Where to invest ¥100,000 today

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It’s been a while! I hope everyone is doing ok in these difficult times. The state of emergency in Japan has been lifted and people are cautiously getting back to something like normal life. Looking at news from around the world it seems we are lucky to be living in a country that has weathered the Covid-19 storm so well, and I’m certainly looking forward to getting out and about a bit more in the coming weeks.

I note that Japan residents are starting to receive the paperwork  for the ¥100,000 government cash assistance scheme. If you are not sure how to make your claim, here is a useful thread telling you how to complete the paperwork.

For some people, this money is clearly needed to replace income lost during the corona virus crisis and ensuing state of emergency shutdown.

However, if you are lucky enough not to need this money to cover expenses, and are thinking of putting it to work, below are a few ideas as to how you could invest it today. Please note I am trying to make these interesting “satellite” type ideas. It is of course perfectly acceptable to simply add this money to your core asset allocation – it’s just not as fun!

Cash is king – ok I know I said “invest”, but now is not such of a bad time to be holding cash. After a steep drop in March, stock markets have rebounded remarkably well, but this does not disguise the fact that the economic damage from Covid-19 is significant. The US unemployment numbers really don’t fit with where the S&P 500 is right now, and with America and Europe trying to reopen even before they have got through the first wave, there’s a chance of further extended lockdowns and more market panic to come. Keeping cash for now and investing when fear takes over is not a bad strategy.

Precious metals – Gold is well known as a safe haven in times of market turmoil, but there is a growing buzz about the gold to silver ratio, which suggests that silver is a compelling buy at the moment. In short, the amount of silver it takes to buy an ounce of gold is near an all-time high, which suggests it should revert to the mean over time. This article does a good job of explaining why silver could make a good investment right now. As for how to buy it, if you are not looking to take delivery of the physical metal you can simply buy a silver ETF via your brokerage account. iShares SLV is perhaps the best known silver ETF.

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Source: https://www.macrotrends.net/1441/gold-to-silver-ratio

Cryptocurrency – Following the halving on May 11th BTC has traded between $8,500 and $10,000, despite a negative Goldman Sachs client briefing on the digital currency. The Grayscale Bitcoin Trust is said to have purchased a third of all newly mined Bitcoin in the last 3 months at a total of $29.9 million, and this retail investor demand is combined with heavyweight trader Paul Tudor Jones declaring himself a holder of BTC. This would be a high risk place to put your ¥100,000, but you are at least guaranteed an exciting ride.

Biotech – I mentioned this in a recent post on satellite holdings. With the race for a Covid-19 vaccine hotting up, Biotech / Pharma / Healthcare are obvious areas of interest. Also with more and more countries heading toward the Japan aging population model, it makes a lot of sense as a long term buy and hold. Picking winners is not easy in this space so it’s probably best to look at ETFs.

I hope these ideas help. I would love to hear if you are investing your stimulus money elsewhere. Of course this money is being given out to stimulate the economy, so you are doing a good thing if you simply go out and spend it in your local community. Covid-19 is likely far from over so please stay safe as you get back to work!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

 

Online Coaching – Perfect Timing

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I hope everyone is safe and well in these difficult times. One thing you are probably doing is spending a lot more time at home. And with that comes a lot more time online, particularly using internet communication tools like Skype and Zoom.

You may have noticed that I offer personal finance coaching. This also includes online coaching, which was initially meant for people living outside the Kanto area, but is fast becoming the norm in these times of social distancing.

Now would be a great time to get your finances in order and take advantage of one of the best opportunities to invest you will see in years. Below is the 25 year chart of the S&P 500. You can see quite clearly the benefit of investing during severe market downturns in 2000 and 2008. Why not make use of the extra bandwidth you have and put some money to work for you?

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Source: https://tradingeconomics.com/

Among other things, I can help you figure out:

  • How much you have available to invest and how much you should be keeping in cash for emergencies.
  • What currency is best for you.
  • What kind of account would be right for you.
  • How to allocate when you get the account.
  • How to maintain your investments over the long run.

More information, including rates, is available here. If you would like to book a coaching session, or you have some questions before getting started, please get in touch with me via the Contact Form.

