Hi, I'm also a permanent resident living in Tokyo. I'm not sure if I can offer specific advice, but maybe some details of my situation might be helpful.
Are you renting or have you bought a home or apartment? We have two kids so we bought a house in western Tokyo - we owned an apartment in a high-rise before that. Buying property won't be for everyone, of course, but it is one way that the low interest rate will benefit you. (We're at 1.85% for the next ten years, after that it will be re-adjusted.)
I mostly invest by transferring funds every month or two to my Schwab account in the States, which converts it to USD, and then buy the usual low-expense index funds that most N.A. people would buy. I'm not really investing in the Japan economy for several reasons:
- Most of the investment advice and knowledge I have read is in English and assumes investing primarily in the US economy (plus international)
- There is probably a fair amount of info for investing directly in Japanese markets, but it's probably mostly in Japanese and my reading ability is not up to it.
- The Japanese economy has been largely moving sideways for the last two decades, with little on the horizon suggesting that would change. Lately "Abenomics" seems to be trying to change that, granted, but we will have to see.
Of course there is exchange rate risk in converting to USD to invest. I figure that since I am basically dollar-cost-averaging by contributing regularly it is mitigated somewhat, but I still view it as a risk that i need to be aware of. Come retirement time (I am a couple years younger than you, shooting for maybe 60 to retire) if the yen has really, massively strengthened against the dollar then we can retire somewhere in the States instead of converting it back to yen.
We still keep a good deal of cash in local savings accounts for emergency funds. I tend to split it up between regular savings accounts (earning the typical .01% or whatever it is now) and foreign currency time deposits that can earn 1-2%, but of course at additional exchange rate risk. I have a good chunk in Australian dollar funds at the moment, getting I think 1.7% when I use a two-week time deposit that auto-renews.
It's kind of hodge-podge, I suppose, but I think of it as a form of diversification. My job income and home equity are in yen, most of my investments are in USD, and some cash reserves are in AUD.
If you're interested in investing in the Vanguard funds, they have an international page that lists several Japanese brokers that offer their funds. Rakuten Shoken is one, which I was originally considering since they make it fairly easy to transfer funds between Rakuten and Shinsei bank, where I have an account. As a Canadian citizen, I believe you aren't prohibited from buying the funds that invest in the US market. (I'm US, so can't buy those funds via Japanese brokers. Not sure what the rationale/law behind it is.)