Saturday 15 April 2023

Finance Investment Movement 32

A Japanese friend suggested to buy property in Japan for investment. His rationale is as follows. Interest rate is ultra low (0.5%), decent rental yields (5%), freehold and demand came from urban migration and young people cannot afford down payment. In the conversation, what struck me was the optimism regarding a foreseeable long period of low interest rates. It had always puzzled me how does the Bank of Japan manage to suppress rates when everywhere else are raising theirs. The revelation was a simple answer. More than half of Japan's debt is to its own people in the form of pension system, much like our CPF. Keeping interest rates low is key and by extension, inflation is also controlled. With its huge foreign reserves, it has bargaining chips when external debtors come knocking. Therefore, another important matter for Japan is to ensure competitive goods export while continuing to invest abroad with cash generated. No wonder the Yen is considered a safe haven and devaluation does not adversely affect its status. While I think a property investment is possible, it's not likely to happen soon since other instruments can achieve close to 4% returns at the moment.

Besides being allocated $5000 worth of April's SSB, there wasn't much financial activity as I continue to observe market movements.

Tip: Lawry’s Private Label Napa NV, blackberries to the fore, short and smooth finish

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