You might be surprised at the title of this article - "Investing in Japan for Beginners." How, exactly, is investing frugal? Shouldn't we be sitting around scanning newspaper inserts for supermarket sales or reusing rubber-bands instead of checking the stock charts? Well, while I am an advocate of saving money, simply watching your cash pile up into mountains (or small hills, even) gets pointless after awhile, especially in a country with interest rates near zero. Accordingly, many foreigners turn to investments to achieve a higher return on their money.
For individuals, there are a few options for investing in Japan, some more complicated than others. For people wanting English-based services, there are a number of expat- oriented investment firms offering investment advising, tax planning, and other services. Although the investment products are centered mostly on offshore opportunities (making investment for Americans and other nations with restricted tax codes difficult), pension plans, mortgages, tax advice, and even health insurance are also available. I have personally had an excellent experience working with Stefanie Reichart of Banner Overseas Financial Services, which has been in business since 1979. She will run a detailed analysis of your future money needs and also offer a number of potential investment options. Visit http://www.bannerjapan.com for more information. Note that most purchases of the products offered by these firms require an international bank transfer in a foreign currency.
For those seeking something a little closer to home and who are comfortable in a Japanese-language environment, Japanese brokerages also are a reasonable option. They have a few points in their favor that the ex-pat firms do not. For one, you can fund your investment product purchases in yen through domestic bank transfers.
Second, many Japanese brokerages have convenient local offices in most major cities. If you don't feel comfortable navigating a Japanese website to open an account, you can trek on down to a local office and get started. Finally, while you can be almost 100% sure that the information on the investments will be in Japanese, brokerages are offering an increasingly large variety of funds and products to choose from, including investment in overseas stock markets, bonds, real-estate investment trusts (REITs), and other mutual funds. Heck, even the Japanese stock market is looking attractive these days.
Opening a brokerage account in Japan is actually quite simple. You'll need your official inkan, your Alien Registration Card information (the card itself, or a document issued by your local city or ward office), and bank account information. I recommend taking the time to visit the brokerage window (madoguchi) in person - it's much like a bank-teller window. The staff will explain the various forms necessary and the procedures through which you can withdraw or deposit money. Some larger branches even offer Saturday seminars on investing or how to use their online trading programs. In short, if you have enough Japanese conversational skills to open a bank account, you can also open a brokerage account - just politely ask them to explain things to you on the forms, even if it takes some time. Also note that a new Japanese taxation system (tokutei koza, or special tax accounts for stocks) on investments levies a flat 10% tax up front, but eliminates the need to report your earnings later on at kakutei shinkoku (or tax filing) in February/March.
There are many companies one can choose from - among the large brokerages (Nomura, Daiwa, and Nikko), Nikko Cordial is rumored to be the most customer friendly. Smaller brokerages with a more "down-home" environment might also give you better service.
It really does depend, however, on the luck of the draw. If you'd rather not be bothered by salespersons or advisors, then let them know ahead of time. They'll make a note in your file. Of course, the more money you invest, the friendlier the staff will be!
(Their commission is proportional to your investment.)
Finally, what to invest in? On this, I cannot offer much advice.
In the end, investment is your own responsibility - try and gather as much information as you can, and realize that (unlike bank savings) there is a possibility that you could lose money. Good luck!
PS: For those looking for professional financial planning services in Japan, note that Banner Japan also offers these services in English. Japan also has a system for licensing financial planners, but the focus of their education seems to be more on budgeting and insurance product selection. As such, their assistance might be of limited help to the average ex-pat.
By Wendy J. Imura. Copyright 2006.