2020 Investment Outlook

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And just like that, another year is gone! After a long wait for the 2019 Rugby World Cup to get started in Japan, the six-week tournament went by in a flash. And now here we are looking forward to the Olympics. I hope 2019 was a rewarding year for you.

When it came to markets, it was one of the best years for risk assets since the Global Financial Crisis with the S&P finishing +30.7%, MSCI Europe +27.1%, MSCI UK (despite Brexit) +16.4%, Japan Topix +18.1%, MSCI Emerging markets +18.4%. Crude oil was +22.7% for the year and Gold +18.3%. This appetite for risk meant that safe haven government bonds were subdued, while US High Yield and Emerging Market bonds returned +14.3% and +12.6% respectively. Bitcoin once again refused to die and posted an impressive return of +95% for the year.

Looking forward to this year “Don’t expect a replay of 2019” seems to be a recurring message, particularly when it comes to equities. Once again Bloomberg have compiled a thorough Wall Street round up for people who have the time:

For those who like to keep it simple, here is a list of key themes to look out for:

  • The end of the bull cycle is getting nearer, but it is still not here yet…
  • Equity and bond market valuations are significantly higher than they were a year ago.
  • Central banks are likely to continue pursuing ultra-loose monetary policy.
  • Smart investors remain invested but are staying alert and perhaps reducing risk.
  • The recent escalation between the US and Iran highlights the potential for sudden geopolitical shocks.
  • There is still potential upside for gold if/when things get rough.
  • Don’t let the US election distract you too much. Politics are not necessarily a good indicator of market returns.
  • Trade is again likely to dominate headlines and unsettle markets from time to time.
  • The Bitcoin halving occurring in May is likely to dominate crypto talk – here’s a detailed and rather bullish post on that for those interested.

At risk of repeating myself year after year, planning and strategy don’t need to be complicated:

  • Have a plan! Read this post if you don’t have one.
  • Stick to your guns. Don’t let the noise divert you from your commitment to saving and investing. (the Japan market made most of its returns in the last third of 2019. If you weren’t buying in the first two thirds then you missed it)
  • Diversify and rebalance – particularly if you are heavily invested in stocks and coming off a good year.
  • Max out tax advantaged investments such as NISA.
  • Look for Japan stocks that are likely to benefit from the Olympic buzz (see what happened to The Hub stock price around Rugby World Cup time)
  • Keep an eye on what the bank of Japan are buying – see post here.

With that I wish you all the best for 2020 and hope you enjoy the Tokyo Olympics!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Japan ETFs for 2020

 

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Cheers everybody! I’ll have what they’re having!

Happy New Year! I wish you all health, wealth and happiness for 2020. Most of us are settled back into work now, and some of you may even be planning your investment strategy for the year to come. Perhaps you are considering how to allocate your NISA contributions, or just wondering how things will play out over the next 12 months? There is a lot of investment chatter around the Olympics of course, but it’s also interesting to note what Japan’s central bank is doing.

I saw the above chart on a tweet from Zerohedge towards year-end. It has been widely publicised that the Bank of Japan have been big buyers of Japan Exchange Traded Funds over the last three years, but what exactly are they buying? And if you were buying Japan stocks at this time, would that influence your choices?

It turns out that the BOJ don’t simply buy only the Nikkei or Topix indices. As part of their overall public policy, the BOJ send a message by focussing on stocks of companies that actively engage in capital and human resources investment. (see here) In order to encourage companies to invest in their people and long-term assets, the BOJ is willing to invest some 300 billion yen per year. (their actual purchases can be tracked here so you can keep an eye on whether they are still buying)

A big issue the BOJ face is that they are constrained to not purchase more than half of the market value of any one ETF. The rest should be held by private investors. There are only a handful of ETFs that fit the definition of capital / human resources investment ETFs and, as the Japanese public have been slow to wake up to the idea of investing in this area, it is hard for the BOJ to find anything big enough to allocate the whole 300 billion yen to.

What that means is, that if you invest in one of these ETF’s, you are effectively giving the central bank the ability to “match” your investment. Every ¥10,000 the public invest adds ¥10,000 to the capacity the Bank of Japan have to buy that same fund. That’s a pretty heavy hitter you’ll be investing alongside!

