A few ideas
These are truly interesting times. So far, things are not too bad in Japan, but the uncertainty is pretty rough.
I spend far too much time online reading news and other sites, and would undoubtedly benefit from logging off and doing something else.
But if there are two things I am good at, they are probably reading and thinking about things, and making plans. After a lot of reading, and a lot of thinking, here is what I am planning to do to prepare/deal with the current situation.
Daily life
I’m a bit concerned about how relaxed the Japanese government and people in general seem to be about the current situation, but only time will tell whether they are right or whether this will blow up in the future.
If RetireJapan had a motto, it would be something like: “be prepared, take effective action, get on with your life”, and that is basically what I’ve been focusing on.
These are some things I have been doing since around Feb 26th:
- Stopped training Brazilian jiu-jitsu. This was tough, as it is something I enjoy that is important to me, but the close proximity in training means it would be easy to spread the virus.
- Wash hands more. My wife had already created this habit in me, but now I am pretty diligent about washing my hands every time I come back into an interior space, as well as between lessons, etc.
- Try to avoid touching face. This is very tough during allergy season!
- Basically don’t go out. We have stopped eating out pretty much, and just go from home to work and ocassionally to the supermarket.
- Started slowly increasing our food supplies. Every time we go shopping we buy a bit of extra pasta, tinned food, etc. Nothing too crazy (we haven’t had to convert the spare room into storage yet) but enough so that we could stay home and feed ourselves for a couple of weeks if necessary.
- Stopped spending money. With all the uncertainty, it is possible we might need cash reserves going forward so discretionary spending is out at the moment.
- Stopped using public transport: I basically drive, cycle, or walk everywhere now.
- Stopped visiting my in-laws. They are in their 80s and have preexisting conditions. Haven’t really succeeded in convincing them to self-isolate yet.
Finances
This is quite frustrating. I’ve been waiting for a stock market correction/crash for almost a decade now, and have some cash reserves that I was expecting to use to buy cheap stocks. Unfortunately, my wife’s business is also facing a lot of uncertainty, and we are going to need those cash reserves to potentially prop it up if we see social restrictions or lockdowns in the future.
I guess I should have predicted that stock market disruption would happen at the same time as disruption to the business. Something to remember for next time, I guess.
For now, we aren’t really doing anything different with our finances. We will continue with our regular investments into iDeCo, NISA, and taxable accounts. We’ll also try and fund our granddaughters’ Junior NISA accounts sooner rather than later.
I am expecting the current stock market volatility (the large swings up and down) to continue for a while. I would not be surprised if things got worse (making stocks even cheaper) or better (making them more expensive).
Regardless, we are going to continue with the plan. Needless to say, we are not planning to sell anything.
For my wife’s business (a medium-sized private English school), we are making plans to switch to online lessons via Zoom, have postponed hiring an additional teacher, and have stopped advertising (as new enquiries basically stopped after the school closures).
How about you? What are you doing to prepare or deal with the current situation?
I’m finding this Coursera free online course (provided by Imperial College, London) to be both interesting and informative. Also, if you are a teacher, it’s a good way to check out the kinds of things you can do with online learning 🙂
Regarding stocking up slowly on food supplies, I also think that’s something worth considering. Thanks and stay safe! ^^
1. Getting at least 8 hours of sleep per night.
2. Exercising daily.
3. Eating as healthily as possible.
4. Practicing good hygiene.
5. Keeping money in the bank and cutting back on unnecessary purchases.
6. Not panic buying.
7. Keeping my distance from elderly relatives (despite the fact they don’t seem too bothered by the current situation).
8. Calling home and checking in on family in the UK more often.
9. Carrying on as normal and trying not to worry.
I am actually finding the trains rather pleasant these days during non-rush hour.
Most people have masks on except me and maybe 15% of others. If you watch people carefully, those without masks rarely touch their faces. Those with masks are always touching the front of the mask and then proceed to touch their faces, drink something or snack. Why use a mask?
we have always had a really nice storage set of all sorts of things for a big earthquake, and we always replenish. An issue with this is though that you might be very far from home if the big one comes.
For a long time, I was made fun of and told that holding principle guaranteed annuities was foolish. I smile now. Guaranteed income keeps rolling in and for being retired that is important.
