Japanese households' financial assets rising: survey

I know the gov't is going to hale this as a sign that the economy is growing and people are better off than before, but I look at it as the people are more concerned with the future, both in terms of the pension system, and politically and they are trying to prepare for the worst. Also, as for house buying, why in the world would you invest a huge amount of money into a poorly designed, constructed house, that loses its value in less time than it takes to pay off? If I had to do it over again, I would have just rented.

Exactly who are they talking about. I haven't met a single Japanese that has said his/her financial assets have increased. They said they TARGETED 8,000 households (out of almost 50,000,000 households) and less than 4,000 reply. Remember people, all those impressive percentages is only based on less than 4,000 households. And this is what this great news is based on? Sounds to me they are buttering things up to make a case for a 10% consumption tax.

thanks trump

an annual survey by the Central Council for Financial Services Information (CCFSI), a body administered by the Bank of Japan

There you go. "Look, look! All these figgers we collected show that our policies are working. Hooray! Everyone's getting richer. Shinzo banzai!"

Only 47% replied to the survey. Perhaps its older people who are free during the day and also hold most of the wealth, including the stocks that have gone up.

My guess would also be that very few single people not considering buying a house have come to that decision because they have plans to enter a care home after retirement. Old houses in Japan are far cheaper than care in an old peoples' home. I think there will be millions of Japanese whose retirement plan does not go beyond "hope for the best".

"...haven't met a single Japanese that has said his/her financial assets have increased." 

The financial assets of our Tokyo household have increased considerably this year. The govt reform drive has produced some great, easy and low-cost ways of investing, like NISAs, J401ks, and online robo-advisers. A couple of friends in Tokyo have also been coining some great returns, after removing the dust from their cash bank savings.

Just because you have chosen NOT to take advantage of the new products and services that the govt is promoting, doesn't mean you have the right to blame the govt. on this issue.

Taking advantage of products, good for you, great but most of the population survive month by month and have little exta to invest in these products of which you speek. Just paying the rent or buying enough food, paying the bills is a priority over what to do with this imaginary excess of cash. Then the ward tax, government tax, that doctors bill, dental, replacing old shoes, underwear, water bill, waist bill, NHK, and that's not including children which most Japanese can't afford so avoid it...all looks sunny with lots of money.

NISAs, J401ks,

Yeas, but if you ever move out of Japan you're expected to close them. Also, the US govt doesnt consider them to be tax-exempt. Hardly the greatest deal ever....

Man what a depressing read!

How on earth the govt  has come to the conclusion things are getting better for the average Tanaka is mind boggling to say the least!!

What I am reading is that households are mostly in dire straights & in rather drastic decline & that young have little or no hope for much of anything in the future......

This is bad & has been bad for 30yrs & looks set to get worse!

Except for  a few companies that had a few more exports........that did they give the employee's nice raises or bonuses????   I haven't heard of any?? Anyone else??

"...but most of the population survive month by month and have little exta to invest in these products."

That simply isn't true. Japanese household wealth is now at a record high. Around half of it is cash....and we're talking tons and tons of cash. Sales of home safes are booming.

"Japanese Households Richer than Ever"

https://www.bloomberg.com/news/articles/2017-03-17/savings-and-stocks-make-japanese-households-richer-than-ever

JeffLee, not blaming the govt for anything. Just stating the fact. Of 50,000,000 households in Japan, I how can anyone say what is stated in the article. The stats look great but it only applies to less than 4,000 households. More than half didn't even reply to the survey. That could be taken as more than half of households are not satisfied with the economy. All depends on who's writing the article.

Households' average financial assets rose 6.8% from a year ago to 11.5 million yen in 2017 thanks to a 25% rise in Japanese stock prices

But 54.1% of households' financial assets were held in savings and bank deposits, with only 8.9% held in stocks, the survey showed.

The headline is probably true but these two lines suggest that only those with stocks and shares, generally the already comfortably off, are benefitting.

In a worrying sign for the consumption outlook, a record high 43.2% of single households said they had no plans to own a house, more than double the ratio 10 years ago.

Single households....meaning? Single parents? Singles?

While it was unclear from the survey why households preferred not to own a house, it may be because more day-care and other facilities catering to seniors are becoming available in Japan's ageing society, said Kengo Kato, deputy director-general of the CCFSI.

Coming to conclusions without looking at the costs involved in building and maintaining a house here. Also the job market numbers are not showing the actual number of people who are full-time and not working on contracts.

No one is going to make the investment of building a house if their finances are not stable, not to mention the fact that banks will not loan them the money if they do not have sufficient collateral or a high enough income to qualify.

Plus "assets" increasing does not mean cash alone, with land prices in some areas rising a bit, that increases the value of many assets as well.

This survey is coming to many conclusions to support Abe and his desire to raise the consumption tax, showing that the economy can weather the increase. He is in for a shock.

Better get taxing this abundance, then, eh? What a pity it doesn't exist.

