By The Numbers in Japan! How To Have Your Passive Income Outweigh Your Expenses.
Summary
TLDRIn this video, BSP Hope discusses the importance of understanding numbers, particularly in the context of living and investing in Japan. He shares insights on the percentage of foreign immigrants in Japan, highlighting that Americans make up a small portion of this demographic. He emphasizes the value of passive income, explaining how it can exceed monthly expenses, leading to financial freedom. BSP Hope also stresses the significance of having out-of-market funds for unexpected expenses, suggesting an 18-month reserve as a rule of thumb. His advice is aimed at helping viewers optimize their financial situation in Japan.
Takeaways
- 📊 The speaker emphasizes the importance of understanding numbers, particularly in relation to net worth and investments.
- 🌍 Discusses the percentage of foreign immigrants in Japan, highlighting that they make up only 2.66% of the population, with Chinese and South Koreans being the largest groups.
- 🏆 Points out the rarity of certain nationalities in Japan, such as Americans and Canadians, and how this can impact one's experience living in the country.
- 💼 Shares personal experiences as an American living in Japan, including the perception and treatment of Westerners in Japanese society.
- 💰 Talks about the concept of active and passive income, suggesting that building passive income is crucial for financial stability and growth.
- 📈 Advises on setting financial goals where passive income matches or exceeds monthly expenses, allowing for reinvestment and wealth accumulation.
- 💹 Highlights the significance of reinvesting dividends to grow passive income over time, regardless of market fluctuations.
- 💳 Stresses the need for out-of-market funds for unexpected expenses or opportunities, recommending having 18 months' worth of expenses saved.
- 🌐 Provides investment advice based on personal experience, not professional expertise, and encourages viewers to consider their financial strategies carefully.
Q & A
What is the percentage of foreign immigrants in Japan's population?
-Foreign immigrants make up 2.66% of Japan's population.
Which ethnic group is the largest among foreign immigrants in Japan?
-The largest group among foreign immigrants in Japan is Chinese, followed by South Koreans.
What is the percentage of Americans living in Japan among the foreign population?
-Americans, including those in the military, constitute only 2.1% of the foreign population in Japan.
Why does the speaker emphasize the rarity of certain nationalities in Japan?
-The speaker emphasizes the rarity to highlight the unique position and respect that Western nationals, such as Americans, Brits, and Canadians, often receive in Japan.
What does the speaker mean by 'numbers guy' and how does it relate to his content?
-The speaker refers to himself as a 'numbers guy' because he frequently discusses financial and statistical information, particularly related to investments and net worth.
What advice does the speaker give regarding active and passive income in Japan?
-The speaker advises that one should aim to have passive income that exceeds their monthly expenses, allowing for financial growth and eventual reliance on passive income rather than active income.
How does the speaker define 'habitual spending' and why is it important?
-Habitual spending refers to a consistent, predictable level of monthly expenses that one can manage without constantly monitoring. It's important for understanding one's financial habits and planning investments.
What is the significance of having out-of-market funds according to the speaker?
-Out-of-market funds are significant as they provide liquid assets for unexpected expenses or market downturns without disrupting the investment portfolio or forcing the sale of investments at a loss.
Why does the speaker suggest maintaining a certain percentage of investments in crypto despite market fluctuations?
-The speaker suggests maintaining a consistent percentage in crypto investments to keep the portfolio proportionally balanced, avoiding the temptation to chase short-term market movements.
What is the recommended minimum out-of-market funds one should have according to the speaker?
-The speaker recommends having out-of-market funds that can cover at least 18 months of monthly expenses to ensure financial security during market downturns or emergencies.
Outlines
🌍 Demographics and Rarities of Foreigners in Japan
The speaker, BSP Hope, initiates the video at Starbucks in Castle Park, emphasizing the spontaneous nature of his content creation. He thanks his viewers for their support and encourages engagement. BSP then delves into the topic of immigration in Japan, highlighting that foreigners constitute only 2.66% of the population, with Chinese and South Koreans being the largest groups. He points out the rarity of Americans, who, including military personnel, make up merely 2.1% of the foreign population. BSP shares personal anecdotes of living in Japan, noting the surprise of locals when they learn he's American, and expresses his enjoyment of the respect accorded to Westerners, particularly Americans, in Japan.
