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Although I am not necessarily planning on living here for the next 20 years, I have been following the track you describe of keeping most of the money I earn in Yen and investing it in Japan. My reasons are that I have found what I think are some good values in the Japanese market (although it is always hard to be sure here, there is so little good information), and I believe that with the continuing US-Japan trade deficit there are good chances that the exchange rate will improve to the Yen's advantage, at least over the several years that I intend to stay here.

Before you go further I should warn you that we could be wrong. There seems to be a consensus that the Yen is likely to head lower --maybe substantially lower-- against the dollar this year, the Japanese economy is still on life-support, and the political and economic leadership here is uninspiring. With that caveat, here is what you might want to look into if you choose to keep your money in Yen:

1. Index funds. There are a lot of index funds here, some using Topix and others the Nikkei 225. They have higher fees and don't track as well as the index funds you may have come to know and love for the US markets. I have invested a few yen in Nomura Fundnet's Nikkei index fund and found that it gives me performance worse than the actual Nikkei by a little over 1% each year (i.e. if the Nikkei falls 10%, it falls 11%, if the Nikkei climbs 10% it climbs 9%). Fundnet advertises in a lot of magazines oriented to Japanese housewife investors (the one I sometimes read is called "Argent" but is spelled in Katakana).

2. Foreign-managed stock funds in Yen. From what I have seen there is a gene for bad stock picking and most Japanese fund managers have it. However, foreign managed Japanese stock funds, like Fidelity and Schroders, often seem to beat the market and they are available here for investors in Yen. I don't invest in these but I would recommend you look into them before you fall for an actively-managed Japanese fund that is run by a Japanese security firm.

3. Japan Inc stocks. The market is down, badly, since the bubble burst in 1990 (those index funds, if you had bought them in 1990 would be deeply underwater by now), but the stocks of firms like Sony, Canon, Honda, Toyota, NEC, Fujitsu (any Japanese firm that comes easily to mind but is not a bank) have done reasonably well since 1990. I would not necessarily recommend any one of these names, but I think this is the area to look. You can find thumbnail sketches of Japanese stocks in English in the Japan Company Handbook (published quarterly) and there is also pretty good information at (I'm not affiliated with any of these groups, of the stocks I mentioned above, I own a tiny sliver of Sony.) If you're not already a stock investor, Japan is a bad place to start because things are very volitile and virtually all advice you receive from brokers, etc. is awful.

4. Think again. It seems like most people I know here repatriate their investment dollars to the US and keep only enough yen to around to pay the bills.

Good luck!

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