The following ETFs look like they would fit the investment criteria:

1479:JP Daiwa ETF MSCI Japan Human and Physical Investment Index

1484:JP One ETF JPX/S&P CAPEX & Human Capital Index

1480:JP Next Funds Nomura Enterprise Value Allocation Index

It’s also interesting to note what happens with the money that can’t be invested due to lack of capacity: It is allocated to a JPX-Nikkei 400 ETF. It turns out that companies in this index have been quick to wake up to the prospect of big investment from the BOJ and have been making an effort to increase capital and human resources investment, which then acts as a stimulus to the real economy.

So if you are a buyer of Japan stocks today, and I’m not saying you should or shouldn’t be, but if you were, wouldn’t you want to have some of what the BOJ are having?

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Japan Inflation Watch

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It’s been a long time coming… 27 years in the case of a well known soft drinks company. Japan’s top Coca-Cola distributor recently announced that they will be increasing prices by between 6% and 10% as soon as April this year. (article here) They are certainly not the only ones, as spring will see price increases in many of your favourite restaurants, as well as on specific foods such as instant ramen, canned mackerel and even ice cream! Coupled with the planned October increase in sales tax from 8-10% this means that your yen isn’t going to go as far as it has for the last three decades.

This will come as a shock to the Japanese public and long-time Japan residents. We’ve all got used to the size of food and drink portions getting incrementally smaller, so called “shrinkflation”, but it’s really quite a jolt to see the actual price of things going up. Even my barber is raising his prices from next month!

What is this going to mean for us all financially? Well, put simply, the massive debt bubble created by the Bank of Japan means we are unlikely to see a rise in interest rates any time soon. So, money languishing in our Japanese bank accounts is going to be losing spending power. I have talked about base currency over and over, but it still bears repeating: If you are planning to spend the money you make in Japan in the UK, then UK inflation is your minimum benchmark for investments. Holding cash in JPY at zero interest in this case means you are not only losing spending power in your base currency, but taking currency risk as well. Up until now, if you were planning to spend the money in Japan, then holding JPY cash was both safe, and good enough to at least preserve your spending power. Regardless of what government inflation statistics might say, this is clearly no longer the case.

So what action should Japan residents be taking here? Here are a few things you can do:

  1. Review your base currency / currencies – if you are saving to pay for your kids education overseas, or your retirement abroad, you should be saving and investing in the currency you are planning to spend the money in. JPY cash is not the place to be.
  2. That said, if you live and work in Japan, your emergency cash reserve should be in JPY. (unless losing your job would mean leaving Japan immediately)
  3. If you have a future need for JPY as a base currency, you are going to lose spending power in JPY cash / bonds – this means you will have to take some risk with some of your money.
  4. One way to do this would be to look for dividend paying stocks / ETFs. Here is an interesting list of dividend paying ETFs in Japan. Google translate does a pretty good job on this. Remember that you should be looking at the Japan stocks / REITS – anything that invests in overseas assets, like emerging market bonds, carry currency risk that could wipe out your actual return.
  5. You could also consider a diversified Japan fund manager. I invest part of my NISA in Rheos Hifumi Plus, which is one of the most popular NISA investment funds in Japan. (this is not a sales pitch – just what I do)

I hope this helps. Please do get in touch with any interesting price increases you notice here in Japan.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

2019 Investment Outlook

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Wow is it February already? Apologies that this is a little late, but after a family holiday it’s been a slow start to the year. 2018 marked the arrival of our first child, so it’s been easy, and fun, to take my eye off the ball a little. However, it is time to get back to business, not to mention getting the house in order! I’ve seen a lot of talk recently about the Netflix series “Tidying Up With Marie Kondo”, so perhaps we should make de-cluttering our theme for this post.

So how was 2018 for you? From an investment perspective there was little joy being sparked no matter where you looked. In a year where much of the talk was about the prospects for a continuing bull market in stocks, actual returns were rather bearish. We never really got the crash that many predicted, but we saw a significant correction in February, and a rather painful last quarter where most stock indices dropped double digits.

Some rough numbers for 2018: The S&P 500 finished -6.2%, Euro Stocks were around -13%, Japan -12%, Emerging markets -17%. Gold ended the year strongly but was still down around 2% for the year. Oil fell some 40% from its previous high, losing almost 25% for the year. Furthermore, as interest rates rose, bonds prices fell too. There were not many places to hide in 2018. (let’s not even talk about that crypto portfolio…)

So what can we expect in 2019? Depending on how much information you are able to digest, Bloomberg has compiled a monster article of Wall Street predictions here.

