The Truth About Wealth Building: What Should You Focus On Instead of Points?

The monthly limit for credit card-based mutual fund investments at securities firms has been increased to 100,000 yen.

The new NISA account system launched this year, which is great news. In response to these system changes, securities firms have been revising their point programs, leading to a competitive scramble to attract customers.

Securities firm point services

The point services offered by various securities firms are all quite similar, with no major differences. Yet, influencers on X and YouTubers are making a fuss over these minor point discrepancies.

Well, I can understand why; by creating sensational thumbnails, they increase their view counts and boost their revenue, which is why YouTubers are so eager to edit these videos.

It makes me feel sorry for the ignorant beginners who get swayed by this trivial point competition. I feel this very strongly when providing financial consultations.

Even at most, the difference in points amounts to only a few thousand yen.

Why are people so concerned about points?

It is likely because they have not prioritized their wealth-building goals, leaving them unable to distinguish between necessary information and irrelevant information, thus getting easily swayed.

Instead of focusing on minor points right in front of you, am I the only one who thinks you would be better off ignoring those points entirely and focusing on gaining solid financial knowledge to achieve better investment results?

Your original goal is wealth building, right?
The most important factor in wealth building is your ability to contribute funds.
And the second is your rate of return.

I hear that many people place great importance on saving money, and while it is necessary, it is not high on my priority list. Once you review all your expenses when you decide to start building wealth, there is not much else to do on a monthly basis. Therefore, I do not consider it an important factor in terms of prioritization.

Earning points is not something you can control yourself, so once you set it up initially, there is nothing left to do.

Focusing on a point system that you have no control over is a waste of time. Besides, point systems are changed at the whim of each securities firm anyway.

What you can control is your ability to contribute funds. I believe that focusing on that is the golden rule of wealth building.

The "Points to Rate of Return" Ratio

I haven't run a simulation, so I'm writing this based on an image, but
I suspect the ratio of points to rate of return is about 1:100.
Or perhaps even more.
A single day's fluctuation in stock prices can result in a difference greater than a whole year's worth of points, probably.

The shallow behavior of scrambling to collect every last point you can getmight be acting as a brake on your original goal, so I think it is also necessary to take a bird's-eye view and re-examine your own thought patterns.

The more your attention is directed toward unnecessary things, the less attention you have for the items that truly matter.

No. 1: Earning Power

This refers to salary increases, promotions, advancements, side jobs, and part-time work. Above all else, aim to increase your salary from your main job first.

If the salaries for senior positions at your company are low, your salary will never be higher than that in the future. Change jobs immediately.

The wonderful thing about a salary from a main job is that, generally speaking, your base pay is guaranteed, and the company will continue to pay you every month like a subscription, whether you work or not. They pay you consistently every month throughout the year. It doesn't go up or down.

In the case of a side job, your income can go up or down depending on how you work. Therefore, I think it is important to first secure your main job as a baseline.

No. 2: Investment Ratio

What percentage of your total financial assets is allocated to your asset management?

An important point in asset management is to never increase Japanese yen savings, time deposits, or foreign currency deposits that generate absolutely no profit, beyond what is needed for emergency funds. After subtracting expenses from your income, you should invest the remaining money without hesitation.

With that as a premise, I recommend making it a habit to check the ratio of your investments and compare your performance against market averages to see how you are doing. To increase your investment ratio, also pay attention to fees and trust management expenses.

Mindset Toward Earning Points

Now, I am not criticizing points, but what percentage of your total asset management amount do the points you earn represent?

I suspect it is less than 1%. If so, I think your focus should also be less than 1%.

How many points does someone with 1 million yen in assets earn per year? If it is 10,000 points, that is 1%. For someone managing 10 million yen, it is 0.1%.

If you have time to fret over missing out on about 10 points because you forgot to present your point card, I think you will understand how insignificant those points are if you look at how much you lose based on daily stock price movements.

Isn't it putting the cart before the horse to focus more than necessary on earning points relative to your total asset value?

Many people say that 'every little bit helps,' but dust doesn't pile up, which is why it's called dust. Even if it does pile up, dust is still just dust.

If more than half of your financial asset management is in accumulation investment trusts like the S&P 500, then more than half of your attention should be on watching market movements.

While 'set-it-and-forget-it' investing is popular and there is a trend toward doing nothing, I believe that as long as you are investing, it is better to watch world movements and economic indicators so that you can choose products that are advantageous to you when changing your investments in response to changing situations.

Having written that so pretentiously, it is the nature of general investors, including myself, not to actually do so.

Mindset Toward Frugality

There is a lot of talk about saving money, but I think that is only because it is easy for everyone to get started. I cannot help but feel that if you save too much when building wealth, the quality of your enjoyment of life decreases. Let's try to practice "frugality" instead of "saving."

The antonym is "wastefulness," which refers to unnecessary spending.

While "frugality" focuses on suppressing meaningless and unnecessary expenses, "saving" seems to focus on the act of cutting back itself.

Excessive saving involves forcing yourself to cut even necessary expenses for a comfortable life, such as utility bills, food costs, and social expenses. For this reason, saving is accompanied by significant stress.

On the other hand, frugality is about not spending money on meaningless or unnecessary things. There is no need to cut back on or begrudge necessary expenses or meaningful spending. I believe that frugality is about being discerning and having a clear sense of priority when it comes to where you spend your money.

Summary: Priorities and Difficulty

I believe that activities to increase income, such as getting a raise or a side job, are more important than anything else for wealth building.

Since increasing income is difficult, everyone focuses on easy savings or immediate points. Securities companies know very well what ordinary people tend to focus on, so you are being played.

The power of cash inflow is immense. It creates a difference of hundreds or thousands of times in the blink of an eye, so I believe that the key to wealth building is not to turn a blind eye to difficult tasks, but to work on things like changing jobs, getting promoted, or starting a side business.

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I am simply writing my honest thoughts based on my own experience, and I am not criticizing any specific person.

If you feel shocked after reading this, I hope it serves as an opportunity for you to think.