Once investing as a side business starts to gain traction, a natural question follows: “Could I become a full-time investor?” This article explains what a full-time investor is, how much capital is required, the typical lifestyle models, and the advantages and disadvantages, including those related to real estate investing.
What Is a Full-Time Investor?
A full-time investor is someone who makes a living solely from investment income. According to the 2019 Household Survey by Japan’s Ministry of Internal Affairs and Communications, the average monthly consumer spending of a single-person household was about 163,000 yen, with the upper range around 189,000 yen. In theory, if you can earn stable investment income of more than 200,000 yen per month, you can sustain life as a full-time investor. However, maintaining stable returns requires an appropriate level of principal capital.
Types of Investments and Their Characteristics
Stock Investing
This approach involves acquiring shares in listed companies and earning capital gains, dividends, and shareholder benefits. Although there are risks such as bankruptcy and price declines, some investors do live on dividends and shareholder perks, but that generally requires assets in the hundreds of millions of yen.
Futures Investing
This is a type of transaction in which the future trading price is fixed in advance. Because large positions can be taken even with limited capital, it is suited to investors who prefer high risk and high return.
FX (Foreign Exchange Trading)
This is trading based on fluctuations in currency prices. It is available 24 hours a day, but because market forecasting is difficult and the speculative element is high, the risk of substantial losses is also significant.
Bond Investing
This refers to investing in securities issued by governments or companies. It is a relatively stable form of investment in which principal and interest are received on the maturity date, although corporate bonds do carry default risk.
What Is the Difference Between a Full-Time Investor and a Part-Time Investor?
A part-time investor has salary income, so investment losses do not directly affect day-to-day living. There is also the advantage of less time pressure and less pressure to generate returns. A full-time investor, by contrast, has greater freedom over time but must constantly bear the pressure of continuing to generate returns in order to maintain a livelihood.
Main Lifestyle Models of Full-Time Investors
- Living on shareholder benefits and dividends：Requires assets in the hundreds of millions of yen. It offers high stability, but substantial initial capital is essential
- Day trader：Completes buying and selling within the same day. This requires instant decision-making, chart analysis skills, and a high-performance PC
- Real estate rental management：A passive-income model based on rental income. Stable returns are relatively easier to achieve through outsourced management
What Are the Advantages and Disadvantages of Being a Full-Time Investor?
Advantages：Freedom over your time, release from difficult bosses, a location-independent lifestyle, and the potential for high returns once you develop the right skills
Disadvantages：If there is no income, you run a deficit and may no longer be able to support your life. In social terms, you may also be treated as “unemployed,” which can make credit card screening and rental contracts more difficult in many cases.
If you are aiming to go full-time through real estate investing, please also see Avoiding Risk Through a Second Opinion on Real Estate Investment.
Recommended Reading
- What Self-Investment Is Necessary Before Real Estate Investing? Knowledge to Learn, Key Cautions, and Study Methods Explained
- Avoiding Risk Through a Second Opinion on Real Estate Investment | How to Use Expert Support to Prevent Failure
- Is Real Estate Investing Difficult Because It Requires Broad Expertise? Explaining the Three Barriers of Tax, Law, and Construction
Frequently Asked Questions (FAQ)
Q1. What is the minimum amount of capital needed to become a full-time investor?
Assuming monthly living expenses of 200,000 yen, you would need about 50 million yen to operate at an annual return of 5%. The required capital varies significantly depending on the investment method.
Q2. Do full-time investors need to file a tax return?
Yes. Because there is no employment income, all investment income must be reported in a tax return. The filing category differs depending on the type of income, such as real estate income or stock dividends.
Q3. Is it possible to become a full-time investor through real estate investing?
Yes, it is possible. If rental income from multiple properties exceeds your living expenses, you are effectively a full-time investor. One strength of real estate investing is that it is easier to turn it into passive income by using outsourced property management.
Q4. Why do full-time investors struggle with rental contracts?
Because they are often regarded as “unemployed” in the screening process, they are frequently asked to provide proof of income, proof of assets, or a guarantor. Preparing asset verification documents in advance is important.
Q5. When is the right time to move from part-time investing to full-time investing?
A common benchmark is when your investment income consistently exceeds your living expenses by around 1.5 to 2 times. You should also make the decision with tax and social insurance changes in mind.
