Start Investing

A journey of a thousand miles begins with a single step.

Our mission here at RetireJapan is to give people the information and motivation they need to improve their personal finances and get more out of life.

A lot of that is fairly intuitive. To have healthy finances you need to earn money and spend less of it than you get. Fairly accessible concepts -the tricky thing is turning them into habits.

For many people, investing surplus money is also going to help. If your money is working too, that can take a lot of the pressure off you. By investing we have the chance to grow our savings and create extra sources of income. It can be extremely powerful.

The problem is that investing seems complex and mysterious.

This is not helped here in Japan by the language barrier, or by the way that many people are wary and distrustful of investing. It’s difficult to get information and advice from people around you.

Waiting until you are ‘ready’

In an ideal world, you would be able to get impartial personalised advice and help when you start investing. You would learn the theory behind investing and the stock market, and would design a portfolio that perfectly matched your goals and risk tolerance.

Sadly, in this world, if that was your condition for starting to invest, you would never start.

And the key is to start. If you start investing, you will learn 100x more than if you continued meaning to learn more about the subject someday. You will make mistakes and your thinking will evolve.

If you read through the old blog posts on RetireJapan, you can see this happening to me 🙂

The solution

Here is one thing you could do to get started investing.

You could open an iDeCo account, but you need to be eligible and your money will be locked up until you are 60. I believe this is an excellent option for many people, but not for everyone.

However, a NISA account is available to anyone resident in Japan and you can get at your cash whenever you want. There are two types: ordinary and tsumitate.

Given that we are starting small, let’s go with tsumitate (you only have to decide which type of NISA to get each year, so you can always get an ordinary one next year if you want to).

Open an account with any of the big online brokers (Rakuten if you use the Rakuten points system, SBI or Monex if you prefer them -there’s not much in it).

Decide how much money you want to invest (this will be a monthly amount up to 33,000 yen). Start small with something you can definitely afford and won’t worry about.

Buy just one fund: the eMAXISSlim全世界株式(ｵｰﾙ･ｶﾝﾄﾘｰ) fund that contains stocks from all over the world, including developed foreign countries, developing countries, and Japan.

Opening the account, buying the fund, and seeing how it performs over time will give you confidence and get you interested in learning more. Then you can fine-tune your portfolio to better match your situation.

A bit more/disclaimer

Of course, this is not a recommendation based on your situation and goals. It can’t be. But it’s a start, and it’s not a terrible one.

You should expect your fund to go up and down over time, but more up than down over the long term.

As long as you are paying in each month, price falls are a good thing. It means you are buying the same collection of profit-making businesses for less money. The months when the stock market fell and you bought at a discount will really boost your long-term gains.

So if you are not currently investing and feel that you probably need to start soon, this might be a good way to do so.

If you need a bit more help you can ask questions in the forum, or even schedule a coaching session.

Remember, this is not a personalised suggestion as to how you should invest. Rather, it is a way for you to get started, and starting is the most important thing for any enterprise.