Why People Who Only Hold Cash Keep Losing Money Even with a 0.5% Deposit Interest Rate | Calculating the Value of 10 Million Yen in 10 Years

“I heard bank interest rates have gone up recently.” Many people probably felt a sense of relief upon seeing that news.

In fact, the three megabanks announced that they will raise the interest rate on ordinary deposits from 0.4% to 0.5% per year starting November 2, 2026. Compared to the 0.001% of a few years ago, that is 500 times higher.

However, please try calculating one thing here. During the same period, the price of goods has risen by 1.9% in one year. After deducting taxes from the 0.5% interest rate, what remains in your hand is about 0.4%. It is not keeping up with the rise in prices at all.

In this article, I will use actual numbers to calculate why the feeling that “it is safe to leave money in a deposit” is quietly reducing your wealth. I will also provide a set of principles to help you avoid rushing into “too good to be true” deals.

📌 What you will learn in this article
・How much money loses value due to the “gap” between a 0.5% interest rate and 1.9% inflation
・What happens to 10 million yen after 10 and 20 years if kept only in deposits
・The only 3 steps to prepare without panic

✅ Conclusion: “The face value not decreasing” and “the value not decreasing” are two different things

With deposits, the face value (the number in your passbook) does not decrease. However, the amount of goods you can buy with that number decreases every year as prices rise.

Calculating with current figures, money held only in deposits is effectively losing about 1.5% of its value every year.

🤔 Reason: After-tax interest rates are losing to inflation

According to the National Consumer Price Index released by the Ministry of Internal Affairs and Communications on August 21, 2026, prices in July 2026 rose by 1.9% overall and 1.8% excluding fresh food compared to the same month the previous year.

On the other hand, interest on deposits is subject to a 20.315% tax. At a 0.5% interest rate, the after-tax rate is about 0.398%.

Prices rise by 1.9%, and your money only increases by 0.398%. This gap becomes your annual “invisible loss.”

🧮 Specifics: If you hold 10 million yen only in deposits

The premise of the calculation is that an after-tax interest rate of 0.398% and an inflation rate of 1.9% continue (actual prices and interest rates will fluctuate).

• Real value change per year: approximately minus 1.47%

• After 10 years: worth about 8.62 million yen in today’s value (about 14% loss)

• After 20 years: worth about 7.43 million yen in today’s value (about 26% loss)

Even though the number in your passbook shows 10 million yen or more, the amount of goods you can buy has decreased by more than 20%. This is the quiet risk of “cash only.”

By the way, according to the Ministry of Health, Labour and Welfare’s Monthly Labour Survey (preliminary report for July 2026), real wages adjusted for inflation increased by 2.4% compared to the same month last year, marking the seventh consecutive month of growth. Wages are starting to catch up with prices. That is precisely why the gap between those people and those whose money is left behind in the wrong place will continue to widen from here on out.

⚠️ This is the most dangerous part: Panic is the gateway to fraud

The moment many people realize that “holding only cash is a loss,” they panic and jump at “high-yield” offers.

Monthly returns of several percent, principal guaranteed, limited time only. As I have written in the “How to Spot Scams” series, all such phrases are signs of fraud. In an era of rising prices, solicitations claiming “we have an investment that can beat inflation” will inevitably increase.

Anxiety about inflation is real. However, the fact that there are people who exploit that anxiety is also real.

🧭 Three steps to prepare without panicking

① First, secure your emergency fund in a savings account
Keep several months’ worth of living expenses in a savings account to prepare for illness or unemployment. For this money, it is more important that it is “immediately accessible” even if its value depreciates slightly.

② Next, allocate money you don’t plan to use to “long-term, diversified, installment” investments
Gradually move money you won’t need for decades into assets that are likely to track with inflation. NISA, a government program, makes investment gains tax-free. There is no need to try to pick individual winning stocks.

③ Finally, hold on with a gorilla-like grip
Once you have decided on an installment plan, do not stop even if the market drops. And do not reach for “get-rich-quick” schemes. Defensive investing is completed with these two things.

Note that the answer to how much to allocate and where depends on your household finances and age. This article does not recommend any specific products.

📝 Summary

Deposit interest rates have risen. However, prices have risen even more. With a difference between the 0.4% after-tax interest rate and 1.9% inflation, money held only in savings is calculated to be losing about 1.5% of its value per year.

The solution is not to panic, but to follow the order. Secure your emergency fund, prepare with long-term, diversified, installment investments, and keep holding on. And above all, never hold onto “too-good-to-be-true” offers that prey on your anxiety.

📚 Series Articles

• Introduction https://note.com/maneguard/n/ne97ac233ec78

• How to Spot Scams Part 1: If these 5 things are present in an SNS investment solicitation, it’s a scam https://note.com/maneguard/n/n6a51acac09f2

• How to Spot Scams Part 2: Is that firm registered? How to check Financial Services Agency registration in 60 seconds https://note.com/maneguard/n/nf4808675e89c

• How to Spot Scams Part 3: 3 checks that people who don’t get scammed by crypto assets perform https://note.com/maneguard/n/n1dfe6a890f9c

📎 Sources

• Ministry of Internal Affairs and Communications, “Consumer Price Index (National) July 2026,” published August 21, 2026 (based on Kyodo News report) https://kumanichi.com/articles/2027397

• Dai-ichi Life Research Institute, “Consumer Price Index (Tokyo Ward Area, August 2026),” August 28, 2026 https://www.dlri.co.jp/files/macro/654644.pdf

• Impress Watch, “Three Mega Banks Raise Ordinary Deposit Interest Rates to 0.5%,” September 20, 2026 https://www.watch.impress.co.jp/docs/news/2142489.html

• Ministry of Health, Labour and Welfare, ‘Monthly Labour Survey: Preliminary Report for July 2026’ (Kyodo News report, September 8, 2026) https://kumanichi.com/articles/2033539