Progress Report 2024

The Progress Continues

This is always one of my favourite posts of the year. It’s a chance to look at my financial progress, and hopefully this will inspire others to work on their finances too.

You can see last year’s post here (and follow the chain back through time if you are interested -the first was in 2017 or so).

You can do something similar by doing a quick annual review for yourself. I do this too at the end of the year and go over my personal goals and progress as well as my financial ones.

I track my investments monthly in a spreadsheet and then I copy the December entry onto my annual spreadsheet, which gives me a zoomed out view of progress going back all the way to 2013 when I started doing it. Very much recommended.

I find it useful to go over my accounts and think about them, and hope this will help you see how you can invest over time here in Japan.

We’re going to cover the following areas in order:

• Overall Progress
• iDeCo Progress
• NISA Progress
• Mortgage Progress
• Pension Progress (new section!)
• Giving Progress

Lots to cover, so let’s begin.

Overall Progress

2024 was interesting. I had almost no income, and we decided to try to spend more while we can.

We had some renovations done at home (new bathroom and toilet, and the grandkids’ room got repainted and new furniture). We also took two of our grandkids to Europe in the summer, an eyewateringly expensive trip that was worth every penny.

Stock markets had a great year, and the yen remained weak so despite all that extra spending our net worth went up by 20% in yen terms in 2024.

From a personal perspective this year was a bit mixed. I had some minor health issues and injuries. I feel like I did not use my time effectively so made less progress on RetireJapan than I would have liked to. My wife was still running her business which required a lot of time and attention from me.

But we have a solid plan for 2025, and it is the year of the snake (my zodiac sign) so I am optimistic that it will be even better.

iDeCo Progress

I write this every year. I think iDeCo is one of the best investment options for people who are planning to retire in Japan.

As a kokumin nenkin payer, my contribution limit is currently 68,000 a month (but may go up soon if the proposed changes go through). I also pay fuka nenkin (400 yen a month) which reduces my iDeCo allowance by 1,000 yen.

The difference between last year:

and this year:

is pretty encouraging.

At this rate I’ll be able to pay in for at least another 18 years (it is now possible to pay in until the age of 65), or longer if they extend the limits more in the future.

I ran the numbers a bit (made a video about it) and it seems that if I continue paying into iDeCo at this rate I should end up with over 40 million yen in the account by age 65. I would then have the option at that point to leave the funds in there to continue compounding until age 75 at the latest. Either way, this would probably be enough to fund our retirement on its own.

Just shows how effective it can be to invest reasonable sums of money over time.

I have my account with Rakuten and am investing in the Tawara no-load developed country fund.

The reason I chose this fund was fees. The Tawara fund’s annual fee is 0.0989%.

However, I just noticed a new option in the Rakuten iDeCo lineup, the Rakuten Plus All-Country Stock Index Fund. This has an annual fee of 0.0561% so I am going to check it out and consider swapping my iDeCo investments from the Tawara fund to this new one (EDIT: did some checking, and it seems the fund has higher actual costs so will be sticking to Tawara for now).

One great thing about iDeCo is that there are no fees or penalties for switching between funds, so you can rebalance or reallocate within the account whenever you like.

NISA Progress

Well, I managed to fill my NISA account this year, but only by selling investments from my taxable account and buying new ones in NISA.

Here’s how my NISA account is looking right now.

That 4.7 million yen is getting a bit of a boost from my legacy tsumitate NISA holdings (just one year, so 590,656 yen’s worth). This will be tax free for another 18 years so I will leave it to grow until then.

I just have one fund in both sections of my NISA account, the eMaxis Slim All-Country fund. I plan to keep buying this until my NISA is full, which should happen by the end of 2028 unless the government changes the rules again.

My wife will do the same, which should give us a nice amount of tax free money to spend in retirement.

Junior NISA

Three of my grandkids have Junior NISA accounts. We are no longer able to add money to them, but their investments have grown this year and will remain tax free until they are 18, at which point I will try to convince them to open NISA accounts and put all the money in there. A maxed out NISA (18m yen) at age 23 should grow to well over 400 million yen by the time they are 60 without them needing to save or add any more money.

This just brings home the power of getting young people to start investing as soon as possible.

Mortgage Progress

I still don’t see any reason to pay my mortgage off early. The interest rate on the loan is still 0.5% (floating), my monthly payment is under 30,000 yen, and we have 6,736,755 left to pay over the next 20-odd years.

If I get cancer or die the loan will be paid off by insurance, and I am pretty sure investing any spare money will give me a better return than using it to pay down the mortgage.

Pension Progress

This is a new section this year given how important pensions are going to be for most people in retirement. Your government pension(s) can provide you with a guaranteed income floor.

Being aware of roughly how much they are going to provide means that you can then figure out how much you need to save and invest in order to pay for the kind of lifestyle you want.

For me, I will have two pensions, nenkin from Japan and the UK state pension.

I have paid 300 months into nenkin since I got to Japan in summer 2000. That would currently get me an annual pension of around 1.2 million yen. I will continue paying kokumin nenkin until at least age 60, but more likely 65. Paying the extra five years on a voluntary basis might be worth it if I can continue paying into iDeCo.

Nenkin will not be anywhere near enough for me to live on, but I guess it might cover food and utilities in retirement.

I have also been making voluntary Class 3 payments into the UK state pension (the more expensive ones). If I had been working in the UK before moving to Japan I may have qualified for the cheaper Class 2 payments, but even Class 3 are a good deal).

Logging into the Government Gateway site, I get the following projections.

I just backpaid a few months to fill in some years with gaps (the UK pension works on full years, so if you miss even one week from a year it will not count towards your pension -you can easily check your record online) so I should have 21 full years with 14 more to pay to get the full pension.

If I stopped paying now I would get just over a million yen a year from my UK pension, and the full pension would be worth just over 2.2 million yen.

Combined, I guess I might receive up to 3.5m yen from my government pensions in retirement, which would be enough to live on.

Spending 5 million yen a year might give us a lifestyle similar to the one we have now, and spending 7-8 million yen a year would allow us to do more travel and activities. Right now our savings and investments would likely cover that.

I really recommend looking into your own numbers to avoid unpleasant surprises later on (when it is difficult to do anything about it!).

Giving Progress

I haven’t given much thought to my giving this year, but continue to donate money to the following charities automatically each month:

• charity: water $40/month
• Courageous Kitchen $25/month
• Amnesty International 2.50GBP/month
• The Severn Hospice 10GBP/month
• Ocean Cleanup $10/month

If anyone would like to donate to charity: water please consider doing so through my referral link.

Donations to Japanese charities can be tax deductible (they use the same tax allowance as furusato nozei) so I prefer to do a single annual donation as this makes my tax return less annoying. The first year I donated to Second Harvest I set up a monthly donation, but then had to input all twelve into my tax return. I have learned my lesson.

• Second Harvest 40,000 yen/year
• The Japanese Red Cross 24,000 yen/year

Overall

Well, that was a long post. Thank you for reading all the way to the end!

Things continue to go surprisingly well on the financial front. I can’t believe the numbers looking back to 2008 when I was newly unemployed with no savings, no investments, and no idea of how I was going to pay the bills for my family.

If your finances are not where they need to be, taking action now is the best thing you can do. Let’s make 2025 the year that changes your life trajectory. If you’re unsure of anything check out the info on the site, the YouTube channel, ask a question in the forum or maybe book a coaching call or join our course.

How are you getting on with your plan? How did 2024 treat you? We’ll be doing a planning post in January, so have a think about your goals before then.