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We have been looking again at the best way to get a return on a yen investment for investors who want a means of generating income. Either for those who wish to use the money to spend without dipping into their actual savings or for those who have a larger sum and wish to live off the generated income.

The challenge in Japan is that as interest rates are low, it is not easy to do so. If the Japanese government pays out less than 1 percent on its bonds it issues, anything an ivestor can get higher than that by giving someone else their yen obviously entails greater risk, which may be unacceptable, or there is something in the small print which means the effective rate is not that high.

Income

We do find the rates of dividend on REITs attractive. The listed funds on the Tokyo Stock Exchange offer income of around 3.5 to 5 percent as of the end of June 2005. The other typical share used by income seeking investors, the utility companies, by comparison offer yields of around 2 percent. The government on its bonds offers aoround 0.5 percent

We cover the risks you should consider and the practicalities of REITs in other articles. We mention the listed REIT funds because the costs of purchasing and selling are very low if you use an internet broker whereas the cost of buying an unlisted REIT fund through a bank can be around 2 to 3 percent of your money because of the way the coommission structure works. This may still be attractive if you like the particular fund or it has a good dividend but it will eat into your investment if you are a relatively short term investor.