💼 The Importance of Passive Income for Expats in Japan
BSP Hope transitions into a discussion on financial strategies for living in Japan, focusing on the concept of active versus passive income. He explains active income as earnings derived from work and passive income as earnings from investments that require little to no effort. BSP emphasizes the goal of shifting from reliance on active to passive income, using Japan's cost of living as a backdrop. He provides a hypothetical scenario to illustrate how covering monthly expenses through passive income can lead to financial stability and freedom. BSP also touches on the cultural aspects of saving and investing, suggesting that viewers should consider their spending habits and start investing to build a substantial passive income stream.
💹 Building and Maximizing Passive Income in Japan
Continuing his financial advice, BSP Hope discusses the strategy of growing passive income to surpass personal expenses. He uses the example of a monthly expense of $1,200 and the importance of generating a passive income of at least that amount. BSP explains that once passive income matches or exceeds expenses, the individual is essentially living 'for free' as the passive income can be reinvested, growing wealth over time. He stresses the importance of reinvestment and the potential for passive income to increase, providing a cushion against market fluctuations and inflation. BSP also introduces the concept of 'out of market' funds, suggesting that individuals should maintain liquid funds outside of investments to cover expenses during market downturns or unforeseen events.
🏦 The Role of Savings and Investment Strategy in Japan
BSP Hope elaborates on the practical aspects of managing finances in Japan, advocating for a clear understanding of one's spending habits to establish a baseline for savings and investment. He introduces the concept of 'habitual spending' and suggests setting aside a portion of disposable income for savings and investments. BSP discusses the importance of starting to invest early, even with small amounts, to build passive income over time. He also addresses the need for a diversified financial approach, including maintaining 'out of market' funds for emergencies or large, unexpected expenses. BSP's alarm interrupts the discussion, prompting him to conclude the video with a promise of a follow-up to further elaborate on these financial strategies for living in Japan.
Mindmap
Keywords
💡Investment
💡Net Worth
💡Passive Income
💡Active Income
💡Inflation
💡Dividends
💡Habitual Spending
💡Out of Market Funds
💡Reinvestment
💡Diversification
Highlights
Introduction to the video and the concept of discussing numbers in Japan.
The speaker emphasizes the importance of understanding numbers for making informed decisions.
Discussion on the percentage of foreign immigrants in Japan, which is only 2.66% of the population.
Breakdown of the largest immigrant groups in Japan, with Chinese and South Koreans being the most prominent.
Surprising fact that Americans make up only 2.1% of the foreign population in Japan.
The rarity of Western immigrants in Japan and the respect they tend to receive.
Personal anecdote about being an American black man in Japan and the unique experiences that come with it.
Advice on the importance of building passive income streams for a comfortable life in Japan.
Definition and explanation of active income versus passive income.
The strategy of moving from active to passive income as one progresses in life.
Example of how to calculate the ideal passive income based on monthly expenses.
Importance of reinvesting passive income to grow wealth over time.
The concept of habitual spending and how it relates to budgeting and financial planning.
Advice for young people moving to Japan on managing active and passive income.
The role of dividends in building passive income and the importance of reinvestment.
Discussion on the importance of having out-of-market funds for unexpected expenses.
Recommendation to maintain a balance between market investments and out-of-market funds.
Conclusion and a call for viewers to apply the discussed financial strategies for a secure future in Japan.
