Money. Everybody needs it and if you are lucky enough you might even have some extra cash you aren't sure what to do with. While foreigners might immediately send any extra money home, this is not always the wisest choice. First, one should determine how much money to send back. If you plan a long stay it's best to consider your future expenses. Sending money back home hoping to change it back into yen at some future point is risky due to constantly fluctuating exchange rates. It's best to take into account your lifestyle and any possible emergencies. With this in mind short-termers should keep from one to two months of cash on hand and long-termers between six months' and a year's worth.
But what are the best options for the spending cash you keep here?

Most banks offer extremely low interest rates compared with banks elsewhere. In Japan you shouldn't expect more than 0.1% to 0.3% on a regular savings account, whereas in the U.S., for example, the same type of account would easily yield 6% to 7%. Most banks also have a number of restrictions, which make certain transactions possible only at the branch where you opened the account . For example, if you lose your ATM card, you can only withdraw money from your home branch until you're issued a new card.
The one exception is the Post Office savings account. Because it's directly tied to the Bank of Japan it offers slightly higher interest rates, and you can conduct all your business at almost any post office nationwide.

Only 0.3%?

If earning less than 1% interest in a regular savings account doesn't sound appealing, here are few suggestions for building a nest egg back home.

Again, before you invest it's best for short-termers to keep one to two months of cash on hand and long-termers between six months' and a year's worth. While some people don't expect to accumulate that much, most financial advisors will tell individual investors that they should make any investment fund a top priority, along with paying off outstanding debts. It's best to set a figure (e.g., \50,000/month) and then religiously send this back before buying that first beer.

There are three main options to get your money overseas. Traveler's checks offer the best exchange rate but are risky. If your overseas letter stuffed with the signed checks gets lost, reimbursement can be an ordeal. International money orders offer greater security, but there are restrictions on how much you can send per transfer. There are also surcharges on amounts exceeding \100,000 or if you want the post office to send it by registered mail. Finally, you can send money by bank transfer. While secure and fast, this is very costly and should be avoided unless you're transferring a large amount or need the money quickly. Traveler's checks and money orders go by mail, so they take several days. Bank transfers can be completed overnight.

Recent financial deregulation allows you, in theory, to deposit money in a bank here and withdraw it in a branch in the U.S. This represents the easiest and least expensive way. However, when we consulted the Bank of Japan they informed us that this service is so new they don't know how to do it and it would be best to consult a bank in the States.

Investing Back Home

Once you have your money back home, then what? First you have to consider what kind of investment to make. Consultants will say there's only one reason to open a stock portfolio: as a retirement fund. If you're planning on getting rich by playing the stock market, you stand a better chance buying lottery tickets. If your broker tells you otherwise, remember he or she earns a commission on every transaction you make whether or not it pays off.

People who expect to dig into their nest egg as soon as they return home should consider other types of investments. For example, bonds, treasuries, mortgages and money market funds (CD's) all generate cash and tend to be less volatile than stocks. Bonds are better if you plan on needing the money in one to five years. T-bills or money market funds are recommended if you expect to return within a year or two and want immediate cash.

However, if it's a retirement or trust fund you're interested in developing, then a diversified stock portfolio is the best. The basic problem with this is maintaining control over your portfolio while overseas. Asking family members to take care of things for you is not recommended. In order for them to do this legally, they will either have to invest the money under their name or you will have to grant them a power of attorney. Either case may lead to problems best avoided.

Instead, thanks to the Internet and a few computer-savvy brokerage houses, you can now trade stocks from the comfort of your own home. You still have to pay a commission on each transaction, but it's usually far less than traditional methods. One of the most popular electronic trading companies, E-trade, has one of the lowest commissions at $14.95 to $19.95 per trade.

Again, resist the temptation to trade vigorously and out-guess the market. Most studies show that a consistent "buy-and-hold" strategy works best in the long run. Of course each individual situation is different, so while you should be wary of letting a broker handle your investment, an initial consultation with an investment manager is well worth the cost ($50 -$100).