Now that interest rates have risen, savings or investment? | Confirming 'savings are safe' with numbers [VOL.35]

In September 2026, the Bank of Japan raised its policy interest rate, and bank deposit interest rates also began to rise. Some people may have felt, ‘If deposit interest rates are rising, isn’t there no need to invest?’ In this article, without reaching a conclusion on ‘savings or investment,’ I will organize the material for consideration by lining up current deposit interest rates and prices with numbers. This is a sequel to VOL.24 (The difference between savings and investment).

※This article is educational content that introduces general ideas regarding savings and investment, and does not recommend the use of specific financial institutions or products, or the transfer of funds from savings to investment. The interest rates and prices in the article are as of the time of writing and do not predict future movements. Please invest at your own risk.

First, let’s confirm the current situation with facts (as of October 11, 2026)

• At its meeting on September 18, the Bank of Japan raised the policy interest rate from 1.00% to 1.25%. The decision was made by a vote of 7 to 2.

• The ordinary deposit interest rate at Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho is currently 0.4% per year. It has been announced that it will rise to 0.5% per year starting November 2 (before tax).

• Some online banks offer interest rates exceeding 1% with deposit limits or conditions (information from comparison sites; conditions must be confirmed on each bank’s official website).

• On the other hand, regarding prices, the national consumer price index (excluding fresh food) was +1.7% in August compared to the same month last year.

Deposit interest rates are rising, but compared to the rate of price increases, they are still at a low level.

Comparing ‘interest on deposits’ and ‘price increases’

Let’s consider the case of depositing 1 million yen in an ordinary deposit (0.4% per year) for one year.

• Interest (before tax): 4,000 yen

• Tax on interest: approximately 20.315% (approximately 813 yen)

• Net interest: approximately 3,187 yen

On the other hand, if prices rise by 1.7% per year, what you could buy for 1 million yen will cost approximately 1,017,000 yen one year later. In other words, the amount needed to buy the same thing increases by approximately 17,000 yen.

The difference between the net interest (approximately 3,187 yen) and the price increase (approximately 17,000 yen) is approximately 13,800 yen. In terms of numbers, if you keep it in savings, the amount you can buy is calculated to be gradually decreasing.

This way of thinking, ‘subtracting price increases from interest,’ is called the ‘real interest rate.’ Detailed calculations will be introduced in VOL.36.

※The price increase rate is a national average, and the actual feeling differs depending on the person and what they buy. This calculation is a guideline.

That does not necessarily mean ‘investment is better’

There is no need to rush to a conclusion here. Savings have strengths that investments do not.

• Principal does not decrease: With savings, the amount deposited does not lose value

• Protected by deposit insurance: For each financial institution, up to 10 million yen in principal per depositor plus interest is protected (payment and settlement deposits are fully protected)

• Can be withdrawn at any time: It is easy to use for sudden expenses or as a reserve for living costs

On the other hand, investment trusts and stocks can decrease in value, leading to a loss of principal. They are also not covered by deposit insurance.

In other words, savings and investments are not a matter of one being right and the other wrong; they have different roles.

Thinking about the roles of savings and investments separately

This is an example of how to think about it. It does not recommend any specific allocation.

• Money to be used soon / Reserve for living expenses: Savings that do not fluctuate in value and can be withdrawn immediately are suitable

• Money to be used in the future: To prepare for rising prices, investment is also an option. However, since values can decrease, consider this within a range you can tolerate

As introduced in VOL.32-34, ‘when you will use the money’ is the starting point for your thinking.

Three questions to help you think

1. When will you use the money?: Do you plan to use it within 1-2 years, or will you not use it for 10 years or more?

2. How many months of living expenses do you have in savings?: This is the amount to prepare for sudden expenses or a decrease in income. Check if you have moved money you need immediately into investments

3. Why is it in savings right now?: Is it ‘because it is necessary for peace of mind,’ or is it ‘just left there for no particular reason’?

The third point is surprisingly important. Your perspective changes depending on whether the money is in savings for a specific purpose or if it is in savings without a purpose.

Common actions people take after seeing interest rate news

• Since deposit interest rates have risen, stop investing and move everything back to savings: If you act without considering the purpose or time frame, you may end up with insufficient future reserves

• Since prices are rising, move all savings into investments: If you move your living expense reserves into investments, it will affect your life if the value drops

• Wait and see for a long time, thinking interest rates might rise further: No one knows what future interest rates will be. While you wait, time passes by

What they all have in common is ‘seeing the news and moving the entire amount at once’.

Summary

While deposit interest rates are rising, they are still at a low level compared to the rate of inflation. However, savings have strengths that investments do not, such as the principal not decreasing and being protected by deposit insurance. The important thing is not to choose between savings or investment, but to think about their roles based on when you will use the money.

In the next issue, VOL.36, I will introduce how to calculate real interest rates and how to choose where to keep your savings. In VOL.37 (paid), I will introduce a collection of prompts and sheets that use AI to help you organize where to keep your money.

References

• BOJ Interest Rate Hike (September 2026): Daiwa Institute of Research “BOJ Monetary Policy Meeting (September 2026)”

• Deposit Interest Rate Hikes: Impress Watch (September 20, 2026), Loan Comparison Site Interest Rate Rankings (Updated October 1, 2026)

• National Consumer Price Index (August 2026): Daiwa Institute of Research Report

• Deposit Insurance System: Japanese Bankers Association Explanation Page

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(This article is educational content introducing general concepts regarding savings and investments and does not recommend the use of specific financial institutions or products, nor does it recommend transferring funds from savings to investments. Interest rates and prices in the article are as of the time of writing. Please invest at your own risk.)