As title said,
Me and my wife have around 10mil sitting in our bank combined. We have a house, a car, basic things we need, and paid off all the debts we had.
I know 10mil is not a lot. My wife want to put this money into investment like stock or NISA but my idea is keeping it sitting in the bank for any emergency situation.
I would like to know, what is your idea on what to do with this money? Keep or invest or something else? I just would like some input for ideas or perspectives.
Thank you everyone.
by Error_Electrical
29 comments
> I know 10mil is not a lot.
10 million yen is a ton of money.
> I would like to know, what is your idea on what to do with this money?
In general, going against your wife’s advice to do what someone on the internet told you to do won’t lead to good outcomes. Having said that, how about splitting it 50/50 between cash and investments?
Generic internet financial literacy for noobs advice is to have cash on hand for 3-12 months of expenses for emergencies (an emergency fund) then put the rest into investments of some kind. If you are in Japan, making a Nisa account is a good place to start for the investment part if anywhere.
Considering that Japan doesn’t have any saving accounts offering interest and that inflation is a thing, you are basically losing money by keeping this money sleeping in the bank.
Investing your money in NISA is definitely a good idea in my opinion. It of course comes with some risks, such as market crashes etc… but if you learn about investing, you’ll see that despite the many crashes in the last 50 years, the average return per year is still around 10%.
Keep 2 months of living expenses aside and dump the rest into NISA. 10 mil is a lot of cash to have on hand, given you generally don’t need 1 mil to cover half a years core costs.
Keeping 10mil sitting in the bank doesn’t seem like a good idea. Your wife is right. If your monthly fixed expenditures are 200k, I’d say keep 2.5mil (a year’s worth) as cash and put the rest into NISA etc.
Caveat being if you are a US citizen investing in Japan can be fairly complex / not quite as beneficial due to PFICs (having to pay taxes even though not resident in the US) so if thats a factor maybe consider other options?
Others here have given good advice. I am in the same boat. Near retirement, zero expenses (loans, mortgage, education for kids, all paid), kid out of the house and independent, retirement home paid for…
yet…
My wife is not comfortable with less than 5 million in the bank, acruing interest at the rate of 10 yen per month, ‘just in case’.
hmmm…not worth fighting over, but worth bitching on the internet for sure.
If you don’t have a separate emergency money pot I would suggest splitting it into two. Keep the first half as your emergency money and for the latter half, split it between your separate NISAs and invest it.
That money is just losing “value” sat in a bank account doing nothing. Will you need to use that money in the next 7-10 years. If not then take full advantage of the new NISA program by opening an account with Rakuten Securities. Blackrock Japan have a range of low cost ETFs you can invest in. If dumping a huge sum into the market all at once is daunting then dollar cost average ¥300,000 a month.
5 mil, invest in BTC, 2.5 mil, invest in NISA or other stocks or simply buy US dollar, and the rest will be for emergency use!
Calculate how much you’d need to live if both of you had no income for 12 months. Keep that in your savings and invest what’s left, prioritizing NISA (unless you’re American)
What you should do with it depends a lot on how long you have until retirement.
If you are still fairly young (around 40), ¥10m is a ton of money because you can invest it and enjoy decades of compounding returns. The world stock market returns 9% per year on average. 25 years at 9% would turn ¥10m into ¥86m before inflation. You could probably retire on that.
If you are near retirement, you probably can’t afford to risk as much of it in case there’s a medium term crash in the market that forces you to draw down at a loss.
You are right that you should keep an emergency fund, but ¥10m is overkill. Most people keep 3-6 months of living expenses. A year if you’ve got something to be worried about. Unless you have high expenses, ¥10m is a lot.
As it sounds like you’ve never invested before, it might not be wise to dump it all in at once. You don’t know your risk appetite and you might make a mistake choosing funds that you later regret. I would try to gradually fill your ¥3.6m NISA limit this year and next. Look into a fund that tracks the MSCI World stock index like eMaxis Slim All Country.
You don’t say how old you are, nor how much of your overall wealth this is (including your current earning power).
If you are younger set aside 3-6 months of expenses, wherever you are comfortable.
If you are close to retirement that 10m might be reasonable to have on hand. I have more than that, but it’s a small percentage of my portfolio, which is tuned to my age and risk.
Your wife is correct, as long as the money is invested in a boring globally-diversified low-fee index fund portfolio that you buy and hold for decades.
If you’re not convinced that your wife is right, make a spreadsheet to model how you’re going to afford retirement, etc. You’ll almost certainly conclude that investing is correct.
Thank you guys
To add more context I’m relatively young in mid-late 30s never invest before.
My original idea was keeping all 10mil for cash in hand then start investing from whatever money we earn from now onwards.
However, after read you guys perspective. I think I will keep 3-5 mil as cash in hand then put 3-4mil in Nisa and 1-2mil in stock markets.
Again thank you so much for your insights. I really appreciate them.
30 years investor, the 3-X month safety buffer really isn’t applicable anymore. It’s very easy to sell investments in brokerage accounts and transfer. So it’s 3-12 months in assets you can make liquid within a month.
Put it in a NISA in an index fund unless you are American. Everyone should max both NISAs unless you don’t like money and like paying taxes. Yeah, it’s that basic. You can even liquidate your NISA without penalty anytime.
Again, it’s very simple, if you don’t like money, then don’t leverage a NISA. It’s a gift from heaven.
¥10 million will probably be worth about 50% of its current value within 10 years (vs the US dollar) as the weakening yen and inflation destroy its value.
You could max out 2024 Nisa (index funds like eMaxis Slim) for ¥3.6M. Keep the rest in the bank.
I have like 10,000 yen in the bank on a good month. God bless you guys.
I think it’s about your retirement plan.
Banking itself is indeed like reducing money. But if you have enough sum, you can live with that. Investment has its own risks.
What you really should do is to ask a qualified professional and do the calculation with them.
10 million yen as in $64,000 USD?? That’s a shit-ton of money.
Strat with Tsumitate Nisa and do 30K or so a month, your wife can observe and once comfortable make larger investments. Getting started is the biggest hurdle with anything new
stocks or nisa? oh noes. nisa is used to buy stocks.
anyhow if I was you, I would setup monthly contribution to world index each month. And let it slowly convert money from bank into index fund.
I think it can be used for investment, no one can say for sure about the future life.
Invest. Yen will depreciate.
Remember: It’s not timing the market, it’s time in the market. Get that 10 Million invested now.
As a fund manager my advice would be take that money and spread it out amongst a variety of big name stocks and other general investments, you have enough money where you don’t have to take stupid risks and desperate gambles, stick to the big names and let it grow.
Stock is relatively liquid assuming markets are open so unless you need it for a hostage exchange in the next 2 hours you will be able to sell even if it is marginally down on your original position.
Reality is unless you investing in something stupid or you need it in the really short term it will only
Be down a little at worst.
Happy to give more advice if you need it
keep 3 months savings for emergency fund. invest the rest.
You should definitely max your NISA
There are few investments which are tax free in Japan