* * * * * * * * F R U G A L W A T C H * * * * * * * *
A weekly roundup of how to be frugal in the world's most
expensive country to live (unless you read this!), written
and compiled by Wendy J. Imura.

Regular edition, Sunday, June 20, 2004 Issue No. 013


- What's new
- Frugal news
- Frugal tips
- Credits

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Dear Frugal Readers,

As a someone known for writing about saving money in Japan, I often get
asked: what do we do with our money now that we've saved it?

That's an excellent question, one that the multi-billion dollar investment
industry tries its hardest to answer. The options in Japan (aside from
offshore investments, which will be addressed in a future Frugal Watch)
are essentially the same as one might see in your home countries: stocks,
bonds, certificates of deposit, mutual funds, real estate, REITs and
just about everything in between. The rate of return, method of access
and other factors can differ, however.

Most people begin thinking about investing their money when their savings
finally begin to grow and they realize how little they are earning
in interest at Japanese banks. My term-deposit at a major Japanese city
bank earned just 0.05 percent annually on about $5,000 US. Frankly,
searching for loose change in vending machines would have yielded
a better return. Banks in Japan should be viewed as a convenient
and safe place to park your money to keep it from burning a hole
in your pocket, and nothing more.

At what point should one begin investing, however? How much money can
you start with?

Practically speaking, most financial planners recommend building a
'contingency fund' of three to six months worth of living expenses as a
cushion in a cash-ready account (regular savings, money market, etc.)

This contingency fund is designed to keep you out of debt should an
emergency like a sudden hospitalization or the loss of a job. If you
have to tap into your contingency fund for any reason, it should be
topped up as soon as possible. After your contingency fund has been
saved, then you can begin to look at other places to put your money
where it might work for you better.

If you are interested in putting your money in something like the
average bank account or term deposit, begin by researching your various
options. A decision to buy a stock or take part in an investment
fund should be treated as carefully as any other major purchase. Imagine
if you were buying a car or a house: you'd carefully examine the loan
paperwork and the house's foundations or get a glimpse under the car's
hood. Likewise, learn as much as you can about the company, industry,
or product you are considering to buy. A little legwork now might
save you some serious money in the future.

Happy Savings,
Wendy J. Imura

================= Entrepreneur's Handbook Seminar ======================
Terrie Lloyd, founder of over 12 start-up companies in Japan will be
giving a English-language seminar and Q&A on starting up a company in
Japan. This is an ideal opportunity to find out what is involved, and to
ask specific questions that are not normally answered in business books.

Time/date: 10:30am, June 26th, 2004
Place: 7-8-1 Minami Aoyama, Minato-ku, Tokyo 107
Price: 15,000 yen prepaid, 20,000 at the door
Included: Lunchbox, refreshments, handouts

Bookings: maria@japaninc.com, in English or Japanese.



*The Nikkei Shinbun, Japan's premier financial daily, reported that the
percentage of ownership of Japanese stock by foreign investors (on a value
basis) rose 4.1 percentage points to 21.8 percent, a record figure.

This is higher than the amount held by individual investors (20.5%) and
banks (5.8%).

A higher ratio of foreign ownership might mean that companies are forced
(through the shareholders' active exertion of ownership rights) to act
in a more shareholder-friendly manner (higher dividends, anyone?).
(Article dated June 19, 2004, Nikkei Net Online Edition.)

Practically speaking, I think this is good news for people seeking to
invest in the Japanese market on a retail (individual) basis. Corporations
find an increasing need to report their earnings in English as well as
Japanese, and both the quality and quantity of information available
about Japanese companies is improving.

Want to learn about investing in a Japanese company? First visit its
official homepage and click on the "English" logo. Next, click on
"Financial Information" or another button with the words IR, Investor
Relations, or For our Shareholders. In most cases, you will find
information in English.

If you like what you see, visit a local brokerage and ask about the stock.
Unlike firms overseas, Japanese companies usually have high minimum
share purchase requirements (100 shares, 1000 shares), so make sure you
have enough cash to invest.

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Saving Money on Stock Investment

With the Japanese stock market slowly shaking off the poor performance
of the past few years, more and more people approach me asking how to
invest in stocks in Japan. For those truly considering a foray into
the Japanese stock market, here are a few tips to consider that might
save you money.

1) If possible, set up an online trading account. Japan's traditional,
large brokerages houses all offer online trading (Nomura, Daiwa, Nikko
Cordial), but the real bargains in trading fees and account set up
costs seem to be with the online upstarts.

Called "Netto Shoken", the major players are DLJ Direct, Matsui Shoken
(Securities), and E-Traden Securities. Kabu.com is also in the game,
with its tie-up with the UFJ Banking Group.

2) If you're looking at more of a long-term hold strategy, why not invest
in stocks that offer special rewards or "presents" for stockholders. Owners
of Oriental Land Group, the company that owns Tokyo Disneyland, get free
tickets to Disneyland in addition to their shares. JAL, ANA, JR East and
West and othercompanies offer discounted travel vouchers for shareholders,
depending on the number of shares owned. Some fast-food companies offer
Y3000, Y5000, or Y10,000 vouchers for food based on the various classes
of stock. Some companies send flowers, food sets, coffee, beer and other
gift sets to shareholders. Some brokerages put together special catalogs
advertising these services, and it might be worthwhile to have a look.
(Note that you must be a shareholder for a certain amount of time before
the gifts take effect.)
(For the Disneyland deal, check out this explanation in English:

3) If you don't have enough money to buy the minimum required share
purchase right away, look into a Ruito (in hiragana). A Ruito (or "mini
kabu") is a "DRIP" style investment plan where you pay a certain amount of
money per month to purchase shares of a certain company. While shareholders'
benefits and the companies that offer Ruitos are limited, they do offer
a lower-entry way to get into the Japanese stock market.

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Written by: Wendy J. Imura (frugalwatch@japaninc.com)
Edited by: JI

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