Sticking with the idea of de-cluttering though, here is a short list of key themes:

  • The end of the bull cycle is getting nearer, but it is not here yet.
  • Investors, however, are likely to behave as if the end is right around the corner (this means continued volatility)
  • The US Federal Reserve will continue to normalise rates.
  • The Bank of Japan will continue its accommodative monetary policy.
  • The outcome of trade negotiations with China will be the main driver of USD strength / weakness. (perhaps we’ll see a weaker USD vs. JPY?)
  • Brexit will not have as big an effect on global markets as many commentators make out. (just my personal opinion here)
  • There is, perhaps, excessive pessimism with regard to Japanese stocks. With the end of the Heisei era, and subsequent celebration of the new era, a growing influx of foreign tourists, the Rugby World Cup later this year and the upcoming 2020 Olympics, we could see a real buzz that will be good for business.

So how should you plan your personal investment strategy for 2019? Again let’s keep it simple:

  • Have a plan! Read this post if you don’t have one.
  • Stick to your guns. Don’t let the noise divert you from your commitment to saving and investing.
  • Diversify and rebalance – review your asset allocation.
  • Max out tax advantaged investments such as NISA.
  • Look for Japan stocks that are likely to benefit from the buzz of the next two years.

With that I wish you all the best for 2019. Hope it is filled with things that spark joy!

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

 

 

Tsumitate NISA

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Following my previous post on NISA – The Japan Individual Savings Account, here’s an update on the launch of NISA for regular savings. This new product is being rolled out by all the major securities companies and brokerages in Japan ready for a January 1st 2018 start.

You may remember that NISA allows you to save ¥1.2 million per year over five years free of the 20% tax on income from capital gains and dividends. The new “Tsumitate NISA” is designed to help people save smaller regular amounts over a longer period. In fact, SBI is advertising that you can start from as little as ¥100.

It works out that you can save up to ¥400,000 per year over a period of 20 years. That makes a maximum possible investment of ¥8 million which will be free of tax on gains / dividends.

Investment choice is limited to Mutual Funds and ETFs, but that still leaves plenty of choice so you can build your ideal asset allocation over time.

You are also able to make withdrawals any time if you need to.

As to whether the standard NISA or the Tsumitate NISA is better, that really depends on your personal preference. If you are trying to max out your tax-free savings then it’s perhaps better to use the standard NISA. That way you can save a larger amount over a shorter time period. If you have less disposable income and are saving for long term goals anyway, then the Tsumitate NISA is probably a good fit.

The account opening process will be similar to a standard NISA, so be sure to read this post on NISA if you are considering this.

Feel free to let me know how you get on!

 

 

Brokerage Accounts – Investing in Japan and Overseas

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For people who are looking for a high level of control over their investments with low cost, an online brokerage account is a great solution. In a way it’s a little sad that people no longer call their broker and instruct him to place orders for them, but it is very convenient to be able to do this yourself online. It also lowers the cost for the brokerage firm, which in turn lowers costs for investors. Today we will take a look at how these accounts work.

Let’s start with a definition: “A brokerage account is an arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage. The investor owns the assets contained in the brokerage account and must usually claim as income any capital gains he/she incurs from the account.” (from Investopedia)

If you live in Japan and are looking for a local brokerage, there is plenty of choice. Some well known ones are Rakuten SecuritiesSBI Securities and Matsui Securities. However their interfaces are not available in English, so you will have to be able to work through the application and use of the platform in Japanese. I have an account with SBI, so will use them as a reference in this post.

If you are looking for an account in English, then Interactive Brokers is probably the best option. IB have a Japan office and offer both a local Japan account for investing in the Japanese market and also a US account, which can access not only US, but also European and other global markets. The US account is completely separate from the Japanese company and is administered in the US, although you can apply through the Japan office.

