Emergency fund

8 comments

1. mostly a waste of time in the Japanese context because the interest rate on savings is non-existent.

   either it’s an emergency fund in which case, prioritize that *or* it’s not in which case seek a return.

   Alternately, recalculate how much emergency fund you need.

2. Really depends how much your fund is (in relation to how many weeks/months it covers your expenses).

   If it is a month’s worth, you’ll have to be realistic. Does a low annual rate of return move the needle for the hassle/risk of investing when one would be better off skipping Starbucks once or twice.

   If it covers multiple months, you could build a bond ladder. It won’t give you instant access to the full amount, but you can build in a monthly, quarterly or yearly ladder to give you redeemable access to what you need in case of an emergency.

3. Sadly there seem to be no options for this in Japan. You either invest in the stock market or you let your money stagnate in a bank account. We could really do with something like the UK’s Premium Bonds here.

4. An emergency fund is money that you can access easily in case of emergency. If you invest and somehow it was to drop, then it won’t cover an emergency anymore

5. Negligible interest, but I currently park my emergency funds in one of these.

   **Shinsei PowerYokin**

   [https://www.shinseibank.com/powerflex/yen/poweryokin.html](https://www.shinseibank.com/powerflex/yen/poweryokin.html)

   [https://sre.shinseibank.com/InterestrateC/rate_list_en.aspx#cate2](https://sre.shinseibank.com/InterestrateC/rate_list_en.aspx#cate2)

   0.001%pa, and a bonus interest of 0.02%pa once a year.
   Also, every 3 months, an additional 0.0121%pa if you make less than 5 transfers out each calendar month. Funds can be accessed anytime on demand.

   (Effectively, you’ll get between 0.021%pa to 0.0331%pa each calendar year, before taxes; but you’ll lose out on the annual interest (0.02%pa) if you close your account before it’s paid out on 1 Jan).

   **Shinsei 2 weeks maturity deposit** (minimum deposit JPY500,000)

   [https://sre.shinseibank.com/InterestrateC/rate_list_en.aspx#cate4](https://sre.shinseibank.com/InterestrateC/rate_list_en.aspx#cate4)

   0.03%pa, before taxes; where the longest you would have to wait is up to 14 days to access your funds if the deposit has just rolled over.

   (*) Interest is subject to 20.315% withholding tax (national tax 15.315% and local tax 5%).

6. You can get 0.1% at 楽天銀行 if you enable money bridge with your Rakuten broker account
   3m yen and less then 0.04% above that. No lockout period since it’s a regular bank account

7. Is 新NISA any good? What’s it all about?

8. when you invest the emergency fund it stops being an emergency fund and becomes an investment instead.

   I reduced my emergency fund from 5 years expense (outside nenkin and insurance) to 1 year salary (include insurance and nenkin and saving.

   I also still have funds (6 months salary worth) at my home country in time deposits that I can liquidate within 1 month.