I have always done hand washing as I like to cook and never want to contaminate things.
Hope to hear from more of you doing similar things…and dang…the annuity is great.
Thanks for the coursera link. I’m going to start it tonight. If anything life (not the markets) seems slower with this disruption and so many of my meetings including all travel being cancelled (along with the gym and half my piano lessons). Nice to spend more time reading and I’m turning my journaling to documenting what I see and experience during the pandemic.
For what it’s worth I’ve never found it possible to save funds to invest for an event like this. The best I find I can do is organize life so my monthly savings rate is as high as possible by not carrying a mortgage or fixed payments for a car or kids’ tuition and maintaining a good emergency fund. Entrepreneurs like you and your wife or KyushuWoozy with his travel business have my sympathies. From what I am seeing from colleagues in the US the sudden economic disruption is even worse than here and many physicians and dentists have seen practice income disappear because of a general shutdown of elective medical procedures in some areas.
The Imperial College course only seems to run through February 18 (4 weeks). Have I made a mistake?
I think they are putting it together as they go (plus the people teaching it seem to also be in charge of the UK government response).
I’ve been lucky in that my life & world as a retiree with some medical issues has been naturally quiet & withdrawn. I had another surgery in January (@Tokyowart, my latest PSA is now 0.006!), and was discharged on the 31st. I was thus naturally taking it easy as this developed last month. It’s only thru March that I’ve had to pay attention to self-quarantining. Being older (68), and having had my right upper lung lobe removed in September, I’m at risk, so of course being cautious is the obvious strategy. My most common people contact is checkout lines at the supermarkets (almost daily). I have been thru a few other stores, but in total, that’s it. I don’t have, or wear masks; my wife sewed/made some probably very ineffective ones for herself, since her school wanted her to wear one, but didn’t have any to pass out.
My wife is still working (uni), and tho her classes are done there are still meetings (about what to do), and there was a reduced/restricted graduation ceremony yesterday. I’m the weekday cook and laundry person, she cooks on weekends. Since she’s at a public uni, there haven’t been the worries that others have about being paid, being laid off, and so on. Good fortune there, but with more outside contact, she is also more likely to bring something home(!).
A month or more ago there was a plan for one daughter and her two kids to come visit about now, but those plans were canceled early on, and likewise we won’t be going there. (We’re in Kanazawa, they’re in Kanagawa.)
My main exercise is walking the dog, and we’re in a part of town where when doing that, you almost never meet people–an occasional jogger or bicyclist will come by. With the dog we do pass some people gardening, and usually say hello but generally don’t stop to talk. I have a bike trainer and should get one of my bikes set up on it–I’m genki enough now to try that. (It’s been a season and a half since I’ve ridden outside, I was once an avid cyclist.)
My wife keeps a few emergency things in a closet, mostly water, but we haven’t specially stockpiled anything. Foodwise, we are eating better–I splurge on whatever veggies I want, and sometimes cook with fish that was supposed to be sashimi. We typically keep 6-8 cans of diced tomatoes on hand, which is really the only canned good we use–otherwise, fresh. Food we have in the fridge, and the few onions and garlic in the basket on the porch wouldn’t last long if it came to that.
Next month, or three or six months from now? Who knows…
Captainspoke,
I like that PSA! If I were in a higher risk group for serious Covid-19 (you’re still young to be in a really high risk group 🙂 ) I would have a low threshold for visiting a doctor for a fever or respiratory symptoms. Just sayin’.
We’re now in our fourth week of online group lessons via Zoom. They are quite challenging, especially for lower elementary school classes, but overall not as bad as I was expecting. If the local schools reopen in April, we will too. But we’ll try to make more space between the students, make them wash their hands before and after class, try to disinfect things they touch… things like that.
Our school income has dropped because some can’t take the online lessons due to technical reasons so get a 100% refund, and everyone else gets a 20% refund due to the poorer lesson quality. We’ve given them the option of an additional online lesson in the spring holiday in lieu of the refund, and thankfully quite a few have accepted this. So it could have been worse. Also this is our best continuation year ever (only a few students who have to move to another city are leaving), which is comforting. Unless they just ticked the easiest box because they have so much else to worry about? I am a bit worried about some leaving due to financial pressures if this lasts much longer. We’re all in the same boat though.
