The details lazily calculated (45 years working life, 30% saving rate, withdraw rate 3% of 1985 total net-worth + the dividend) Salary data here http://nbakki.hatenablog.com/entry/Changes_Wage-Workers_Salary_1950-2013 I don't have dividend details but I assume you will save up the dividends in your working life and use it later. If you worked 40 years instead of 45 you would have about 7M yen remaining in 2017.
You need to incorporate inflation into account after retire. I know inflation is not an issue for japan. Japanese CPI figure shows, it was 89.7 in the beginning of 1990 and 103.5 during end of 2015. So about 15% of purchasing power erosion. 1) 30% savings rate of gross salary is pretty aggressive (20% reasonable) and 45 years of working life is little generous (40 might be okay). Don't know about tax rates in japan, 30% savings rate before tax is pretty close 50% savings rate after tax in US. 2) 1985 salary is 3,163,000, assuming 80% amount needed to retire, it is 2,530,400. You are assuming half of that. Don't know about your assumption of dividends saved will make up for that. Anyway good analysis.
@alexpun I assume that the currency is JPY? And thus that the annual withdrawal from the capital equals 1,126,774 JPY? That is hardly enough to live of in current Japan, cost of living is higher than that. If this capital was the only source of income then it would have been depleted by now.
Yes, I am familiar with the various behaviourist explanations and theories for momentum effects. I am just curious that you're comfortable with an investment thesis which, essentially, explicitly relies on other investors in the market being "stupid".
Yes. I posted my asset allocation in other thread. 80% in 14 asset classes, with value tilt, 10% in short vol currently (will move 5% to catastrophic bonds from this allocation) and 10% to trend following to compensate my value bias.
In Japan if you go through the trouble to buy that basket of stock in the index (well, before futures and etf are invented I suppose), you actually get many shareholder benefits which is sort of monetary reward program for owning the stock. Which can yield about 1% on top of dividends. https://asia.nikkei.com/Markets/Tokyo-Market/Japan-s-companies-embrace-gift-giving-to-lure-investors For example, a chain store Bic camara (stock number 3048) would send 1000 yen coupons to the stock owners. http://www.biccamera.co.jp/ir/service/index.html owning 1000 stock cost JP¥1,421,000 The company send you 10x 1000yen coupons in a year for owning 1000 stock. If you hold the stock for more than 2 years, you get 2x 1000 yen coupon each year. So you would get ¥12000 yen coupon to spend with an investment of JP¥1,421,000 If you want to squeeze out every bit of juice, you can buy 100 stock instead and they would still send you 3 coupon each year + 2 for holding it long term. There are Japanese web sites teaching people how to live off these programs. ------------------------------------------------------------ Calculation assume no dividend, so dividend saved up over these working years can be used to help funding living expenses. You also get dividend which is about 1% in the early day and near 2% recently. If you work in Japan you are also forced to join this. http://www.nenkin.go.jp/international/english/nationalpension/nationalpension.html which pay ￥779,300/ year (full benefit amount based on 40 years of fully contributed coverage periods) ---------------------------------------------------------------------------------- Yeah 30% is aggressive, I should have use something like 15%, so just cut the figure into half and adding that to the Japan pension plan.
I must admit I overestimate how much a Japanese earn in the 60s and 70s. If the salary figure is correct then yeah they would have a tough time.
There are many mutual funds in this space. http://stoneridgefunds.com/ SRRIX is the symbol, https://www.oppenheimerfunds.com/private-client-groups/investment-strategies/cat-bond Most of these open at certain times of the year. Mostly when insurance contract is written.