<br><br>---------- Forwarded message ----------<br><span class="gmail_quote">From: <b class="gmail_sendername">peter harris</b> <<a href="mailto:peterjharris@gmail.com">peterjharris@gmail.com</a>><br>Date: Oct 9, 2007 3:29 PM
<br>Subject: FW-106 -- Why Boring Investments Work<br>To: <a href="mailto:FrugalWatch@mailman.japaninc.com">FrugalWatch@mailman.japaninc.com</a><br><br></span>* * * * * * * * F R U G A L W A T C H * * * * * * * *<br>A weekly roundup of how to be frugal in the world's most
<br>expensive country to live (unless you read this!), written<br>and compiled by Wendy J. Imura.<br><br>
October 9, 2007 Issue No. 106<br>+++ INDEX<br><br>***** Why Boring Investments Work ****<br><br><br>Hi Frugalites!<br><br>Are you investing in Japan? If you are already, or were thinking<br>about starting soon, a new law recently came into effect in Japan
<br>(the Kinyu Shohin Torikihi Ho, or Financial Instruments &<br>Exchange Law) that might force some changes in dealings with<br>your broker. Essentially, it aims to extend protections for<br>investors for a wider range of sectors and financial products.
<br><br>Practically speaking, it works like this: Sellers of securities<br>like stocks, bonds, forex savings schemes, and other investments<br>are now required to provide (at least once a year) clear<br>explanations *on paper* of how their products work and the risks
<br>involved. Sellers must also ask clients what the purpose of their<br>investments are (growth, savings for retirement etc), and are<br>also obligated to be forthright in advertising these products as<br>to the possible risks investors face (
i.e. they might lose<br>money!) in purchasing them.<br><br>This all emerged out of both the 2006 Livedoor scandal and a<br>string of fraud cases involving elderly and/or other unsuitable<br>investors being sold questionable products that clearly didn't
<br>meet their needs, resulting in many billions of yen in losses. I<br>personally heard the sad story of an older 'friend of a friend'<br>who lost close to 10 million yen in foreign exchange options<br>trading, which someone told her was 'guaranteed' to make
<br>money. Options trading, a rather complicated investment vehicle,<br>is certainly not where a beginner should start.<br><br>So, where should a beginner investor look to put their money?<br>What is safe? What has the best long-term performance? One of
<br>my favorite websites, Get Rich Slowly ( <a href="http://www.getrichslowly.com" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">www.getrichslowly.com</a>)<br>offered some excellent advice on the subject which can be boiled
<br>down to one word: indexing.<br><br>What is indexing? Essentially, this means placing your money in
<br>funds (or a portfolio) that track a particular target index,<br>which is called a benchmark. The fund simply aims to achieve the<br>same performance as the benchmark it tracks. Suppose, for<br>example, that you want to invest in US stocks. You have a few
<br>choices: (1) you can research one of the thousands of companies<br>listed on the New York Stock Exchange and other markets, (2) you<br>can choose one of the tens of thousands of actively<br>-managed mutual funds (i.e
. you pay a fund manager to actively
<br>invest the money for you), or (3) you can buy an index fund which<br>tracks a typical US stock index (such as the Standard & Poors<br>500). If you chose the latter, you would not only save money in<br>fees (on average, you pay
3.1% *more* for actively managed<br>funds), but may also enjoy better returns over the long-term. <br>For some extended reading on why, take a trip to the following<br>53-page PDF file:<br><a href="http://www.transparentinvesting.com/uploads/wholestory.pdf" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">
http://www.transparentinvesting.com/uploads/wholestory.pdf</a><br><br>(Yes, I'm asking you to read [or at least skim] a 50+ page<br>document on investing. Why? If you are serious about making<br>money investing in a simple manner, you'll have to do a little
<br>research. Most people, interestingly, spend far much more time<br>investigating their next PC or car purchase than their<br>investments.)<br><br>After reading up on indexing, doing some financial planning, and<br>determining your desired asset allocation, it's time to start
<br>shopping for funds. If you have a US address or bank account, you<br>can most likely set up an online brokerage account and purchase<br>one of the funds recommended in Transparent Investing file. I<br>recommend this approach, from a tax perspective, for US citizens.
<br>If you do not have this access, then you can ask your local<br>broker to find you an index fund that tracks either a Japanese<br>index (there are many Nikkei 225 or TOPIX 'rendogata' funds) or<br>one for an overseas market. The term 'index fund' is known in
<br>Japanese in its katakana version (indekkusu faando), or is<br>sometimes mistranslated as 'toshi shintaku' (which is the general<br>name for an investment trust). Be sure and specify what you want!<br><br>If you are interested in the Vangaurd Funds listed in the PDF,
<br>check out Monex Securities. It is, apparently, the sole<br>distributor of Vanguard Funds outside of the US, and offers a<br>small cap index and total stock market index fund. It is a<br>Japanese low-cost online stock brokerage that also offers a full
<br>range of other investments. Regrettably, there appears to be no<br>English language support.<br><br>Good luck investing, Frugalites!<br><br><br>***Those using this newsletter for investment purposes<br>do so at their own risk***
<br><br>END<br>+++ ABOUT US<br><br>STAFF<br>Written by: Wendy J. Imura (<a href="mailto:frugalwatch@japaninc.com" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">
frugalwatch@japaninc.com</a>)<br>Edited by: JI<br><br>Copyright 2007 Japan Inc. Communication<br><br><br>SIGN UP FOR FREE!:<br><a href="http://www.japaninc.com/newsletters/free_sign_up" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">
http://www.japaninc.com/newsletters/free_sign_up
</a><br><br>READ J@PAN INC (SEPT/OCT) FREE ONLINE<br><a href="http://www.japaninc.com/mgz_sep-oct_2007_issue" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">www.japaninc.com/mgz_sep-oct_2007_issue
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<br>Japan's First Family Social Network is here! <a href="http://www.piqniq.jp" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">www.piqniq.jp</a><br><br>Are you raising a family in Japan? Do you speak English?
<br>Would you like to meet other English speaking families in
<br>your area? Piqniq is a Social Network Service tailored<br>specifically for you!<br>Our concept is "Families helping Families" and we invite<br>anyone that wants to meet other families, help other families,<br>
or discuss family-related issues pertinent to life in Japan<br>to come and join the Piqniq today!<br><br>For more information: <a href="http://www.piqniq.jp" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">
www.piqniq.jp</a><br><br>-----------------------------------------------------------
<br>Start a Company in Japan<br><br>Entrepreneur's Handbook Seminar 6th of October, 2007<br><br>If you have been considering setting up your own company,<br>find out what it takes to make it successful.<br>Terrie Lloyd, founder of over 13 start-up companies in Japan,
<br>will be giving an English-language seminar and Q and A on<br>starting up a company in Japan.<br>This is an ideal opportunity to find out what is involved,<br>and to ask specific questions that are not normally answered
<br>in business books.<br>All materials are in English and are Japan-focused.<br><br>For more details: <a href="http://japaninc.com/terrie_lloyd/" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">http://japaninc.com/terrie_lloyd/
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