We have a bit of cash in our SBI iDeCo account that we’ve been saving for a time like this, and I’m switching it to other assets about every two weeks to keep everything in balance. But there are timing issues, which is a bit annoying. The cash is actually a cash deposit fund that must be sold before we can buy other funds, so a switching order we made yesterday (Saturday) won’t be complete until next Thursday in most cases. In this volatility anything could happen between now and Thursday! I don’t suppose there’s any way to hold actual cash in an iDeCo is there? So we can buy funds without the delay of selling the CD fund first? I guess not.
1. “…and select the investment approach yourself …”
*Only an honest professional should do this for you. I lost hundreds of thousands in the last two crashes because I thought I was smarter than the pros.
2. “…average living expenses for a nonworking elderly couple household (nonworking household composed only of a husband 65 years or older and a wife 60 years or older) amount to 267,546 yen per month.”
* I totally disagree with this, plus not enough information.
A. Does this average couple own their own pace with no mortgage?
B. Do they have a car, car loans and paying for parking?
C. Are they credit card debt free?
D. How long have they been retired, because health insurance really drops after the first year as it is based on the year before income level.
*****My calculations put my first year of retirement requiring under ¥200,000 a month. And we are spending to live and no issues. The article needs to be more open and give more substantiative information.
Going into the second year now and we will actually need only about ¥175,000. No car…transportation here is great. I do spend some good cash heading to the beach to surf or walk…and walking is a given…at least 18,000 steps per day at a nice pace to sweat. Taking in ¥340,000 a month. Getting difficult to spend it all.
Don’t panic people. Pay off the mortgage, have a few hundred thousand in yen cash to play with and get some annuities. I was laughed at for having a wonderful annuity as everyone told me I would never be rich. Well, I sure feel rich now. I am sitting pretty. Surfs up tomorrow. Hitting it!
Just wondering–are annuity payouts taxed as income in japan? Or treated like dividends/other distributions? (also since you might be US–how does the IRS see them?)
Probably as with other things, it’s a decision (dilemma) as to whether to take the money now–and pay taxes on it–or to put it into dividend-less stocks, allowing you to take the gains when and in what quantity you want, while maybe passing something along, that your heirs would get a stepped up basis on.
Yes you must pay taxes on the annuity and declared as income in America plus you should declare it in Japan too. But because you will pay taxes in America on it will offset the taxes in Japan because of the agreement for tax situations.
Annuities are great if you are not greedy, do not want or need ti be rich, and not want any stress about living, waking up, smiling and not checking the stick market.
I think annuities were an under appreciated component of a portfolio. They take so much volatility out of a portfolio and allow that peace of mind you mention. Good for you sticking with what you’re comfortable with! However, going forward, we’re in extremely low interest rate environment globally. If you don’t have annuities now, it’s tough to make a case to get some (although I think there’s still value in an allocation). A 1.3% return on a 30 year treasury is a tough nut to swallow. So I’m thinking how to pivot and re-distribute during this unique buying time. Real estate looks good due to low interest rates, commodities perhaps (and goodness knows, people will need oil and gas), there will be some good values on stocks at some point which could be a good hedge against possible inflation. With all the money printing that will occur, it might be prudent to take a portion of a portfolio and hedge against inflation.
@Ax: Investing in land in Japan is a loser in my opinion. I could probably get 20 million for my mansion/condo but bought it for 42 million years ago. But great roof garden and it is all paid off. I have no intention to sell and move and lose my 60 square meters of outdoor space.
My annuity was paying me 7% a year every March and often the market was up so my principle went up as well. I started withdrawing almost a year ago on my 65th birthday. Not sure what getting into one now will show yearly increases once a year. The monthly payment I receive is 6%. Most are only 4 or 5%. So I have done fine.
Family and friends sure are quiet….they thought I was foolish…oh well, live and learn.
We closed our school in March too and shifted those lesson to August (when we usually run a homestay program in Australia instead of having lessons). We also plan on reopening if the schools reopen.
