RetireJapan

Hi everyone,

Was wondering what people's thoughts were on alternatives to cash for a rainy day.

What would be a wise alternative? Seems a waste to have a fair chunk of cash sitting in a low interest (Japanese) bank account.

Would want to be able to access the money quickly in an emergency (car packs in or similar) and probably limit volatility risk etc..., but get some sort of return. It may be that the cash isn't needed for a number of years.

Have already got iDeco and have maxed out NISA this year, so this question is specifically with regards to alternatives to cash savings.

Looking forward to hearing any ideas!

Typically after an emergency fund is established (6 months +), and Nisa and iDeco are accounted for, then continuing in your tokutei would be next.

As for cash, it depends. If you wanted to hold other currencies Shinsei, Sony and SMBC have such accounts.

If I had usd chilling in an account in Japan I would buy American Treasuries directly from one of the big 3. (Assuming it was not part of an emergency fund.)

Not my thinking, but some people say that !!!unused!!! Credit cards with a big credit limit should be your Emergency Fund, and you should invest the rest. Notice the word !!!UNUSED!!!. No point relying on them if they're already maxed out...

I think, things like car break down, appliance break down, etc., should not actually qualify as true 'Emergencies', but should instead have been 'Budgeted For' as normal wear-and-tear depreciation expenses, just as buying new clothes doesn't qualify as an 'Emergency'. Depending on the number of appliances / cars you own, and you are therefore on the hook for (as opposed to appliances provided by the landlord in a rental), you should probably budget say Y2,000 or Y3,000 per appliance/car per month for these expenses, totally separate from your Emergency Fund, which should be used for living expenses in true 'Emergencies'; hospitalization, job loss, death in the family, etc.. But how you strike that definition is at the end of the day up to you. You can use your Credit Card to get the points, but make sure to pay it off immediately so that it is available when you really need it.

The point about the Emergency Fund is that you don't want to be forced to sell your investments in a down-turn / crash such as now, or draw down on your pension fund in the down-turn to be able to survive. Now would probably be the worst time to liquidate assets, and like the people in these videos:

https://www.pbs.org/video/frontline-retirement-gamble/
https://www.pbs.org/wgbh/frontline/film ... on-gamble/

you'd be robbing your future self... This is of course a forum about retiring with enough assets...

One 30 something guy early in the first video says he thinks he should save 10-15% of his salary. Not enough... More like 25%...

Someone else says they took multiple draw-downs from their 401k, and then wondered why they didn't have enough assets to retire...

Thanks for the replies. Some good information to think on.

Just to clarify, the extra cash savings is in addition to an emergency fund (for loss of job etc...). It's cash earmarked for buying a new (used) car, washing machine etc... when needed. It will be used at some point, but that point is unknown!

I guess putting it in my Tokutei would make sense, it's just that once it's in there I know I won't ever want to sell! Also, if I put it in there what to buy... Treasuries is definitely one option. Maybe just the classic All Country and if I need it when the market is low I can just buy a cheaper car!

Probably should have mentioned before, my brokerage account is with Rakuten.

SOT wrote: ↑Sun Jun 12, 2022 3:12 am Thanks for the replies. Some good information to think on.

Just to clarify, the extra cash savings is in addition to an emergency fund (for loss of job etc...). It's cash earmarked for buying a new (used) car, washing machine etc... when needed. It will be used at some point, but that point is unknown!

I guess putting it in my Tokutei would make sense, it's just that once it's in there I know I won't ever want to sell! Also, if I put it in there what to buy... Treasuries is definitely one option. Maybe just the classic All Country and if I need it when the market is low I can just buy a cheaper car!

Probably should have mentioned before, my brokerage account is with Rakuten.

If you need it to be a bit more liquid TYO listed ETFs are an option Maxis has an ETF version of All Country that trades free on Rakuten. Lots of Hedged and unhedged treasury ETFs too.

That All Country ETF might be just the thing.

Will take a look at it. Sounds like a good idea.