Transcripts
so what's up everybody this is bsp hope
y'all can hear me out here we got some
background noise um but I'm up here to
Starbucks here the Castle Park
Starbucks this is my third video today I
I I do videos spontaneously so um
whenever comes to my mind if something I
feel like is really important I'm going
to bring it out um so first of all I
want to give everybody a shout out
thanks for supporting my Channel please
hit the like button and subscribe and we
can get some more information out here
for Japan
man okay so here's the
thing I'mma call this numbers in Japan
that's what I am you know I'm a numbers
guy I always talk about numbers I'm
always think about numbers I'm a guy
that knows my net worth on a daily
basis um I'm an investor I I live off of
my investments here in
Japan so um I'm going to be giving um
some investment advice up here on my
site um start talking about numbers more
here on my channel just to kind of give
every proba an idea what's going on okay
so first numbers I'm going to talk about
is
this uh immigration ethnic groups in
Japan if you
will you know that uh when you walk
around places like Tokyo and uh um you
know Osaka you're going to feel like
there's a lot in kto you're going to
feel like there's a lot of um immigrants
living in
Japan but did you know that they are
only
2.66% of the population in Japan are
foreign immigrants Japan has about4
million
people and out of that
2.66% the largest group are
Chinese and followed by South Koreans
then you have Vietnamese
Filipinos Indonesians
nepales and down the line Americans
living in Japan are way down the line
yes in fact Americans including the the
Americans that are in the
military are only 2.1% of the foreign
population in Japan so that's only 2.1%
of the the foreign immigrants in
Japan so I want the reason why I'm
bringing these numbers up is because I
want you to know just how rare you
really are Canadians are you you're just
you're just like minus I mean you're
like 0% something
in this
country England you're about one point
something of not of the country but of
the immigrants that are in the country
of the foreign immigrants that in the
country so last I checked according to
22 there's something like 16,000 Brits
living in in
Japan those numbers are very low so you
may think just because you see a bunch
of people from Europe walking around or
whatever that there's a lot of people
from Europe here but they're actually
not those most of those people used see
walking around are
tourists okay so what does that mean to
you why why do you care about the
Immigrant numbers well I give you an
example here I live out here in nigata
in the place called Joy
City 181,000 people live in my
town since I've been living here since
last
June and I've walked around I've driven
around I drive everywhere and I've only
seen in my city and he I know he wasn't
a resident I've only seen one brother
one other brother besides me and my
son in the city now the next city over
they have more immigrants up there
because Mio's got that big skiing thing
going on but in my city I was the only
I'm the I'm me and my son are the only
ones that I know of that live here now
NE got the city which is a much bigger
city than where we liveing in you're
talking about 900,000 people they have a
lot of people not a lot but they have
more the people the black people that
you see there are mostly Africans so
when I first got here and I think people
were kind of didn't even know I was
American they looked at me like oh he he
must be African
well some people ask me they they're
like they say hey where you from and I
say I'm from America they oh Kaku now oh
you're an American and that's why I
always tell people I love being an
American black man in Japan because
that's what it that's to be frank
Americans are at the top of the food
chain in this
world um so that's why you know you you
want to be proud of yourselves as an
American you be proud of yourself as a
Brit a
Canadian um the Western we we're Western
Nations Australians we get treated with
a lot of
respect from people here in Japan so
that's why I love being American over
here I love being American anyway but I
love being American especially in Japan
because I know that we sit at the top of
food chain so there's not that many
American IM ANS living here like I said
with the exception of the base now the
military inations probably have a good
95% of the American immigrants so now I
always thought that there was way more
Americans here than that but no there's
not that many Americans here at all
realistically speaking and trust me when
I go up the hill I'm I know two
Americans up there that happen to be
black like me everybody else is from
either England or Australia yeah so
that's how the numbers work so so know
that you are a rarity when you're
walking around here just imagine your
Rarity and just imagine if you're making
some good coin and you got some good
Investments coming
in that's the real deal so if you don't
open your mouth and tell people where
you're from if you're proud of where
you're from they won't they will assume
that you're something else or you're
from somewhere else they will assume it
you know the way I'm dressing I got my
Dodger grab on a smart Japanese can
pretty much tell oh this guy must be
from from the states but the average
Japanese is not looking at people like
that so they don't know where I'm from
until they ask me that's why I want to
bring that up
now my second part of the numbers in
Japan I'm going to talk about here and