Hi Ben,
This is a real perfect storm for small business owners so I hope your wife’s school can hang in there. While it must frustrating to not be able to leverage saved up capital for investing right now, at least you have that extra cushion of money to hold you over and keep things afloat. I also hope you took that tenured position at your university. Having a safe job is the greatest thing in the world at times like these and my #1 goal right now is to stay employed during this recession. I am hopeful that Japan will avoid the worst but to be honest, looking at how irresponsibly everyone was behaving over the long weekend in Tokyo, I am preparing for things to get a lot worse here. Trying to slowly stock up on long life foods and other essentials just in case we get a 2nd wave panic and stores sell out.
Thanks! Not tenured yet, but have two more years at least, so that’s a big weight off. Yeah, for the business we can pay three months of fixed costs (rent and salaries) with zero income before going bust. I can’t imagine zero income and the same costs (we’d go online, etc) so I think we’ll be okay.
At least we don’t run a hotel or an airline, eh?
Good for you and I hope you guys pull through. Small business owners are by far bearing the worst of this – airlines and large hotels will get bailed out by the government at the end of the day.
Tenured positions at Universities are rare these days and if you do not have a doctorate, forget it in general.
I am retired here in JP land and walk at least 15 kilometers a day for daily exercise. I do stop in stores or read the signs out front telling what is not available. Toilet paper is everywhere. Alcohol for cleaning hard to get.
There was a line of up to 100 people for masks this morning at Cainze home center. I do not wear a mask. When I watch most that do, they are touching them inappropriately and making things worse for themselves. I also see people put them face down on restaurant tables…yuckers…and then watch the tables get a quick wipe…and I am sure not by an alcohol laced towell.
Going bust would be terrible for you Ben. I think you will need more than a few months of cash available. A common thought is to have at least 3 years’ worth of funds to support a business during good and bad times. Are your teacher’s foreigners? Are they able to survive?
And true about hotels and airlines and the travel business in general.
Going bust would be frustrating and somewhat painful but not terrible. We are fortunate to have investments to keep us going if that happens.
As for three years operating expenses, do any companies have that? (apart from Apple, of course)
Our monthly fixed costs are over 2m yen, so if we have three years’ worth in the bank (over 100m yen) I’d be very tempted to just shut down the business and move onto other things 😉
I meant to write 6 months of hard cash to hold off any disruptions in businesses, not six years. Must have had a bout of dementia on writing that one.
Still, six months does not seem like it will save many businesses with this situation. seems like a year or more will be needed.
Yeah, what was up with Tokyo this last weekend? I saw via TV that Ueno was busy with folks looking at cherry blossoms, parks are full of kids running around playing and construction projects seem to be going as usual. Yomiyuri Land (amusement park) reopened. We walked to Muji to pick up something and were confronted with large crowds which was very uncomfortable so we left quickly. So what’s going on? It’s a little confusing to see what’s happening in other countries and what’s not happening in Tokyo.
Hello, Ben. Good luck to you and everyone else during these crazy times. You said your wife’s school is moving to Zoom lessons from April. Why are you doing this now? Elementary, junior, and high schools will be opening up from April. We closed down our school for 2 weeks at the beginning of March and we did Zoom lessons for the last two weeks of March. We are opening up for regular classes (taking extra precautions) from April.
Hi Kevin
Our plan is to shut for one week then move online *in the event of a lockdown*. I hope we won’t see one but am not ruling it out. I am pretty worried about the lack of action from the government/people in Japan.
We actually stayed open in March, and I think that was a good decision. Going forward, I have no idea what is going to happen.
Really hoping we see a) effective treatment, b) a vaccine, or c) elimination of the virus soon. The uncertainty is triggering my planning instincts almost daily, and that is not good for my sanity 😉
I see, Ben. You said, “we are making plans to switch to online lessons via Zoom.”, so I assumed it was happening. So you are making plans for online lessons in case there is a lockdown. Is that correct?
Interesting. You stayed open, but think that it was the right choice. I closed the school for a month and feel it was the right choice. That’s great. I think it is because we each thought long and hard before making our decisions. In times like these, it is hard to know what the “right” decision is. All we can do is guide our thoughts by facts, logic… and heart.
Prayers to you and all others reading this thread.
Yes, we are thinking about various scenarios. I just realised we’re going to have to give all our teachers copies of the textbooks their classes use to take home, in case we end up with a restriction on going out (so that they will be able to run classes from home).
I had assumed we’d be able to run online classes from the school, but that is not necessarily going to be possible.
Lots of moving pieces! Good luck to us all.