RetireJapan

The rate for a one-year time deposit in USD has recently gone up to 4.5% at Prestia. They withhold tax so after tax it's 3.58%. This seems like a good deal to me and I've recently put some money into it. I'm a US citizen and so I have dollars, and I don't have a good place to park them at the moment. (I don't want to increase my holdings of stocks.)

Cash is a very safe asset and I want to have some. Can anyone think of a better way to hold cash? (either yen or USD?)

kantoguy wrote: ↑Mon Dec 05, 2022 7:32 am...I'm a US citizen ...

Isn't there a US treasury bond that you can buy direct that yields far more than that?

I think it's limited to $10-15k/yr, and while the interest rate for it has just been reset, I think for the past six months it was at 9.62%. You have to hold for five years, or, if you redeem sooner you lose the last quarter of interest.

captainspoke wrote: ↑Mon Dec 05, 2022 8:17 am

kantoguy wrote: ↑Mon Dec 05, 2022 7:32 am...I'm a US citizen ...

Isn't there a US treasury bond that you can buy direct that yields far more than that?

I think it's limited to $10-15k/yr, and while the interest rate for it has just been reset, I think for the past six months it was at 9.62%. You have to hold for five years, or, if you redeem sooner you lose the last quarter of interest.

non-Americans can really only access strips and notes on Japanese exchanges.

I suppose if you had an international IBKR account there might be more offerings?

America should probably just use Treasury.gov and load up on ibonds which the rest of the investing world is jealous of.

You can buy t bill ETF. The advantage is that like all ETF, they have a permanent liquidity (You can sell them on the market like stocks). Deposits have a maturity and as a result you will not benefit if short term rates continue to increase (unless you break them before maturity but it probably means paying a penalty). Fed fund rates are likely to be hiked to at least 5 % in the near future so you may be able to earn more with this type of ETF than with this deposit but it will all depend how rate actually move of course.

One example is the ticker BILL US listed on the NYSE. You can buy it with any Japanese online broker (SBI...). Yield is now 4.05 % but it will basically rise to around 5 % when the Fed funds rate reach 5 % in a couple of months.

If I had cash in USD, I would keep it this way but my cash is in JPY so it is complicated as I have to take into consideration the FX exchange rate. Big headache.

The I bond is an option. The current rate is 6.89%. That can change after 6 months.

Downsides are that you can buy only $10K/year, and I'd have to open a new account with the US treasury. I've got more than $10K in the time deposit.

Where are residents of Japan keeping their "Emergency Money?" Is it earning interest? A ladder of these time deposits seems like a good solution.

kantoguy wrote: ↑Mon Dec 05, 2022 1:30 pm The I bond is an option. The current rate is 6.89%. That can change after 6 months.

Downsides are that you can buy only $10K/year, and I'd have to open a new account with the US treasury. I've got more than $10K in the time deposit.

Where are residents of Japan keeping their "Emergency Money?" Is it earning interest? A ladder of these time deposits seems like a good solution.

100,000 yen in cash in the emergency bag.

1 Year of spending in Yen in a traditional account.

Everything else is invested.

If I understand correctly, you are keeping a years spending in an account with little or no interest. Understandable. I've done this myself for long stretches.

I have no problem keeping my most liquid cash in USD. It originates as USD and I can bring it here (to Prestia) at no cost. The usual advice to Americans is to keep cash in a CD (currently paying around 4.5%) or a money market fund (around 3%?). I can't buy these due to my foreign residency. So I'm trying out the Prestia account.

Has anyone found a way to earn interest on an emergency fund?

kantoguy wrote: ↑Mon Dec 05, 2022 11:29 pm If I understand correctly, you are keeping a years spending in an account with little or no interest. Understandable. I've done this myself for long stretches.

I have no problem keeping my most liquid cash in USD. It originates as USD and I can bring it here (to Prestia) at no cost. The usual advice to Americans is to keep cash in a CD (currently paying around 4.5%) or a money market fund (around 3%?). I can't buy these due to my foreign residency. So I'm trying out the Prestia account.

Has anyone found a way to earn interest on an emergency fund?

Your emergency fund should primarily be in the currency you use daily, which will be yen, which you cannot really earn any interest off without risk.

I think it could make sense for part of your emergency fund to be in USD. However, I would ensure you can withdrawal it easily, and that the penalties are reasonable (i.e loss of interest accumulated, nothing more).

I would be tempted to buy US treasuries directly in USD via Rakuten/Monex/SBI. As they payout in USD, and the market is highly liquid.

.....
So:

6-12 months true living expenses in YEN in the Bank.
6-12 months true living expenses in treasuries, bought in USD.

sorry-do you have to be a us resident/citizen to do this?

bryanc wrote: ↑Tue Dec 06, 2022 5:36 am sorry-do you have to be a us resident/citizen to do this?

No, the only "Us-Citizen only" element would be using Treasury.gov to buy bonds, but most American expats will have difficulty with that as well.

Treasury Bonds can be bought on Rakuten, SBI and Monex and are denominated in USD, they can be bought in USD, yen, or USD MMF etc. The can be settled in USD or YEN.

USD MMF and time deposits are open to everyone.