Author Topic: Japanese Child Allowance - What to do with Foreign Currency?  (Read 2585 times)

suds

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Hello All! Long time reader, first time poster - figured it's finally time to be active in the community.

Backstory: My wife is a Japanese citizen, and I have twins < 1 who are dual US/JPN citizens. We currently reside in Japan, I work for the US Military and spouse is a SAHM. Almost all of our financial dealings are US based - Retirement Accounts, Health Insurance, Checking/Savings Accounts, Residence. Most shopping also happens on Base, in US dollars - we occasionally will purchase groceries from the local Japanese economy. Currently, we receive what is known in Japan as "Kodomo Teate", or Child Allowance. This is 80,000 Yen paid every 4 months per child, so 480,000 Yen per year (~ $4,000) combined. This will continue for the next two years, after which it will scale down to 312,000 yen (~ $2,500) per year until they are in Middle School. I have been unable to find any good place to put this money on the Japanese side, but would like to keep it in some manner tied to the children - possibly a college fund paid for courtesy of the Japanese government?

Questions: I would like to keep this money somewhere where I can either gift it to my children or use it for College expenses or down payment etc... , but I have been unable to find anything on the Japanese side that gets any interest. I am unsure if it is a good idea to transfer this money from Yen to USD, especially considering the frequent fluctuations between the two currencies. I don't want to try to guess when which currency will be changing in which direction. Should I open a 529 (USD) and then just transfer all of the money into it every 4 months? Should I just throw it in a savings account based in USD? Should I keep it in a savings account in Yen? I am especially confused because Japan has essentially had no inflation for 30 years, but America does have inflation, so if I invest it in yen am I likely to lose money down the road if the kids want to go to an American College? Can anyone think of anything else I should use this money for, or a different investment vehicle to put it in in Japan? Just read this http://forum.mrmoneymustache.com/investor-alley/ira-for-baby/ about IRAs for children - might I be able to claim the allowance from the Japanese government as income and stash it in each child's IRA?

Thanks everyone!
« Last Edit: July 08, 2015, 02:27:26 AM by suds »

meep

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Re: Japanese Child Allowance - What to do with Foreign Currency?
« Reply #1 on: July 08, 2015, 05:49:14 AM »
If you wanted to keep it attached to the child I'd open a child nisa account when available.

concealed stache

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Re: Japanese Child Allowance - What to do with Foreign Currency?
« Reply #2 on: July 08, 2015, 06:16:15 AM »
Yes the Junior NISA sounds like the one for you. Will be available at any major bank when it arrives. You are in no way restricted to Japan-only funds etc, so you can include the U.S. or other markets.

johnny847

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Re: Japanese Child Allowance - What to do with Foreign Currency?
« Reply #3 on: July 08, 2015, 06:16:19 AM »
There was a similar thread that I posted on recently. Similar in the sense that you should not attempt to time the currency market.

I take it you want to spend the money as USD in the future? I'd just convert to USD as you get the money. "Dollar cost average" in so to speak to hedge your bets that the exchange rate might change in the future. Unlike the stock market there is not some force that will on average drive the currency in one direction. So there isn't a statistical advantage of waiting. By waiting and exchanging all your yen at once it may end up being highly unfavorable. Then again it may be highly favorable. I'd rather just convert it as I get it though.

I have no suggestions for investment vehicles in Japan as I have no idea.

The key to eligibility to contribute to an IRA is earned income. The earned part is very important. This allowance is not in any way earned and hence you cannot deposit this money into a custodial IRA on their behalf.

dungoofed

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Re: Japanese Child Allowance - What to do with Foreign Currency?
« Reply #4 on: July 08, 2015, 07:17:11 AM »
Just to add, living on the base and attending international schools it sounds like your kids aren't going to have much of a connection to Japan. I'd consider sending the money back to the US and investing.

I think it's extraordinary though that you live in Japan yet spend so little yen! Your total annual yen expenses are less than ¥480,000??

johnny847

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Re: Japanese Child Allowance - What to do with Foreign Currency?
« Reply #5 on: July 08, 2015, 07:19:31 AM »
Just to add, living on the base and attending international schools it sounds like your kids aren't going to have much of a connection to Japan. I'd consider sending the money back to the US and investing.

I think it's extraordinary though that you live in Japan yet spend so little yen! Your total annual yen expenses are less than ¥480,000??

Making the reasonable assumption (because suds is on this forum) that the OP is frugal, I don't find this surprising - suds said they do most of their shopping on the base, in USD. They don't need to purchase much off base in JPY.

StockBeard

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Re: Japanese Child Allowance - What to do with Foreign Currency?
« Reply #6 on: January 20, 2016, 01:06:29 PM »
Replying late here, but +1 for the Junior NISA.
(I'm in the US for now but have plans to get back to Japan eventually. Will open NISA accounts for my kids when we move to Japan)