Who doesn’t like free stuff?
One interesting thing about investing in Japan is that many companies give special gifts to their shareholders. These can be something mundane, like a face towel, or something pretty useful, like discounts at department stores or cheap plane tickets.
The gifts are called 株主優待 kabunushi yuutai, but are often abbreviated to just 優待.
According to wikipedia, just over a third of companies listed in Japan provide some kind of yuutai. There is usually a minimum number of shares you need to own to get the gifts, and sadly buying mutual funds or ETFs doesn’t count. You have to be an individual shareholder.
As you can imagine, there are several portal sites that allow you to search for yuutai, like this one that covers both yuutai and dividends.
Most yuutai are in the form of discounts, gift vouchers, or free products.
Yuutai are very popular in Japan, particularly with less sophisticated investors. After all, it is very easy to understand the benefits of getting free stuff every year.
However, as with dividends, it is important to keep total return in mind when considering yuutai. Investing in individual companies can be risky, both in terms of the catastrophic risk of losing all your money if the company should go bankrupt, as well as the risk of underperforming the market as a whole.
In general we recommend investing in low-cost index funds (particularly cheap mutual funds like these ones) within a diversified portfolio. If you can use tax-advantaged accounts like iDeCo or NISA you should invest there first.
If you want to invest in things like individual shares we recommend doing so with just a small part of your portfolio. That way, your potential losses will be limited.
How about you? Are you taking advantage of the yuutai system? Any good gifts out there?