3.

Life Plan
3 Domains of Life Plan

Reason
for
Living
Financial Plan
（Narrow Sense of Life Plan）
3 Domains of Life Plan

Health Money
Economic Wealth
The wealth gap grows wide with economic growth.

Almost all people are Some people will be richer, but

getting richer. some people will be poorer.

⇒Necessity of life plan

High Economic Growth Low Economic Growth

Time
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 How much money do you need in your life? (Average in Japan)

Cost of Funeral
Cost of Living After Retirement 1,110
226〜346/month (Ministry of Economy, Trade
（Japan Institute of Life Insurance） and Industry)

House Purchase
Own money 4,470 60s
Borrowings 30,900
（Japan Housing Finance Agency
Report） 50s
Cost of Nursing 78/month
40s （Japan Institute of Life Insurance）

30s Amount of Savings (per household)

The head of household
30s 6,340
40s 10,740
50s 16,990
Wedding Ceremony and Reception 60s 23,820
(Ministry of Internal Affairs and Communications)
3,580
Education Expenses
Money Support from Parents （Commute from home）
1,750 Kindergarten〜High school(Public）
(Zexy (Japanese popular wedding magazine) 5,400
Report)
Kindergarten〜High school(Private）
17,700 Traveling Abroad to Hawaii
(Ministry of Education, Culture, Sports, 273 per person
Science and Technology)
(Ministry of Internal Affairs and Communications）
 Image of Family Budget
Before Retirement (Active) After Retirement

Savings Savings

Retirement Allowance

Surplus Cost for Comfortable Life

346

Shortage Comfortable
Comfortable
（Deficiency） 120

Salary
Pension Fund
Minimum Minimum
Living Expenses 205 Living Expenses
226

（Japan Institute of Life Insurance, Ministry of Health, Labor and Welfare ）

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 Family Budget Restructuring

At first you should set aside some of your monthly income, and then you spend the
remainder.
⇒You can save money certainly !

× Income − Expense ＝ Savings

○ Income − Savings ＝ Expense

 Bond Investment

１ ２
①
Denomination ４

②
Coupon Rate
２
③
Coupon Pay-
３
ment Date

④
Redemption
Date

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6
 Profitability of Bond Investment
◆Usually we use the yield (% per year) as the measure of bond investment.

１ ２
Selling Price － Buying Price
Coupon Rate ＋ １Holding Period(Year)
Yield（％） ＝ × 100
Buying Price

Percentage of income
to buying price Coupon
１

Yield
２ Capital Gain

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 Equity Investment

Bond Investment : Less risky

Equity Investment : More risky

Expected Equity Investment rate of return

＝Risk-free rate ＋ Risk Premium

Risk Premium : Compensation for Risk Taking

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 Equity Investment Rate of Return in Kao & Sony
（Note） Jan,2005-Dec,2018. Monthly Data

Kao Sony
（number of times）
（number of times）
26
26
24
24
22
22
20
20
18
18

16 16

14 14

12 12

10 10

8 8

6 6

4 4

2 2

0 0
-42-38-34-30-26-22-18-14-10 -6 -2 2 6 10 14 18 22 26 30 34 38 42 -42-38-34-30-26-22-18-14-10 -6 -2 2 6 10 14 18 22 26 30 34 38 42
（％） （％）

・ Return ： 0.86％ ・ Return ： 0.79％

・ Standard Deviation ： 5.96％ ・ Standard Deviation ： 11.17％
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 Prospect Theory

Value

Usually we feel more sensitive to loss

Loss Profit
than profit.

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 If you begin the security investments, ・・・

① Clarify the purpose of transaction

② Diversify the security investments

③ Consider time horizon

④ Control the mental accounting & self-discipline

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Useful Knowledge
The Law of 72
How long do you need to double your money?
(Compound Investment)

{Yield/Year[%]}×{Number of year}=72

Example : {Yield/Year}=4.5% (present Vietnam interest rate)

⇒｛Number of Year｝= 16

Case of Simple Interest :

{Yield/Year[%]}×{Number of year}=100
{Yield/Year}=4.5% ⇒｛Number of Year｝= 22.2

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