Cash-loving Japanese savers opt to play it safe

Karyn Nishimura-Poupee -

The Tokyo stock market might be riding two-decade highs, but a growing number of Japanese are choosing to stash their cash in the humble home safe. Japan has some of the world’s biggest savers, learning from an early age to put aside some of their hard-earned wages for a likely long retirement.

However, cautious households who already put away more than half their nest-egg in cold hard yen, are increasingly bringing the cash home.

Part of the reason is a long-standing savings culture. But the Bank of Japan’s move to usher in negative interest rates last year and changes to the tax code have propelled demand for alternatives to keeping money in the bank. And that has seen home safes that cost from as much as 20,000 yen fly off store shelves, with sales surging by a fifth last year.

A recent Bank of Japan study that found investors socked away no less than half of their combined 1.8 trillion yen savings in cash, while 10 per cent was put into stocks and 19 per cent in other retirement and life insurance policies.

By contrast, Americans hold just 13 per cent of their savings in cash and just over a third in equities, while Europeans fall somewhere in between. This despite the fact that Tokyo’s benchmark Nikkei 225 index has been rising since its financial crisis trough in 2009 and is now sitting at its highest levels for 21 years.

“Investing is seen by many Japanese as a whole other world,” said Kaneko Ito, a personal finance consultant at Japan’s All About advisory site.

Cash is king in Japan and credit cards are much less popular than in other countries. It’s common for people to carry around large amounts of yen to pay for day-to-day things. The country’s low crime rate is one reason people feel safe-keeping cash in their house.

Like in some other Asian nations, Japanese people are told from an early age that they must save for the future with parents reminding adult children to “put some aside” and not to borrow too much.

Some lessons were also learned from Japan’s phenomenal post-war economic boom that ended with the collapse of a stock and real estate market bubble in the early nineties.

“It’s a question of culture and education — protecting oneself rather than being aggressive, and avoiding losses rather than maximising profits,” Ito said. — AFP