these numbers are a lot more um real you
know not realistic but a lot more
important to people here and they're
going to help you live in Japan live a a
smoother life in Japan the advice that I
give up here on my channel is designed
to help people live very well here in
Japan now I'm getting a lot of of
questions from people uh wanting to know
about Investments or how these
Investments work I'm not a professional
investment broker I I you know I'm just
telling you what I know and what I where
what I see is working what's working for
me one thing I want to want to talk to
you about to I mean what I want to tell
you is
this everybody's making active and
passive income when we start off when
we're When We're Young when we're like
you know soon as we get out of high
school or we go get out of college
whatever the case may be or even when
we're High working part-time jobs the
only way that we know how to make money
is with active income through active
income meaning we work with our hands
feet head toes ass in some cases
whatever you decide you want to do for
your profession we work and that's what
active income means active income means
that you are receiving something because
you're doing something for that money
all right now the goal is always as you
progress as you get older to move that
pendulin let's say if this if the active
income is all way on the left you're all
the way on the left into the Spectrum
you want to move that as far to the
right as you possibly can meaning you
move it farther and farther as further
to the right means you are living off of
100% passive income that's what that
means
so a lot of people aren't even
living they don't even get 10% passive
income not even 5% not even
1% but here's how I'm telling you how
passive income
works
so now if you let's say you have your
your living expenses every month and I'm
I'm talking about I mean if you're
living in Japan because I'm I'm I'm more
familiar with the Japan numbers now
let's say that you living expenses in
Japan about $1,200 a month $1,200 a
month and and so you and your pay is
giving you about $2,000 a month I'm
being very conservative if you're the
numbers so you're at a $24,000 a year
clip right which I told you earlier that
um about 29% in Japanese males in this
country is making less than $25,000 a
year all right now if you have a $1,200
outlay every month you know with food
rent you know you know
incidentals then if you're getting
$2,000 a month guess what after you end
up paying it if this is if you're get
straight cash if you after all your
taxes are paid or whatever you that
means you have $800 left over pretty
much that $800 is going to turn into
disposable income you'll probably Park
some of it in savings most most people
over here they're not investing in of it
any of it so I would say 50% of that
$800 left over is going to be toward
toward um SA savings or maybe 60%
Japanese are very average Savers and 40%
is going to be disposable income or
saving up to do something disposable
right but here's the thing that people
need to start thinking
about you need to start thinking about
what if you were
getting the same amount of more and
passive income as your expenses yes this
is something that people don't think
about right
I think about this all the day all the
time you know why because that's what I
do that's what I do yes so like I said
I'm a retired software
engineer and you know when you have
retirement monies coming in that would
be considered active income right
because you're retired income but if you
have passive income that's making you
more money than what you're paying out
that guess what that feels like and it
really and you truly is that means
you're not really paying
anything see I you got to put this m I
know yeah people say well I'm I'm
physically paying that money yes but
you're really not paying you you're
you're making money you truly are making
money because think about it you're not
making money on your income you're
making you're yeah you're making I mean
active income but your passive income is
the money that you don't normally touch
at least you shouldn't touch it anyway
you should be using just your active
income
but if you want to set a goal for
yourself as because I you know I get
people saying hey how much should I do I
need for dividends or whatever
Investments to live in Japan well here's
the thing if you're making if you're
paying out $1,200 a month then you
should your passive income should be
$1,221 a month you see what I'm getting
that that means you you're you're
canceling out the money that's being
spent out that means that all that money
that you can you can literally say
that if you you can look at it so many
different ways but if you're making if
you're paying $1,200 a month but you're
making $1,200 a month passive income and
you're getting your active income of
course because you're paying it to the
active income you're not spending your
passive income to pay your expenses
you're using your active income to pay
your expenses well guess what each and
every month when that money is the same
or more than you what you're paying out
that's money that's put aside for later
on down the road to where you won't be
living off your active income anymore
you'll be living off a passive income
and guess what you need that passive
income to be growing every month so like
I said if you're paying out $1,200 this
is let's look at the 12 month of course
one year is 12 months you start off you
paying $1,200 a month expenses and you
