopying my ID. As if this comes back to bite them in the ass, at least they can point out this foreigner came with a name that sounded at least similar to the Katakana reading of the name on the letter they handed over.

And there we have it, around 2 months of being declined with online forms, direct emailing to sort out the error, playing post tag correcting my mistakes and jumping through hoops and then the simple matter of picking the letter up at the post office – I had done it! I had conquered this mountain called “opening a securities account in Japan”! Now I can start investing!

Thankfully I learned just recently while setting an account for one of my kids, they now support alphabet letters in their online forms and account names – perhaps after experiencing my emails, looking at my forms and trying to make sense of a foreigner with less than a half grasp of the Japanese language fumble through their sign up process, they thought “maybe we could help these people”.

This was a few years back and now and a funny story to tell. Now that I’m setup it’s a simple as doing a bank transfer each month and off I go investing in my ETF’s and mutual funds etc.

So as I said I used Monex, which once setup works well for me and can be accessed through their app or web browser. I have friends using SBI which also sounds like reliable option. Rakuten is a recent player too, which happen to be a firm that will happily give foreigners credit cards without too much trouble – so I imagine wouldn’t be too difficult to use either.

NISA Accounts and what are they for?

After creating an investment account (no doubt you’ll see this word in the process), you’ll want to setup a NISA account. What is a NISA account? simply put it’s a tax free investment account that was introduced to help encourage/help people in Japan invest for the future. You can find a detailed explanation of it it here in English What is a NISA account?

Once you’ve setup your regular investment account, it’s usually a simple add on to get a NISA account attached to your regular account that you can then transfer into to get the tax exception through NISA.

The Nitty Gritty:

If you’re planning to create an account, these are the things you’ll need.

1. Your residence card
2. A bank account
3. My Number, number
4. Possibly a second form of id for extra verification. A statement from your city office showing your name, address etc.

Somethings to keep in mind, they are very tight on making sure your name and address on your residence card, My Number card and any other ID are all the same and up to date. So if you haven’t got around to updating your address after moving – make sure you get that taken care of. I had a form sent back me, as after moving address the city office mistakenly left a very insignificant detail off my address on the back of my card. Also the account name you use and the name of the bank account name you plan to use to transfer money to your securities account need to match. Not a big deal if both bank and securities firm support English, but if your name is in Katakana for any reason and they aren’t the same you won’t be able transfer money into your account. Most companies offering accounts also support a simple transfer system at their end you connect your bank account to and can easily draw money into your investment account from your bank account – but if the names is different, this won’t work. One work around is when transferring from your internet banking and change the name to appear on the receivers account to the exact same name as what is on your investment account and it should go through fine.

Summary:
Finger crossed it’s a smoother signup than mine, just make sure to cross all your t’s and dot all your i’s with the applications and of course make sure names are exactly the same as much as possible. If you do these things, you have a good chance of setting up an account. And once you are setup, it it’s not such a big step to setup a NISA account also.

Anyway I hope this broad brushed info on how to setup an account gives you some pointers, helpful info and you’re able to setup for yourself without much trouble.

Also if you know of a great, simple. foreigner friendly provider of securities/investment accounts, please share in the comments below!

Happy investing everyone!