Interviewing Smart Money Asia

Expat personal finance made simple?

A couple of weeks I was doing some online searching for personal finance and investing in Japan in English, and while I was disappointed that RetireJapan didn’t show up as much as I expected, I did find an interesting site. When I saw the site owner Martin also did fee-only financial coaching I knew I had to get in touch. There aren’t many of us out there (in fact, this is the first person I have found that also does this in English in Japan).

We had a good chat via Zoom and Martin agreed to a quick interview, so here he is.

How did you get started with personal finance?

I’m originally from the UK and came to Japan in 1997 on the JET Programme and worked as an ALT until 2002. After that I started a sales job for a sports event company, which led to me being recruited into the financial planning business. I was fortunate to join a progressive company with a focus on training and education of advisers, and building a sustainable recurrent income business based on servicing clients for the long term. I spent over a year studying for the UK financial planning certification as I learned the business.

Could you tell us a bit about yourself and your site?

I am still shocked how little we are taught about personal finance in school. It’s something you are just expected to figure out along the way. Add to that living in a foreign country with a challenging language, and financial planning can seem daunting to some people. Working as a financial planner I understand the challenges people in Japan face just to get things organised and feel some peace of mind. Some people are simply not going to get there by themselves and need professional help. They are just too busy, it’s not their strong point, or there are other things they would rather be doing with their time. Others, however, are perfectly capable of organising their own finances, and I really started the site as a resource for them. There is a wealth of information out there and I try to break it down into bite-sized, actionable chunks to save people time. 

How do you think personal finance has changed in Japan while you’ve been here?

Just in general, there’s a world of difference from when I started in 2002! You couldn’t just go online and open a brokerage account and start buying ETFs with minimal fees back then. The way to access financial services used to be to go and talk to an adviser or a bank or securities company and buy what they recommended. Now you can open a browser and find pretty much any solution you want and interact with people who have already tried and tested it. The individual has so much more information and control now. As for Japan, it’s quirky as you know! You can open a securities account and a NISA online and trade stocks and ETFs with relative ease. However, go to a bank and try to make an overseas transfer to somewhere they are not familiar with and you can be stuck there for hours! On the whole things are much better though and there is a broader awareness of personal finance in Japan than there was 20 years ago.

What’s your personal approach to personal finance and investing?

I try to keep things simple and follow what I have learned. I keep an emergency cash reserve in case I ever need it. I have basic health, income protection and life insurance. I invest my money on a core / satellite basis with the core 70% or so in a diversified managed portfolio –  I’m not an investment manager and I don’t feel the need to try to be one. That said, the other 30% I invest myself in more interesting / higher risk assets. It’s mostly stocks and ETFs, and I probably have a higher than average exposure to cryptocurrency.

What kind of things do you help your clients with?

All the typical financial planning issues: basic protection, saving for retirement and kids future education costs. Understanding their base currency and risk profile and choosing an investment allocation that fits and then adjusting it over time as things change. However, in truth I’m an organiser. A lot of what I do is give busy people peace of mind that they are taking care of the things they should be.

Any good books/websites/podcasts/etc. to recommend?

Retire Japan of course! Think and Grow Rich and Rich Dad, Poor Dad are two books I read early on. I use Twitter a lot for financial information and commentary – I love how fast it is and how you can curate lists of accounts to keep up with (I’m @MartinJPJP there). Over the last couple of years I’ve come to believe that if you are trying to build wealth, you really should educate yourself on what’s going on in the cryptocurrency space. I’m writing a post for my site now which will provide some ideas and resources on how to do that.

Any other thoughts?

I know I’m preaching to the converted with your readers, but there really has never been a better time to take control of your own financial future. Study broadly, act decisively, and don’t be afraid to make the odd mistake. There’s always something new to learn!

Thanks for taking the time to answer my questions today Martin. Long-term readers probably know I don’t own any cryptocurrency, but it is fascinating to watch. Any questions for Martin?

14 Responses

  1. Hi. Could you please tell us a little more about the income protection you have? Is it for self-employed folk/sole proprietors/freelancers? How does it work? Many thanks!

    1. It’s a UK policy I got years ago and unfortunately is not available to Japan residents any more. Japanese insurance companies have their own versions of income protection, although they tend to sell a lot more cancer and hospitalisation insurance.

      1. Thanks for your answer.

        Do you think the income protection insurance is worth getting, or is it better to just have a safety net of cash sitting in your bank account? Thanks!

        1. How large is your safety net, Gareth? And what are your circumstances?

          As an example, let’s say you are the sole earner in your family and have a small child. How much money would your wife need to take care of herself and the child until 20 years old? And would she be able to earn the same amount as you, even while taking care of the child? Are there other potential sources of financial support? (wealthy parents etc)
          Those are the sort of questions to consider.
          A large pile of cash is certainly going to help, but in some circumstances it may not be enough…

        2. So the emergency cash reserve is really to protect you for the short term. If you have a stable job / marketable skills then 3-6 months expenses are usually enough. If you are self-employed or have a fluctuating income then you may want to have more.

          Income protection should provide cover for if you are sick or injured and unable to work for the long term. Typically you are looking at insuring up to 75% of your income. Then if you are unable to work, there is a 3-6 month deferred period before it starts paying out that income, which continues until you are fit to go back to work, or reach retirement age. (in the UK it covers you to age 65) This then allows you to cover living costs, and hopefully even keep saving a little bit while you are off work.

          I note Ben’s comment that the Japanese income protection is probably not up to this standard. It may be worth checking if you can get cover in your home country first. There are also insurance companies that specialise in “expat cover”. I find them to be a little more expensive, but if you really need the cover and can’t get anything better it may be worth looking into.

          Hope that helps!

          1. Thanks for your answers everyone.

            I wasn’t really thinking in terms of not being able to work for health reasons. I was thinking more like a safety net or cushion in the event of something like this pandemic or a natural disaster or something beyond my control that limits income, not necessarily to zero but to lower than a liveable amount.

            Income in 2020 dropped 19% for me compared to 2019. That was easily manageable, but had it have been 79% for example, is there a product out there that could have helped in this situation?

            During this pandemic, the government offered help up to a million yen. I didn’t need it, and there’s no guarantee something would be available should we have another situation like this.

            This pandemic has made me think more about the perilous nature of being self-employed so am considering options to make it less perilous, since there isn’t any kind of unemployment benefit I can make use of should things go belly up.

            Thanks for your answers. I appreciate it!

  2. I’ve been following Smart Money Asia and @Martin JPJP on Twitter for a while. For some reason I assumed you must already know each other. Think you both have a similar mindset and good advice regarding personal finance.

  3. Twitter and Crypto! That’s timely.

    I’m looking forward to the post on Crypto. The strong regulations in Japan are probably a good thing in terms of protecting us, but they certainly put up a few barriers that people in some countries don’t face.

    Issues I see are limited choice of exchanges, no stablecoins on Japanese exchanges (as far as I know) and no access to apps such as Celsius.

    I haven’t looked into the taxes much but I think taxes may also potentially end up being quite high.

    Anyway, looking forward to seeing the information as it’s definitely something for us to consider once we’ve got everything else in order. iDeco, NISA, ETF’s etc..

    1. Crypto profits are treated as miscellaneous income in Japan -just added to your income tax. That can make the tax extremely expensive.