Spat Mari, a 28-year-old nurse, was frustrated. Her salary was meager at only ¥160,000 ($1,100) per month; after bills, rent, shopping and a few vacations, she had little left. So she decided to buy some shares in 2020. “I used to think it was too risky,” said Ms. Saito, who learned about investing through books and YouTube. “But it’s been great to see my wealth grow.”
While Ms. Saito’s story would not be unremarkable anywhere else, it is part of a major change in Japan. According to surveys by the Investment Trusts Association, 23% of 20-somethings invested in mutual funds last year, up from 6% in 2016. So did 29% of 30-somethings, up from 10% – a bigger increase than any other age group. Those exposed to the Nikkei 225, which surpassed a 1989 all-time high on February 22, are reaping the benefits.
Japanese officials, who want to boost economic growth, have long desired such a shift. The public’s previous aversion to retail investing dates back to the early 1990s, when a stock market bubble burst. In subsequent decades, when inflation was minimal or nonexistent, low-risk saving was considered virtuous. About 54% of Japan’s household wealth consists of cash or deposits, compared with 31% in Britain and 13% in America.
Kishida Fumio, the Japanese Prime Minister, outlined an “Asset Income Doubling Plan” in 2022. This aims to create a virtuous cycle: companies will grow by using funds from private investors; individuals will enjoy the benefits of their growth. As part of the initiative, the government improved its conditions in January NISA programme, following the example of Great Britain IS A, which exempts private investors from capital gains taxes. 900,000 new the same month NISA Accounts were opened with the five largest investment platforms in the country.
Mr Kishida’s impulse has been given extra strength by economic developments. Under Japan’s zero interest rate policy, hoarding cash at a bank yields virtually no return. This has been true for some time, but inflation is now around 3% – the highest level in three decades – meaning the value of cash that is not being used is being eroded. Young generations, who do not share the trauma of the bursting bubble, are more likely to take action.
The number of students of ABCAsh, a financial school in Tokyo that caters to millennials, has doubled its enrollment to 40,000 since 2022. Shinjo Sayaka joined after seeing an influencer mention it on Instagram. “It’s hard to talk to my family about money,” she reports. One problem for Mr. Kishida is that many young people prefer international markets to domestic ones. For example, Ms. Saito’s investments include Apple (an American technology giant), the S&P 500 (an index of major US companies) and BioNTech (a German vaccine maker). But perhaps they and others will change their approach if the Nikkei continues to rise. ■