Ryan Ginstrom wrote:

> Out of all these little programs, not one earns any significant interest.

Hi, Ryan. Has she taken out things like pension plans, insurance policies,
etc. (either on her behalf or on yours), which qualify for tax relief? I
have found that the tax relief aspect of things like that compensates
significantly for the comparatively low interest rates.

> I have talked to her a few times about buying US savings bonds, if
> nothing else for the sprog's college, since he will almost certainly be
> cashing them in there. But for the average Japanese, "interest" is an
> utterly foreign concept.

If the interest rate is guaranteed, I think you can convince her. The low
dollar makes now an attractive time to get started, and those regular
statements showing how the money has grown will bring a smile to her face.
Her fears probably stem from a deep-rooted feeling among many Japanese
people that "investment" is just a euphemism for gambling.

> Don't even get me started on the stock market.

Actually, I'm with my wife on this one. I put several million yen into
portfolios during my first few years in Japan and only ever lost money
(well, one of them has increased in value, but not as much as if I'd just
put it into a high interest bank account; the others are worth less than
when they started). With the yen going up and down (it has been anywhere
from around 135 to 240 to the pound sterling during my time in Japan) and
the fluctuations in the stock market itself it's like riding two roller
coasters at the same time.

These days, I put my money into Japanese systems that qualify for tax relief
and offshore (UK) accounts that earn a decent rate of interest. The money I
at first put into the hands of a "financial advisor" to speculate with I now
plough into books and antiques. That started as a hobby and developed into a
small sideline business - it's a lot more fun (for me, at least) and if I do
make a mistake at least it was *my* mistake, not the mistake of some agent
who continues to charge me for his services even while he is losing my money
for me.

> One form of investment she thinks is worth it is land, and despite
> the crash in land values in the 90s, enough fellow Japanese seem
> to share her opinion that she is probably right.

Well, if you're renting your home it's definitely worth looking into ways to
buy. Interest rates on housing loans are (can be) very reasonable, and you
can set your loan repayments to the same level as you are currently paying
in rent, so that, for no extra money, you end up with an asset worth
millions of yen. We decided to buy about four years ago, and definitely have
no regrets. Once we have paid off the loan on our home (probably in about
half the time we originally agreed with the loan company) we will probably
take out another loan and buy a besso somewhere in the countryside, within
striking distance of our present home.

I tend to feel that the reason for buying a house is because I want to live
in it. Speculative investment in land or estate isn't something I've thought
too much about, but if I ever did do it, I'd probably do it in such a way
that I got the use of it (living on it, cultivating it or, perhaps, renting
it out). That way, even if it didn't end up increasing very much in value,
I'd have got some benefit from it.

--
John
http://rarebooksinjapan.com