RetireJapan

Thanks Ditto - do you mind if I ask a couple of questions?

a) What is the insurance on your children?
b) Does your wife work outside the home?

Regarding the house and down payment vs no down payment: I can't say jcc is 'wrong' - mathematically, the odds are that in the long run you *should* make more than 1-2% on your investments.

However, we disagree mostly because I have a different view of personal finance - maybe a philosophical difference - but I think avoiding debt first and foremost trumps investing. Not owing anybody anything is a great feeling, and I think the freedom and sense of security that gives you trumps gaining a percent or two here or there for a couple of years. And the more debt you have and the longer you're in debt, the longer you're exposed to unplanned situations that become emergencies, that otherwise would just be annoyances/inconveniences.

Everyone knows the math, but people still do stupid stuff with money. I strongly believe that personal finance is ultimately behavioral. It's not about just 'money' because I know and we all know people with very high salaries that are still broke. The first step on the road to wealth is not being in debt, and I think having that mind set first and foremost will serve you better in the long run than trying to play a 30-year investment/mortgage arbitrage.

DragonAsh wrote: ↑Sat Mar 24, 2018 11:06 am
a) What is the insurance on your children?
b) Does your wife work outside the home?

Hi again,

I went over all insurance papers since they were signed 2 years ago and were a blur.

These are the insurances I pay:

Death Y3,000/month- benefit Y30million expires at age 40.
Cancer Y2750/month - benefit Y1million if diagnosed + all treatment, surgery, drugs costs.
Disability Support Y3290/month - benefit Y100,000 per month if diagnosed unfit to work expires at age 65.
Hospitalization Y3000/month - benefit Y5000 per day if hospitalized + 200,000 for surgeries.

Wife:
Death Y1000/moth - benefit Y1million
Hospitalization Y2000/month - benefit Y5000 per day if hospitalized + 200,000 for surgeries.
Cancer Y3200/month - benefit Y1million if diagnosed + all treatment, surgery, drugs costs.

To answer your questions:

a. Hospitalization Y1500 /month - benefit Y5000 per day if hospitalized + 200,000 for surgeries.
b. No, stay at home mom, kids are still young.

Kind regards,

Thanks Ditto. And full disclosure here, I'm not an insurance professional, nor am I (yet - watch this space) a certified financial planner.
I'm just a random guy on the internet, so take everything I (or anyone on these boards) say with a shaker of salt and make the decisions that fits in with what you and your wife together want to do. Marital harmony is worth something.

That said, you have a ton of room to save on insurance.

a) You don't need life insurance on your wife. Life insurance is aimed at ensuring any dependents that rely on her income to live are protected should anything happen to her. Your family is not relying on her income.

b) You don't need hospitalization or cancer insurance for her (or yourself) either. As I explained in the previous post, you are almost certainly going to pay out far, far more than any out-of-pocket expense would be. Extra medical insurance is aimed at preventing a catastrophic financial outcome if you or our wife became ill. That is not really an issue here, because you already have Y3 million as an emergency fund. The only exception I can think of is if you know that there is a very high incidence rate of cancer in her or your family that suggests either of you are a very high risk of getting cancer at a young age. But look at it this way - my wife had cancer when she was younger than your wife, and I *still* wouldn't take out cancer insurance on her; in Japan, any such expenses are cash flowable, especially if you have an emergency fund.

c) And that goes doubly uber-super ditto for the kids. Insurance on kids is a pure rip-off, and any insurance person pushing it should be banned as far as I'm concerned.

When/if such incidents do come up, you can either pay for the incidents as they come up (cash flow it - that's what the emergency fund is for) or you can have insurance pay for it. The problem is, insurance is like 10 or 20 times more expensive. Insurance is a way to protect your family against financial ruin / bankruptcy. That's not a relevant scenario in your case, since you're in Japan with national health insurance coverage, capped monthly expenses and you have an emergency fund. Those extra add-ons are fantastic for the insurance companies, with some of the highest margins of any insurance product. Not so great for the policy holder.

If I were in your shoes, I would look at dropping everything except your life insurance, and in fact I might actually bump that up a bit while your kids are young and you're building your savings. If you got another Y30 million in coverage, that'd be Y6,000 for your life insurance and you could drop everything else and end up with Y18,000 a month extra that you could add to your savings and not even notice it.