and if you got your passive income up to
$1,200 a month you're even by the end of
the year the law of averages say that
you your passive income should be now
you're making 10% more than what you
were paying out you see so at the end of
the year your passive income is now
giving you $1,320 every month and your
your expenses that you're paying out are
$1,200 a month now in Japan that's
doable because in Japan inflation is not
like it is in the West in the west you
got to always compensate for inflation
so let's say that your your passive
income is is going to go up 10% but your
expenses are going to go up say 4 or 5%
depending on what the inflation rate is
lately like a few years it was 8% right
coup years ago but still you're sitting
pretty if you're getting that 10% off of
your passive income as long as your
passive income is more than what you're
paying out you're making money your
money is growing I know you got to
figure you got to put it all in your
head what I'm trying to say but that's
how we live here in Japan that's how we
live all my expenses that I pay out my
rent my my electric bill my phone bill
water bill you know food things of that
nature
you know incidentals like you know you
want to buy clothes or shoes whatever
all the funds that I spend out every
month without getting to personal in
Japan I'm making way more money on with
my passive income than that and my
dividends with my dividends your
dividends a passive income I'm making
way more money than that yes and when I
was working when I was making that
passive income see that passive income
was building and building and building
and building and building for me all
these years so in a sense it didn't feel
like I was paying for anything because I
was that money was sitting over there
see that's how rich people do it they
always make sure that their passive
income is way more even $1 when you
start off even if you just have $1 over
you're good now is that passive income
going to be obtainable that amounts
those amounts are going to be obtainable
right away no it's going to take some
planning so what you do is if you're
starting off if you because you need to
be that's the direction you need to be
going in trust me
so you start off you know what your
monthly expenses are you need to know
what you're spending all the time I'm
not saying be a tight WT you need to
know how money works because what you're
going to establish is you're going to
establish what they call habitual
spending and that means that you don't
even really have to look at all all the
time and you pretty much know you're
you're going to be spending around ,200
or $1,250 or $1,150 every month see it's
habitual spending the way you eat the
way you dine out the kind of the way you
shop
it becomes habitual you got people
actually sitting down okay let's look at
the budget let's do this let's do that
but that's not realistic when you think
about it because you're going to spend
some money off the side this life throws
everything all kind of things at us all
kind of things come at us life us right
so you're going to spending sometimes
this much or that much and you'll know
when you've going over your budget
because you're going to look at you say
damn I spent $1600 what damn I spent a
little bit too much yeah you're going to
know but if you look up and you say oh I
spent like $1,230 this month oh it's not
going to bother you because that's
that's what we call habitual spending
you're got to give yourself plus or
minus 100 on the habitual spending scale
so if like I said if your expenses are
$1,200 and you go say $1,300 or $1,100
either way you're good because you got
to give yourself that plus orus 100 some
people may go plus orus 200 it just
depends on what your level of passive
and active income is that's what I'm
saying see see how that works so if you
are say in your late 20s and you move to
Japan and you are whatever you're doing
your your your expenses are about $1,100
whatever the case may be th000 that's
make a th000 for round number and your
active income because you got to work
cuz you're young in Japan you if you're
getting like $1,500 or $2,000 a
month at that point that disposable
income left over see see what I'm saying
if you're making 2,000 minus
1,000 and then you're going to start you
know putting maybe you might might have
like $100 or $150 worth of disposable
income meaning you're going out at the
bars you're drinking a beer or you you
know whatever you do your friend calls
you up out of the blue okay let's go
that's disposable income you're you need
to be putting at least of course half or
more in your savings account right and
I'm I'm going to get to that what I call
that in a
minute and then anything left over you
need to start using for Investments you
need to start investing that money you
need I'm sorry my alarm went off I'm
sorry you need to start looking at
things things that will will um you know
pay you dividends right away so you may
start off getting like only $5 a month
dividends but still that's okay if
you're getting $5 but a month from
dividends but you're you're paying out
$1,100 or $1,000 like I said to make the
numbers easy guess what now you're only
paying really out $995 you're getting $5
back you see what I'm saying so that's
going to grow that's going to grow
little by little every month now it may
take you a few years depending on how
aggressive your Investments strategy is
for your dividends but eventually that
that passive income is going to match
your your your expenses should you not
