Why Do the Japanese Save So Much but Invest So Little?

I have always been interested in understanding how different countries handle money and financial education.

And why not? It’s fascinating.

Pure knowledge.

Recently, out of curiosity, I started diving into Japan’s case and discovered an interesting detail.

Despite being one of the richest and most developed countries in the world, the Japanese have a serious issue when it comes to investments. They save a lot but invest very little. This made me think a lot about the impact of financial education on a country’s economy.

The first thing I noticed was that Japanese culture places a high value on stability and financial security.

They grew up hearing that the best thing to do is to save money, avoid debt, and not take unnecessary risks.

This mindset became even stronger after World War II when the country needed to rebuild its economy.

The problem is that this mentality has persisted over the decades, creating a generation that is afraid to invest.

Pixabay

Where does this image fit into all of this?

I don’t know, I just really liked it.

Anyway…

While in other countries, like the United States, many people put their money in the stock market or other assets to make it grow, the Japanese still prefer to leave everything in savings. The big problem with this is that interest rates in Japan are extremely low, practically zero. In other words, the money they save doesn’t generate any returns, and in the long run, this can be bad for both them and the country's economy.

Another factor influencing this behavior is the trauma from the economic bubble that burst in the 1990s.

Hey, you can find all financial crises in a PDF here: https://dergipark.org.tr/en/download/article-file/3165574

At that time, many people lost money because the stock market and real estate sector collapsed.

Since then, many Japanese have avoided investments, associating them with high risks and potential losses.

This lack of confidence in the financial market still affects the country’s economy today.

But Japan? Such an advanced country?

Yes.

The Japanese education system doesn’t emphasize financial education much.

Schools teach mathematics and traditional economics, but they rarely talk about investments, asset diversification, and financial planning for the future.

I thought, "Why?" But then I understood.

The result is that many people grow up not knowing how to make their money work for them. And without this knowledge, the natural tendency is to follow what society recommends: "Save money in a bank account and avoid risks."

This behavior has direct impacts on the country’s economy. Since the Japanese invest little, many companies rely more on banks and loans than on individual investors. This makes economic growth slower and less dynamic. Furthermore, with a rapidly aging population, many people risk reaching retirement without enough money to support themselves comfortably. In recent years, the Japanese government has recognized this issue and started taking measures to encourage people to invest more.

One of these initiatives was the creation of the NISA (Nippon Individual Savings Account), a program that offers tax benefits to those who invest in the financial market.

Private retirement plans like iDeCo were also introduced, allowing workers to contribute to a long-term pension fund.

Even so, changing this mentality is not easy.

Many Japanese still see investing as something risky and prefer to keep their money idle. However, there are signs of change, especially among younger people, who are beginning to realize that without investments, securing a comfortable retirement in the future will be difficult.

This made me reflect on the importance of learning how to manage money from an early age.

If we want a more secure financial future, we need to seek knowledge.

And, of course, understand that investing is not gambling but a smart way to plan for the future.

Perhaps Japan is now beginning to take this path, but there is still much to be done.

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