When You Are Concerned About Government Bonds, Compare Interest Rates and Usage Timing

Even though the balance in your bank account hasn’t decreased, the amount you spend on your usual shopping is gradually increasing.
At times like these, you may also feel hesitant about simply leaving your money in the bank.

You have a desire to grow your money.
However, you also don’t want to live a life where you are constantly worried about daily price fluctuations.

Now that interest rates exist, options other than aiming for large capital gains can be considered more concretely than before. Individual government bonds are one such option.

However, when you see the interest rate figures, you might want to pause for a moment.
When and for what purpose will you use that money?
Thinking from that perspective changes how you view where to place your funds.

Looking at interest rates changes your options slightly

The individual government bonds offered in October 2026 have a 5-year fixed interest rate of 2.39% per annum. This figure is before taxes, and after taxes, it is approximately 1.90% per annum.

If you decide that “government bonds don’t grow much” based only on the impression of past low interest rates, you will overlook current conditions. It is worth re-verifying the interest you can receive.

For example, if you were to invest 1 million yen at 2.39% per annum, the interest for one year would be 23,900 yen before taxes. Calculating simply with a tax rate of 20.315%, the amount after taxes would be approximately 19,045 yen. The actual amount received also involves the number of days in the interest payment period and rounding.

When you look at the amount of growth on an annual basis, it becomes easier to imagine how much weight it carries in your daily life.

On the other hand, the mechanism for returning the principal and whether you can continue to buy the same things with that money are different matters. If prices rise at a pace that exceeds the interest you receive, the purchasing power of your money will decrease.

Don’t just feel at ease with the phrase “the principal won’t decrease”; you should also keep an eye on the amount remaining after taxes.

Checking the duration of “not using it immediately”

The phrase “money you won’t use right away” actually has a wide range of meanings.
Do you need it in half a year, or do you have no plans to use it for several years? Even with the same savings, their roles are different.

In principle, individual government bonds cannot be redeemed early for one year after issuance. Once a year has passed, they can be redeemed, but an amount equivalent to the pre-tax interest for the two most recent interest payment periods multiplied by 0.79685 will be deducted.

For example, if you have set aside money for moving expenses in half a year, even if you want to receive as much interest as possible, you will be in trouble if you cannot use it on the day you need it. For this money, it is important that it can be moved immediately.

On the other hand, if it is money prepared for home repairs several years from now, you can compare candidates while checking the schedule against the maturity date. However, repairs may be needed sooner than planned. You should leave room to avoid lumping together money that might be needed for sudden expenses.

Think about the “day you might use it” before comparing interest rates.
Just doing that will make your selection process calmer.

The peace of mind of fixing and the room for change

For the 5-year fixed rate, the interest rate at the time of issuance does not change until maturity. Being able to foresee the future receipt amount has a peace of mind that goes beyond the numbers.

However, even if market interest rates rise after that, the fixed interest rate you have already purchased will not increase.
The 10-year floating rate has a mechanism where the applicable interest rate changes every six months, but it is not guaranteed that it will definitely rise from here on.

Trying to anticipate which is more profitable will only lead to more confusion.

For me, I wonder if I would feel more at ease knowing the future amount, or if I can accept changes in interest rates. I want to think about my plans for using the money and the role I expect that money to play side by side.

Write down your plans before moving your money

First, before opening new accounts or applying for financial products, try writing down in a notebook the money you will need within the next year and your plans for the next few years.

Even if the amount is still vague, once you see ‘what the money is for,’ the conditions you want to compare will become clearer. Then, check the amount you would receive if you held it until maturity versus if you cashed it in early, using the same principal amount. Compare these with the conditions of your savings account, looking at the after-tax figures.

I think you don’t have to make all your money do the same job.

Money that supports your daily life because it is readily available. Money that earns interest little by little because it is set aside for a while.

The amount that grows and the peace of mind of having money available. I hope you can choose a place for your money that you are comfortable with for both, in line with your current lifestyle.