How to Invest ¥100k: the 5-3-2 Rule

This is a wealth-basics bonus of Fund Strategy, referencing Jia Yi’s How to Invest 100k — for those who saved their first pot.

¥100k is both the retail investor’s most dangerous “psychological threshold” and the hard-earned “first pot” scratched out of real life. Jia Yi repeats one point: the first job isn’t excitement — it’s building defense and allocation order. Here are the book’s key points as a do-able framework.

1. Mental reset: reject the “gambler” game first

• The fragility of 100k: small capital — one 50% drawdown needs a 100% gain to recover; it can’t afford big mistakes;
• The “play-money” illusion: treating capital as “fun tokens” in a mental account — going all-in is just a fig leaf for lazy thinking;
• Arbitrage mindset: for small money the way is “stay steady” — avoiding big errors beats chasing overnight riches.

2. Core: the 5-3-2 allocation rule

Split 100k into three — defend first, enhance next, chase averages last:

• 50k · Anchor (defense): pure bond funds as the foundation, steadying the portfolio floor;
• 30k · Arbitrage sleeve: hunt “certain arbitrage” in the cracks of the rules — no directional bet, just earn the rule’s money;
• 20k · Average-return sleeve: take market averages with restraint — this is exactly the “four-step DCA” from this course, in practice.

3. Fixed-income landmines (how to split the 50k)

• Bond fund ≠ bank deposit: bond funds fluctuate and aren’t principal-protected; don’t treat them as cash;
• Pure bond funds: bonds only — the most solid base of an investment account;
• Tier-1 bond funds + convertible bonds: a bit of “elasticity” on top of pure bonds;
• Three schools of tier-2 bond funds: thematic (aggressive one-way bets), line-drawer (steady “old ox”), quant (emotionless machine, a range-market killer that cures “can’t-keep-hands-off”);
• Flexible allocation funds: tier-2 bond funds in a hybrid disguise — pick by risk tolerance.

4. Retail toolkit (how to run the 30k arbitrage)

• QDII / hot LOF quota arbitrage: first find an “arbitrage-friendly” broker for access, then capture the certainty of quota premium;
• Double-low convertible bonds: low price + low conversion premium — a haven that attacks and defends;
• Arbitrage presupposes clear rules and clear hedges, not betting on volatility.

5. How it links to this course’s DCA system

That 20k “average-return sleeve” maps straight onto the four-step DCA (ch1–4): pick the asset (broad index) → set rules (valuation anchor) → set sizing & rhythm (staggered averaging) → rebalance & take profit. The other 80k is pinned down by bonds + arbitrage — trade time for space, not leverage for thrills.

⚠️ This is a method framework for illustration only — not investment or financial advice. Markets are risky; allocation must fit your own situation.