The Money Game: Understanding Interest Rates and Investing Reveals How Money Moves, Then vs. Now

“Should I just keep my money in the bank?”
“Is investing only for the wealthy?”
“What happens to our daily lives when interest rates rise?”

The way money works changes with the times.

If you only think based on the common sense of the past, you might overlook the changes in interest rates and investing today.

The important thing is not to memorize every difficult term.

What do interest rates change? What are the roles and risks of investing?

Let’s start by understanding these two things.

Table of Contents

1. What is the money game?

2. What are interest rates in simple terms?

3. What changes when interest rates rise?

4. How has investing changed from the past to the present?

5. NISA is not an “investment product”

6. The order of financial priorities beginners should set first

7. Three actions you can take starting today

8. Summary

9. Chiharu’s YouTube, Methods, and Experiences

1. What is the money game?

The “money game” referred to here is not about beating someone else.

It is about understanding how money moves, what causes it to increase or decrease, and using that knowledge to improve your own life.

For example, we are involved in the flow of money through ways such as:

• working and receiving a salary

• depositing money in a bank

• borrowing money for things like a home mortgage

• companies investing in equipment and human resources

• individuals buying stocks or investment trusts

These are all ways we participate in the flow of money.

Factors that influence this flow include interest rates, prices, the economy, and corporate profits.

Financial news may sound difficult, but as you gradually understand the mechanisms, you will see how it connects to your daily life.

2. What is an interest rate in simple terms?

In simple terms, an interest rate is the fee charged when borrowing money.

When you borrow money from a bank, you repay the principal plus interest.

On the other hand, if interest is applied to a deposit, you receive interest on the money you deposited.

In other words, an interest rate is:

• for the borrower, money to be paid

• for the depositor, money to be received

• for the investor, something that affects the value of the investment

.

Example of depositing 1 million yen

In a simple calculation that does not account for taxes,

• At 0.1% per year, the annual interest is about 1,000 yen

• At 1% per year, the annual interest is about 10,000 yen

that is what it becomes.

Even with the same 1 million yen, the interest received changes if the interest rate is different.

Actual deposit interest rates vary depending on the financial institution and product, and interest is also subject to taxes.

3. What changes when interest rates rise?

When interest rates rise, it can have several effects on daily life.

People who are borrowing money

If interest rates on things like home loans rise, depending on the contract terms, future repayment amounts may increase.

The impact differs depending on whether it is a fixed or variable interest rate. It is reassuring to check which type your loan is and what the conditions are for interest rate changes.

People who are depositing money

If deposit interest rates rise, the interest received from deposited money may increase.

However, just because interest rates have risen does not mean that the interest rates for all deposit products will rise in the same way.

People who are investing

When interest rates change, it can also affect the prices of stocks, bonds, and other assets.

For example, when interest rates rise, the burden on companies to borrow money may increase. Also, bond prices can fluctuate due to changes in market interest rates.

However, stock and bond prices are not determined solely by interest rates. Multiple factors are involved, such as the economy, company performance, and investor expectations.

In Japan, there was a time when deposit interest rates were directly linked to the Bank of Japan’s official discount rate. Later, the liberalization of interest rates progressed, and in 1994, the direct link to deposit interest rates was removed. The mechanism of interest rates itself has changed over time.

The Bank of Japan has also changed its monetary policy stance in 2026. The interest rate environment does not stay the same forever.

4. How has investing changed from the past to the present?

In the past, regarding investing,

“It seems like you need a large sum of money,”
“It seems impossible without specialized knowledge,”
“It has nothing to do with me.”

many people may have felt that.

Now, there are ways to start investing with small amounts through brokerage accounts and investment trusts. You can also research information on the internet and check your assets on your smartphone.

The gateway to investing has widened.

However, the fact that it has become easier to start is different from it being safer.

Investment products can decrease in value. The principal is not guaranteed.

It is not a matter of “it’s fine because I can start with a small amount”; you need to know what you are investing in and under what circumstances it might decrease in value.

5. NISA is not an “investment product”

NISA is not an investment itself.

It is a system where taxes on profits are exempted when you invest in stocks, investment trusts, etc.

Normally, profits earned from stocks and investment trusts are taxed. When you use a NISA account, those profits become tax-free within the limits of the system.

Starting in 2024, NISA has:

there are.

The two quotas can be used together, and the total annual investment limit is 3.6 million yen. However, this does not mean that you “must invest 3.6 million yen.” There is no need to invest money that you need for your daily life.

Even if you use NISA, investment products can still decrease in value.

Being tax-free is different from not losing money.

6. The order of money matters that beginners should sort out first

Before you start investing, let’s organize your cash flow.

1. Know your monthly income and expenses

Check how much you spend and on what after receiving your salary.

First, try writing down the money that goes out every month, such as rent, food costs, communication expenses, and insurance premiums.

2. Set aside money for unexpected expenses

Prepare money for unplanned expenditures, such as illness, unemployment, or broken home appliances.

If you invest this money as well, you might be forced to sell it at the wrong time if the value drops.

3. Decide on the amount you can invest

After securing your living expenses and emergency funds, consider the amount you can afford to leave untouched for a long period.

There is a method of starting with an amount you can comfortably maintain, rather than moving a large sum from the beginning.

7. Three actions you can take starting today

You don’t need to follow all the complicated economic news. First, let’s start with these three things.

1. Check the interest rate on your loans

If you have a mortgage or a card loan, check whether it is a fixed or variable interest rate and what the conditions are for interest rate changes.

2. Check the interest rate on your savings

Take a look at the interest rates for the savings or time deposits at the bank you use.

Savings are not meant to be converted into investments at any time. They also serve the role of holding money you plan to use soon or money set aside for unexpected expenses.

3. Research how an investment product works before buying it

Check “what you are investing in,” “how much trouble you would be in if the value drops,” and “how much the fees are” before making a decision.

Make your decision after confirming these points.

There is no need to rush into putting money into things you do not understand.

Summary

Know the current financial system, not the conventional wisdom of the past

Interest rates affect borrowers, savers, and investors in different ways.

While the entry points for investment have expanded, the risk of price drops has not disappeared.

That is why, instead of making large moves suddenly, it is important to follow this order:

• Know your income and expenses

• Check your borrowing interest rates

• Prepare for sudden expenses

• Understand how investments work

• Consider an amount you can sustain

This order is important.

Instead of just chasing money, organize how you work, save, spend, and grow it.

Now that the money game has changed, learning the current system rather than blindly believing old common sense is what will give you the power to protect your livelihood.

Chiharu’s YouTube, Methods, and Experiences

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*Investments carry the risk of loss of principal. Please check the product details and risks, and make decisions based on your own life and financial plan.

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