change up your expenses of course as you
get older you might your expenses might
go from $1,000 a month to say $15 a
month but that income should be going up
at the same time active income means
that went up too you see what I'm saying
so that's okay if you if you're going to
be paying more your active income went
up but you still got to keep that
passive income growing that passive
income has to to keep growing because
once that passive income grows you're
going to get into the position where
years later you're like oh my goodness
I'm in a really nice spot now because
all that money is be is reinvesting it's
reinvesting it's reinvesting it's
reinvesting itself that's what we do our
money is always reinvesting I'm talking
to you right now I'm making money I'm
sleeping I'm making money I wake up in
the morning I'm making money I'm not
doing anything I'm making money that's
how it has to be your passive income has
to keep going I don't worry about what
the market does if the market goes down
whoop they do I don't have money I don't
have and I'm getting get back to the
Savings in a minute I'm I don't have any
money that I need to use right away in
the market anyway money that I KN that I
need to use right away or within a few
months or for like I said with this with
these upgrades I need to pay for coming
up or if I want to get a car or whatever
Furniture whatever the case may be that
is put into a outof market account see
and this the first time a lot of you
guys are hear about this I just said
this today for the first time I was
on I was on the phone and with with a
friend of mine Soul Shader back in the
States and I had mentioned to him we
were talking about out of Market
expenses and the reason why that came up
is because Bitcoin is down right now
right crypto's down so automatically
everybody's going to think oh the
Market's down crypto or whatever you're
in the market I'm going to purchase more
yeah of course purchase more
but be aware that you do not want to
still you don't want to change up your
percentages right so like for me I'm a
98% Investment Portfolio 2% bit crypto
right so just because crypto go down
went down doesn't mean I'm going to jack
it up to 5% of my portfolio no I'm going
to keep the levels the same keep it
proportionally equal right now I'm not
going to change percentages that's where
you're out of Market income or out of
Market funds come in when you have out
of Market funds you can take some of
those funds and then you can start to
distribute those funds when the market
is low see without messing up your
without you know losing any money
because you're putting it in the market
yeah the market might go down but you're
not losing because you didn't sell
anything and you have to make sure
you're getting dividends once you get
once you're getting dividends dividends
don't care if the market goes down
you're still getting those dividends
every month which is still contributing
to your
reinvestment see so I'm going to go soon
I think I've been talking a little bit
too much but I will do a part two on
this I have to look at my video and
remember what I talked about um I got to
go pick my son up things of that nature
but my alarm went off so that means I to
go get him but yes what I'm saying is
you need to understand that you have to
work that passive income build up that
passive income to where it's more than
your expenses that is the secret and
then once you get it even with your
expenses let it re keep and reinvesting
itself to where eventally it will be
twice or three times what you're
spending every month and you you're
looking at your active income you say
okay I don't mind boom here you go here
you go here you go and guess what you
can then with that money going out like
that you can keep building up your out
of Market funds because you're out of
Market funds are so important a lot of
people ignore out of Market funds they
automatically think that well I don't
need to have any money in savings I'm
just going to put all this money in the
market and this that the other but wait
what if you need something what if you
have to go on the trip what if your
friends come in country and say hey I
need to go I need to go here I need to
go there if you don't have any
aftermarket funds you're going to be
pulling money from the market that's in
a loss right if you try to pull money
from the market say the beginning of
July middle of July those few weeks when
the market was down you already lost
some money you're the red right now
you're trying to pull money out of the
red you don't want to pull nothing out
of the red nothing if anything you want
to purchase something in the red but in
order for you to do that you need to
have your out of Market funds good and
the rule of thumb is you need to have
enough out of Market funds to last you
for 18 months should everything shut
down the market shut down the bank shut
down well I mean not the banks but the
market shut down you need to have access
to out of Market liquid funds for at
least 18- monthly expenses so like I
said if you're
eventually if you're spending $1,000 a
month realistically you need to have
$188,000 a month in your out of Market
expenses yes I mean your out of Market
fence so this is
bsp I'm calling this the numbers in
Japan I will be doing some more videos
like this trust me but this is just came
out I just wanted to talk to you about
it because the numbers were on my mind
bsp Japan I'm out I'll talk to you later
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