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Company Formation Japan



The 5 Most Common Investment Mistakes in Japan

Written by: Editor

Japan offers plenty of investment opportunities, being an extremely attractive financial hub for foreign investors. The Tokyo Stock Exchange is the fourth largest one in the world by aggregate market capitalization of the companies which are listed on it, and the largest in Asia and East Asia. 
Just like any other market, however, there is the possibility to make several mistakes when investing in Japan. Here are five of the most common investment mistakes in Japan which our Japan company formation consultants believe are worth mentioning.

1. Making an investment based on emotion in Japan

It is a common investment mistake in Japan. Even though everyone is aware of the rule “buy low and sell high”, there are numerous investors who do exactly the opposite.
Driven by overconfidence and excitement, sometimes investors get involved with a stock at the top of a bull market too close to the peak price, only to see their investment decrease.
If that is the case, our company formation advisors in Japan recommend you to keep your cool and get involved with a stock when the equity market cycle is low, offering you the highest profit potential over time.

2. Not being familiar with the local legislation

When it comes to investing in brick and mortar (real estate), another common investment mistake in Japan is not being familiar with the local legislation.
Recently, in Japan there have been introduced plenty of building revisions, fire and safety codes. Unlike other countries, Japan has hundreds of thousands of non-compliant or illegal properties available on the market.
Knowing the local legislation is therefore the key to making sure you acquire a property which you can then re-sell and profit from. Our company registration agents in Japan can assist you in connection to this matter.

3. Watching too much financial media in Japan

In the financial media, there is almost nothing which can assist you to make a good investment decision. If you really think about it, if someone had the key to successful investing, would they make it public?
What you could do instead is to spend more time drawing up and following your investment plan.

4. Hiring the wrong financial advisor

According to some specialists, financial advisors often do more harm than good. If you do need one, choose a broker who is not making a profit from buying and selling every stock in your portfolio.
Also, our company formation executives in Japan recommend you to ensure that he or she does not have a conflict and works on the investment strategy which is the most appropriate for you.

5. Do not chase performance on the stock market in Japan

A lot of investors base their investment decisions on recent strong performance. However, if a fund or a stock has performed well in the last years, the time to invest would have been then, not now.
Therefore, follow your investment plan and rebalance, which is exactly the opposite of following performance.
In case you need to know more about investment mistakes, or for assistance in starting a company in Japan, please get in touch with our friendly company formation agents in Japan.