The 'World with Interest Rates' Has Returned. What Is the Impact on Assets?

“We are now in a world with interest rates.”

I’ve been hearing that phrase a lot lately.

Since I started investing, I’ve had more opportunities to think about interest rates, but until recently, I thought interest rates were something that didn’t really concern me.

That’s because I’ve lived through a long period of deflation and low interest rates.

Even if you kept your money in the bank, it barely grew.

That was just the norm.

So, I never really thought deeply about interest rates.

But things are different now.

Mortgage rates are rising, deposit interest rates are up, and the yields on government bonds have reached levels incomparable to the past.

So, now that we are in a “world with interest rates,” do we need to change how we approach our money?

Here is what I think.

We are in a world with interest rates.

But my rules for money remain the same.

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◽️ I used to think, “Interest rates have nothing to do with me”

When I was in my 20s and 30s,

the term “interest rate” didn’t really mean much to me, honestly.

Even if you deposited money in the bank, it hardly grew.

I knew that.

But,

“Well, what percentage interest rate would be good?”

I had never thought about that.

In the first place, I don’t think I even had the idea of building assets while being conscious of interest rates.

When I first started investing, I was more interested in “how to grow my money” than in interest rates.

Looking back now, my perspective was quite short-term.

And it wasn’t until I was around 38 that I seriously started to focus on “investing that makes time your ally.”

I wish I had known sooner.

I still think that today.

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◽️ September 29, 2026: What are the actual interest rates?

Here, I would like to check the current interest rate levels.

As of September 29, 2026, the Bank of Japan has decided on a monetary policy to keep the uncollateralized overnight call rate at around 1.25%.

Considering the long-lasting world of “near-zero interest rates,” it is safe to say that the environment has clearly changed.

On the other hand, what about bank deposit rates?

According to the Bank of Japan’s major time-series statistics, the average over-the-counter interest rates in September 2026 were:

• Ordinary deposits: 0.322%
• 1-year time deposits (10 million yen or more): 0.472%

(BOJ Statistics Search)

In other words, just because the policy rate has risen to around 1.25% doesn’t mean that ordinary deposit rates have exceeded 1%.

Meanwhile, looking at government bonds for individuals, the “Floating 10-Year” issue for September 2026 has an initial coupon rate of **1.95% (before tax)**. (Ministry of Finance)

Looking at the numbers like this,

it is true that we have entered a “world with interest rates.”

But not all money generates high interest rates uniformly.

I think this is surprisingly important.

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◽️ I started paying attention to interest rates because of my “mortgage”

The reason I started to strongly consider interest rates as a “personal matter” was my mortgage.

When I bought my home, I took out a 30 million yen mortgage.

The initial variable interest rate was 0.65%.

That has now become 1.4%.

If interest rates rise, naturally, the interest I pay also increases.

In fact, in my case, my monthly repayment amount increased by about 2,500 yen.

Looking at just 2,500 yen, it’s not an amount that would shake my household finances.

But what I’m concerned about isn’t just the amount.

It’s the fact that “the interest rate went from 0.65% to 1.4%.”

And,

“What will happen if this rises even further?”

I have started to feel that anxiety more than before.

When I took out the mortgage, I barely thought about interest rates rising.

If it were now, I would think about it a bit more.

Variable rate or fixed rate?

And above all,

“Can I manage my household finances even with this loan amount?”

I think about that.

Rather than predicting interest rates, I think it is more important to borrow in a way that won’t cause trouble even if rates rise.

I believe that is more important.

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◽️ So, should I just leave it in a savings account?

This is an area where my own thinking hasn’t changed much from before.

I don’t literally think of interest rates below 1% as “no interest.”

Of course, whether it’s 0.3% or 0.5%, you earn interest if you deposit it.

However,

when thinking about the goal of “asset formation,” it doesn’t hold much appeal for me.

That is what I think.

One benchmark I use is 2%.

Why 2%?

The Bank of Japan has set a price stability target of 2%.

And if you think about it using the simplified “Rule of 72,” at 1% per year, it would take about 72 years for your money to double.

Of course, actual asset formation isn’t such a simple calculation.

