Crowdsourcing: One Million Yen

Help me, RetireJapan readers. You’re my only hope.

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A happy ‘problem’ to have today. Due to a fortunate series of events, it looks like I will have about a million extra yen this year. I’m wondering what I should do with it. Obviously if it were a million dollars, I would know exactly what to do.

I’ve already maxed out my NISA account for the year. I figure my main options are: 

1. invest it in a taxable account
2. pay down my mortgage
​3. buy a Honda RR600

Appealing though option 3 is, my wife would KILL me if the bike didn’t, so I’m inclined to go with option 1 or option 2. 

INVEST

If I were to invest in a taxable account I would probably buy some index funds and dividend paying shares in my Rakuten Securities account.

One interesting alternative might be to open an Interactive Brokers account and start buying index funds in there for diversification/portability purposes (I could keep the account if we ended up leaving Japan in the future). I am probably overly concerned with the implausible scenario that we are forced to leave Japan at short notice for some reason.

MORTGAGE

I currently owe just over nine million yen on my mortgage, with about 28 years left to pay. I don’t receive the tax break on mortgages as our manshon was over twenty-five years old when we bought it and I wasn’t able to get certification for it. Our montly payment is under 30,000 yen. Current interest on the loan is floating at 0.5%.

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I’ll be honest and say I am not feeling super-excited about any of these options. Perhaps there is a better one? Please let me know in the comments.

What do you think? What would you do in my situation?

32 Responses

  1. My first thought would be to pay down the mortgage, but at that interest rate it is probably better to find something with a better return and invest it.
    Buy about £6,000 worth of UK premium bonds. Obviously it’s variable, but the return is about 1.4%. Like lottery tickets, except you can’t lose your stake. I’m still waiting to win a million quid, but I get a pretty regular £50 win on mine. And who knows……

    1. I have a bit of cash sitting in an account in the UK doing nothing. Darren, you have just tempted me to look into buying some premium bonds! I’m not earning much interest anyway so it seems to be worth a punt!

    2. Good point, Darren! I used to own Premium Bonds though, and decided I didn’t like the return…

    1. The Judgement of Solomon! That would work if I liked both options equally.
      My problem is that neither option is tickling my tastebuds…

    1. Sadly I am not a US citizen, nor a US taxpayer (I believe you need taxable income to pay into a Roth IRA account, so most people taking the earned income exclusion would not qualify).

  4. Go long on AAPL 🙂
    (I bought another half million’s worth today so my money’s where my mouth is…)

    1. I do have some Apple, but recently I’ve been really impressed with Chinese brands like Huawei. I suspect they are going to seriously mess with Apple and Samsung soon.

      1. If they’re the same companies that make their elevators and escalators, I’d rethink that… :-))

  5. Your interest rate is so low that I would not put it to the mortgage unless that gives you peace of mind. Better would be to invest it in accordance with your normal investment strategy.
    Alternatively, is there any way you could invest it in yourself or your business?

    2. I have been thinking about this a lot, and this option is starting to appeal.
      I’m tempted to start an ‘opportunity fund’ and just keep the money in cash to use for opportunities. I may also use it to upgrade RetireJapan later in the year (I think the website needs a lot of work…) 😉
      Thanks, EWS!

      1. You are a saint for running this site. It is a huge source of info not available anywhere else. I hope you can find a way to generate income off it at some point!

      2. That’s far too kind of you 🙂
        Monetising the site isn’t much of a priority, to be honest -it’s finally making enough money to pay for itself, so that’s good enough for me.
        Some people clearly don’t believe me, but it’s been a real privilege to have everyone read and contribute to the site: by far the biggest beneficiary has been me in terms of lessons learned…

  6. “What would you do in my situation?”
    As you already have a property and equities, I would go with precious metals just to be diversified

  7. “​3. buy a Honda RR600”
    Silly. Buy a Copen. (That’s what I am doing this winter, and will upgrade to a MX-5 RF 2.0 if they hand me tenure at the end of this contract…. you only live once)
    Seriously though. I love this website. I try to save close to 50% (I got a raise recently) BUT, I know many of you said cars are a waste of money, but you got live your live and have some fun and waste some money. So I would say no way to #1 and no way to #2. I know you are are financially sound and don’t need #1 and #2. So number 3, or learn to ride a motorcycle or take a trip you normally wouldn’t take. Or buy a 65 inch TV. Buy something or do something you normally would not do that you kinda want to. Heck, go on a crazy charity run and become Santa in July and start giving presents to people who look like they need a smile.

    1. This is actually pretty appealing.
      I’m not allowed to get a motorbike (totalled mine and broke an ankle in 2012 -wife is adamant on this one after that).
      I’m strongly inclined to start an ‘opportunity fund’ (see comment above) to make sure I have cash to do stuff that comes up 🙂

  8. Hello,
    *Go against Dave Ramsey’s mantra, don’t pay off your mortgage.
    *How about IDECO?
    *SBI trading platform for active traders.
    Good luck, it’s all about hard work but still can use a little luck.

    1. How about real estate. There is a group of foreigners that sell shares in 1BR mansions and pay 5% per annum for 5 years. I can’t remember the name, but will look it up, if you are interested.

  9. If it were me, I would buy some extra stock (but that’s part of my overall investment strategy). As stocks bought in your Rakuten account will be taxed, I’d go for a dividend growth stock with a low yield but high growth potential. Currently one on my list is V (Visa).

  10. I’d just go for more diversified stock. You have your emergency fund and your interest on the loan is rock bottom.
    You can’t time the market so now is as good a time as any, though maybe you can average it out over a couple months(I’ve been doing the same which saved me from going all in just before the dip we had in february)

    1. “Current interest on the loan is floating at 0.5%.”
      See the “Financial Samurai’s DAIR” or “FS DAIR” for short. in regards to this

      2. That’s really interesting. So according to FS DAIR, my interest rate of 0.5% means that I should be paying 0.5% of my income towards my debts.
        And in reality, my mortgage is not too far off that. So my decision to not overpay the mortgage is supported by this 😀

  11. Start a fund to buy investment books. The knowledge you’ll gain after reading a million yen worth of investment books will be worth more than other investments you would make with a similar amount of money. You would be set for life.

    1. That’s a pretty good idea 🙂
      I already spend 10-20 hours a week reading about personal finance online and books (probably buy a book a week or so).

  12. Obviously the Honda. Keep it at your work so the wife will not find about it until it’s too late.
    The downside is, she’ll want something similar to go ride with you (it’s awesome) and you’ll be paying up for her oogata license too.
    So get something like a 500k bike, and put the rest aside to get your wife through the motorcycle school and buy another bike.
    And I’m not even joking that much…

    1. Ha, ha, I would be tempted, but I wrote off my last bike (breaking my ankle in the process) and my wife was adamant there would be no more…
      I have a rather natty yellow bicycle now 🙂