Other overseas brokerage firms may or may not accept investors based on the country they live in. Japan residents will find they are not eligible to open accounts with most of them. In fact I think Interactive Brokers may be the only option available at present. (please correct me if I’m wrong on this)

SBI allows trading on both the Japan market and also overseas markets, namely the US, China, Korea, Russia, Vietnam, Indonesia, Singapore, Thailand and Malaysia. Once you get used to the interface it is fairly easy to navigate and execute transactions. Google translate does a reasonably good job these days if you get stuck.

Security – nothing is 100% safe, but as long as you are using a recognised broker you can expect them to be heavily regulated. You retain ownership of the assets in the account at all times. Obviously, because we are talking about online accounts, you need to be careful with your personal online security. Your brokerage should be using high-end encryption, but you need to make sure your login details are kept safe and that you change your password regularly.

Investment options –  A brokerage account gives you access to direct stocks, bonds, ETFs and mutual funds. Many also offer FX trading, options, and margin trading.

Cost – costs vary from one broker to another. Some may charge a fixed fee per transaction, and some may have a sliding scale depending on volume and how often you trade. Here is a breakdown of costs for Interactive Brokers and SBI.

Tax – As noted in our definition, these are taxable accounts. If you reside in Japan and use a local brokerage, you will receive a summary document each year you can submit to your tax office. If you use an overseas account, you will be responsible for reporting on this account in the country or countries you are tax resident in.

Drawbacks – Interactive Brokers has an account minimum of $10,000 for the US account. I think it’s ¥1,000,000 for their Japan account. (SBI doesn’t have this minimum so it’s easy to get started with a small amount and build up over time) Obviously the lack of an English interface for the Japan accounts can be a problem. For some investors this kind of account could simply be too “hands on”. You have to make all the investment decisions and execute them yourself. Hopefully this blog will make that easier! (see the section on Asset Allocation)

Account opening – information on opening an Interactive Brokers account is available here. For SBI, the process is as follows:

  1. Fill in some personal information on the website and request the account opening documents.
  2. Account application documents are mailed to you.
  3. Complete account application documents and return along with a copy of your residence card and tax ID number. (My Number)
  4. The securities company then notifies you that the account is open, either by mail, or via login to their website.

Hopefully this gives you an idea of how brokerage accounts work. If you are new to this it may seem a little daunting at first, but if you start with a small amount of money and study as you go, you may find it is not so hard to get the hang of. As always, let me know if you have any questions or comments.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

 

NISA – The Japan Individual Savings Account

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Today let’s take a look at a Japan based investment vehicle that longer term expats may wish to utilise. The Nippon Individual Savings Account Program, or NISA, was launched in January 2014. It has since been expanded to include the Junior NISA. NISA is based on the UK Individual Savings Account. (ISA)

Eligibility – anyone over the age of 20 resident in Japan is eligible to open a NISA account.

Tax Exemption – individuals are eligible for an exemption of the 20% levy on income from capital gains and dividends from annual investments of up to ¥1.2 million made over a five year period, as long as they reside in Japan. In other words, you can contribute up to ¥1.2 million in year one and it is sheltered from tax on gains for 5 years. You can then invest up to ¥1.2 million in year two and that is also tax free for 5 years, and so on. Each annual “slice” qualifies for the 5 year tax exemption. So if you invest every year you can hold one NISA for a total of 10 years. After that you may start a new NISA.

Junior NISA – available since April 2016, Junior NISA allows parents / grandparents / guardians to make contributions on behalf of children under 20. The contribution limit for Junior NISA is ¥800,000 per year.

Investment options – NISA’s are offered by securities companies. This means you are able to invest in direct stocks, bonds, ETFs and mutual funds.

Security – as the account holder directly owns the investment assets in the account, NISA’s are very secure. Of course you are still taking investment risk and there is no protection against the value of investments falling.

Cost – it’s tricky to find information on the actual fees involved in investing in NISA, but they are relatively low. The securities company will charge a brokerage fee of up to 0.15%, usually with a minimum commission fee. ETF management fees are no more than 0.5% p.a.. Mutual funds run around 1.5% p.a. Obviously costs will increase if you employ an adviser to help you with asset allocation.

Drawbacks – one drawback is that capital losses made in a NISA cannot be used to offset against capital gains made in other accounts, but this seems fair enough on a non-taxable account. The main drawback with NISA is that if the value of your investment falls over the 5 year investment period, the price is effectively reset and any recovery then counts as a taxable capital gain.

