I'm a 38 year old American and have been living in Japan for 8 years on a spouse visa. My wife and I have three young children, between the ages of 1 year old to 6 years old.
Since around the age of 20, I've been hyper focused on my personal finances by budgeting, living below my means, and investing. When I moved to Japan, I had no intentions of staying long-term. However, after staying through Covid and with Tokyo becoming more of a home than anywhere else, it's looking like we'll be here for the long term.
On the US side of my finances, I feel comfortable with our strategy. However, I feel like I could be missing some important considerations on the Japan side. I'd like to lay out my financial situation and key points to our strategy, so please critique and offer any recommendations.
I first must point out that I have been incredibly lucky. I was raised in a middle class family in the wealthiest country in the world by parents who supported in all the ways they could. I graduated university with just $20,000 USD in debt, and I paid it off within a year of working a full-time job. I had a few mentors early on that got me interested in personal finance, so I've been investing in one of the biggest stock market runs consistently for almost 20 years. I cannot understate how grateful I am for my parents and for my mentors that helped me along the way.
Understandably so, this post will rub some people the wrong way, especially when many struggle to invest anything at all. Please know that I understand how lucky we have been.
Total Net Wealth Breakdown ($1.8m) – since 95% of our net wealth is in USD, I'll use USD in this post
- $800k USD in tax-deferred accounts, including 401ks and Roth IRAs
- $715k in taxable brokerage accounts
- $95k in HSA health accounts
- $85k in a DCA pension in Japan
- $75k in 529 education accounts
- $20k in physical items (car, electronics, etc.)
Asset allocation:
- 98% Equities (50% VTI, 30% VXUS, 20% VBR)
- 2% Cash
We do not own a house and have no plans to buy. We enjoy the simplicity and flexibility of renting.
Annual Income and Expenses
Our total household income is 24m JPY, and our total expenses for this year will be about 10m JPY. Admittedly, we have loosened up on our spending in the past few years with the chaotic life with three young kids. During these past several years, the stock market returns have far outpaced our contributions.
Investing
Until now, we always converted JPY to USD and invested in our accounts in the US. With the increased generosity of the NISA account and Interactive Brokers providing non-PFIC index funds, we'll plan to invest 2.4m JPY each for the next five years to max out the contribution limit. After this, we'll go back to investing into the taxable brokerage account in the USA.
Schooling
As with many other parents, we consider our options for our three kids for schooling. Our plan is to start our oldest in public elementary school and see how it goes. If we feel like it's not going well and we're not seeing an education that we'd want for our kids, we would consider looking into private schools. Private schools seem to cost somewhere in the range of 2.5-3m JPY per year, which would become a major expense with multiple kids.
FIRE number
I used to think $2m USD was our FIRE number. However, with the possibility of spending $60k per year on schooling alone for several years, I believe $3m USD would make us incredibly comfortable. With that said, neither my wife nor I plan on retiring early since we enjoy working. However, we will not make this amount of income forever. I imagine this income will last for another 6-8 years, then we'll step back a bit and/or shift careers.
-What am I missing from consideration?
-What advice would you give me?
-Given a possible move outside of Japan at some time in my life, what should I consider on the financial side?
-What tax considerations should I be thinking about?
by IspeakGreenspanish