Even so,

I don’t find the idea of “growing assets significantly with only a 1% yield” very attractive.

That’s why I think:

Keep the cash needed for daily life as cash.

But don’t keep money intended for long-term growth in cash.

That is my way of thinking.

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◽️ That doesn’t mean “cash is bad”

I don’t want there to be a misunderstanding here.

I don’t think cash is unnecessary.

On the contrary, cash has a clear role.

In my case, I include about 10% cash in my asset allocation.

The purpose is not

“to grow it,” but “to keep it in a usable state.”

And when the market drops significantly, I use that cash to buy.

In other words, for me, cash is

liquidity + standby funds for a market crash.

It has this role.

So, just because the deposit interest rate went from 0.3% to 0.5%, I don’t think about holding a large amount of cash.

That’s because I think about what role that money should play, not the interest rate.

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◽️ On the other hand, the thinking for “emergency funds” is a bit different

Apart from my asset allocation, I also have emergency funds.

Since I started thinking about FIRE, I have become much more conscious of the importance of this money.

This is not “money to grow.”

It is money to ensure that if something happens,

“I can live without having to sell my investment assets.”

Therefore, I have become more conscious of interest rates for this money than before.

Especially now, the interest rates on government bonds for individuals are also rising.

The “Floating 10-Year” government bond for individuals issued in September 2026 has an initial coupon rate of 1.95%. According to the Ministry of Finance, it can be redeemed early after one year has passed since issuance. (Ministry of Finance)

Of course, cash and government bonds have different characteristics.

So I don’t simply want to say,

“Government bonds are better than deposits.”

What I feel is that

“there are more options now than before for money meant for protection.”

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◽️ My money each has a role

Now that we are in a world with interest rates, there is something I feel again.

Money does not all have the same role.

In my case, the image is:

Cash → Use/Wait

Bonds → Reduce risk

Stocks → Grow assets over the long term

There is no need to force cash to have the role of “growing.”

There is no need to expect bonds to have the same price appreciation as stocks.

And I don’t seek short-term stability from stocks.

Each has a role.

So, just because interest rates have risen,

I don’t think, “Stock investment is no longer necessary.”

It’s actually the opposite.

In terms of building assets over the long term, I feel that the importance of investing has become even greater.

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◽️ Because there are interest rates, “time” becomes important

Since I started investing in earnest around the age of 38, what I feel strongly now is the importance of “time.”

Investing doesn’t dramatically change your life in a year or two.

But if you spend 10 or 20 years, the power of compound interest kicks in.

That’s why I value

not just “at what percentage to invest,” but “how many years I can invest.”

When I was in my 20s,

I thought, “I want to grow my money quickly.”

I dabbled in individual stocks and FX.

But if I could, I would tell my younger self this:

“Instead of trying to make money quickly, make compound interest your ally quickly.”

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◽️ We are in a world with interest rates. But my investment policy remains unchanged

Interest rates have risen.

Deposits now earn a little interest.

The burden of mortgage payments has increased.

Government bonds have become more attractive than before.

Certainly, the environment surrounding money has changed.

But my own investment policy remains unchanged.

I don’t intend to waver every time, adjusting to the market environment by asking,

“Is it time for stocks?”

“Is it time for cash?”

I will build assets over the long term.

To do that, I will give cash, bonds, and stocks their respective roles.

And I will grow my assets over a long period of time.

Whether there are interest rates or not, what role do I give my money?

For me, that is the most important thing.

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◽️ If I were to tell my 20-year-old self

If I could go back to my 20s now.

I wouldn’t say, ‘Interest rates have gone up, so start investing.’

I wouldn’t say, ‘Buy stocks,’ either.

I would tell myself something more fundamental.

Realize sooner that you should invest in a reproducible way that leverages compound interest.

And,

start as soon as possible.

When I was in my 20s, I didn’t realize that ‘time’ would become such a massive asset.

Now that I am 44, I understand it well.

We are now in a world with interest rates.

That is precisely why I think about it again.

It is important to invest time into money as well.

And from here on out, I want to continue building assets in a reproducible way that makes compound interest my ally,

rather than being swayed by

‘because interest rates went up’

or

‘because interest rates went down.’

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