Let me illustrate that so it’s clear: Say you invest ¥1.2 million in your NISA and leave it there for 5 years. Over the 5 years the value falls to ¥800,000. You don’t want to sell the asset and realise the loss, so you continue to hold it. However, it is now outside the 5 year tax exempt period. If the value then returns to ¥1.2 million you will be taxed on the ¥400,000 “increase” as a capital gain.

Account Opening – the account opening process is a little convoluted and you are going to need some skill / help in Japanese language to complete it. Typically the flow is something like this:

  1. On your chosen securities company website, request the account opening documents for NISA – this will require inputting some personal information.
  2. Account application documents will be mailed to you.
  3. Complete account application documents and return along with a copy of your residence card and tax ID number. (My Number)
  4. The securities company will then apply on your behalf to the tax office.
  5. The tax office approves the application and notifies the securities company.
  6. The securities company then notifies you that the account is open, either by mail, or via login to their website.

Some well known securities companies offering NISA are Rakuten Securities, SBI Securities and Matsui Securities. As far as I’m aware, the online interface for applying for accounts, depositing money, and buying / trading investments is all in Japanese.

This article suggests that, even for Japanese people, setting up Junior NISA is rather complicated.

Overall, NISA seems like a very cost-effective way to save and invest in Japan. However, I do feel that the major hurdle for expats is the lack of an English interface. Also for expats and Japanese alike, operating a securities account without professional advice, whether tax exempt or not, means managing your own investments. Some people will relish this level of control, while for others it can be rather daunting. Hopefully that’s where this blog will come in useful! You may want to go back and  work on your financial profile and read up on the investment basics in earlier posts.

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

 

20 years in Japan!

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July 21st 2017 marked exactly 20 years since I moved to Japan. I’ve made plenty of memories during those years that are fun to look back on, and it made me wonder what it’s been like for investors in Japan over that time frame. So here is some data from 21st July 1997 to 21st July 2017:

USD/JPY

USD:JPY 20 yrs

There have been some large currency fluctuations over the last 20 years, and it’s interesting to note that at around 111 today we are probably near the average for the period. I remember going to the UK many years ago and £1 was around 240 yen! If the Brexit vote has done nothing else, it has at least made my trips back home cheaper!

Nikkei 225

Nikkei 225 20 yrs

Interesting to note that if you had bought the Nikkei exactly 20 years ago and held it, you are pretty much back where you started! This is excluding dividends, which would have outperformed cash at least. (average dividend yield is 1.68%) Regular investors would have fared better due to the averaging effect of buying regularly and accumulating more during the bad years. (see article on Regular vs. Lump Sum investing) Investors who loaded up during the lows of 2003 and 2009 will have done very well for themselves. Remember, if you see the Nikkei at those levels again you should be buying as much as you can, not panicking and running for the hills.

Interest rate

Japan interest rate 20 yrs

Anyone who has lived in Japan in the last 20 years will know that cash in the bank does not earn anything by the time you have deducted ATM and transfer fees. For homeowners it does make Japan a borrowers paradise though. Buying our own home was a great move for my wife and I, with monthly mortgage payments lower than we were previously paying in rent.

10 year JGB Yield

JGB 20 yrs

Not much to see here I’m afraid, and the next chart explains why:

Inflation

Japan inflation 20 yrs

Japan is still battling deflation, and Bank of Japan governor Haruhiko Kuroda has just pushed back the expected timing for hitting the 2% inflation target for the sixth time, with the new target being fiscal 2019. All this despite a mammoth stimulus effort of debt purchasing and an ultra-easy monetary policy. So far this effort has failed to budge the stubborn inflation rate, although it has certainly impacted the next two charts:

Bank of Japan balance sheet

BOJ Bal Sheet 20 yrs

Japan debt to GDP

Debt to GDP 20 yrs

With the US Federal Reserve already raising interest rates and the European Central Bank possibly looking to tighten from September, all eyes are now turning to Japan, which certainly has the most daunting task ahead when it comes to how to exit this ultra-easy monetary policy. It’s probably safe to say that this is unlikely to begin for some years yet, but it should certainly make the next 20 years an interesting time to be in Japan.

(Charts from Trading Economics – a great source of data if you’re interested in this kind of thing)