FIFoldPath

Monthly Financial Snapshot: April 2022

Apologies for not posting the last few months.

Looking back at my previous post, the same concerns are even more relevant now: inflation and exchange rate.

Since I last wrote, the yen has sharply weakened to its lowest level in 20 years. Currently it is sitting at about 130 JPY / USD, and it is now a regular topic of conversation on the evening news. As someone who earns money in JPY, it is disheartening to see my salary worth less and less compared to my "home" currency of dollars. As I mentioned before, because I am all but forced to invest in the US, it makes it difficult for me to make new investments as my salary buys fewer and fewer dollars. However, my existing USD investments become more and more valuable in terms of JPY, which helps with paying my living expenses. However, if/when I visit the US it will be even more important to pay using my points and miles and avoid spending JPY.

US inflation also continues to remain high, 8.5% most recently. Inflation is starting to pick up in Japan; I recently noticed that onions had nearly doubled in price compared to the previous week. But so far most price increases have been fairly modest, as Japanese consumers haven't experienced any inflation in over a generation and as a result can be very price-sensitive. On the US side, I once again made an annual $10k purchase of I-bonds, which pay out interest equal to the inflation rate, as determined every 6 months. For bonds issued in the May-October 2022 period, I-bonds will pay 9.62% interest for 6 months, and then it will readjust depending on what the CPI is in October 2022. I decided to purchase in April in order to lock in the previous rate of 7.12% for the first 6 months and then receive 9.62% interest for the following 6 months. As you are prevented from redeeming the bonds within 1 year, I have guaranteed a rate of 8.37% for my first year and will decide whether to sell them after 1 year depending on what inflation is doing at that time. Last year I did the same and purchased in May 2021 when the rate was 3.54%, and that set of bonds is now redeemable since it has been a year. I will let them continue earning their high interest rate and will only sell once inflation starts to go back to normal, which could be a while!

Finally, the US market continues to be volatile and on a generally downward trajectory. Additional uncertainties due to the ongoing war in Ukraine hasn't helped supply chain issues, and rising costs of energy affect everything. Expect more of the same for the near future.

Here's a summary of my status at this point:

Description 04/22
Total Expenses $2,661.97
Gross Income $7,015.73
Taxes $574.77
Net Income $6,440.96
Savings $3,778.99
Savings Rate 58.7%
Net Worth $405,980.81

Projected time to FI (assuming 6% growth and 4% withdrawal rate): 11 years, 5 months.

In my progress chart, I have added another line representing my net worth in JPY, as that is the currency most relevant to me now. I have retroactively extended it back to when I moved to Japan in October 2019 in order to show my progress during that period. Note that due to the rapid depreciation against the dollar, my net worth in JPY has increased this month, even though in USD terms it has fallen almost $20k due to market declines!

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