Still spoon this propaganda out and the herd will eat it up, shelling out dutifully with a shrug and a shouganai.

Rich are getting richer, poor getting poorer.

For once I agree with JeffLee, to the extent that there are useful mechanisms by which we all can reduce our taxes.

And I’d point out that this is a regular survey so it’s not like it has been doctored for any particular purpose. It’s showing results inline with previous surveys.

Alfie, that the US has a ridiculous tax system does not mean that NISA and IDeCo accounts are not worth the bother for the rest of us non-Americans. Take that up with your government.

Everyone who pays income tax here should get set up with an iDeCo. Even if you just buy a principal guaranteed fund with your iDeCo money, you can reduce your income tax by the amount you save.

It’s not the case that 40% of the populace save nothing, so most people can save for retirement with an iDeCo and therefore should given the tax benefit.

The most important point from the article however is this:

uncertainty over Japan's social welfare provisions being maintained among a rapidly ageing population prevented households from turning to riskier investments, underscoring the challenge the central bank faces in nudging the country's risk-shy population to invest rather than save cash in accounts.

No amount or type of central bank policy can address this issue because the social welfare system is run by the GOVERNMENT not the central bank.

Unless there are ‘third arrow’ reforms to fix Japan's unusustainable social welfare spending programs, people will not stop saving excessive amounts out of fear for the future.

Expand the iDeCo program for young people and make it compulsory for example, as part of this, give them certainty. Phase out the old system as today’s elderly die away. Have a hybrid system for people in between. This can be done if only we do it.

land prices in some areas rising a bit, that increases the value of many assets as well.

I believe land is not included in this survey.

Only financial assets. Cash and securities, etc.

It's obvious with the crazy printing of money by BOJ, and the buying of bonds & stocks the following had happened:

Bond prices rise.

Stock prices rise.

Land in big cities rise.

Costs of living rise.

All happening in a fast aging & declining population demographics, which means:

Only a very small percentage of the population, the super-rich will benefit.

Salary-men will be suffering more, as costs (housing, food, etc) up but wages up little.

The young & young families in the big cities will be especially hurt as housing & services costs continue to outpaced their increase in income.

It is an unsustainable bubble in bonds, stock & land prices relative to the demographics.

It also result in complacency in the government and encourages irresponsible prolific spending, raising the debts of the country.  Basically it is a massive real transfer of wealth from the vast population to the super-rich and government.

When asked how they choose which financial assets to hold, 46.6% said they would prioritise security such as a guarantee of principal, with only 18.7% saying they focus on profitability.

With the extremely low inflation rate in Japan they can afford to.

Alfie Noakes

NISAs, J401ks,, the US govt doesnt consider them to be tax-exempt. Hardly the greatest deal ever.

Then don't go to the USA.

While it was unclear from the survey why households preferred not to own a house,

Did they ask that question? Otherwise it is just speculation on a factor for which the survey can not supply any meaningful answers.

Yubaru No one is going to make the investment of building a house

I think the housing market in Japan must be very different from any other country I am familiar with, most places people buy a pre existing (be it "old" or "new build") house. Building your own house is very rare.

Commenting in response to myself as I see I have written something wrong:

Even if you just buy a principal guaranteed fund with your iDeCo money, you can reduce your income tax by the amount you save.

The amount of the tax reduction is not equal to the amount of one's iDeCo contribution, but tax burden is lower as a result of the income deduction that can be taken for money contributed to your iDeCo. 

bluesky.greentrees,

Costs of living rise.

Fortunately this has not happened to the extent that the central planners ostensibly intended/hoped. Little inflation means little increase in the costs of living. A good thing for the average person; a failed promise for the central planners.

Only a very small percentage of the population, the super-rich will benefit.

To the extent that everyone expects the GPIF to contribute to their pension one day in future, the higher asset prices are a good thing for everyone, as the GPIF has moved into riskier assets.

But does Japan actually have "super-rich" people? 

I can only think of a few really rich ones, like Uniqlo's Yanai-san, Softbank's Son-san.

I guess it depends how one defines "super-rich", but in any case I should think those people would already have most of their assets invested in overseas markets to a large extent.

It also result in complacency in the government and encourages irresponsible prolific spending, raising the debts of the country. Basically it is a massive real transfer of wealth from the vast population to the super-rich and government.

I agree that the prolific spending is a problem, but I don't see the money going to the "super-rich". I just see the money getting sloshed around by government wastefully, and returned to the people in the form of poor-value-for-money "services".

Japanese people would surely spend the money more wisely if it were them doing the spending.

This is why I'd go for (in the pension space) an expanded iDeCo system, where people pay less income tax to the government in return for contributing to their own retirement via a personalized account.

I'd go for similar reforms in the welfare and healthcare space - rather than everyone paying taxes to the government, greatly reduce taxes and in return have people pay money into personalized accounts (similar to iDeCo), so that they are ready to cover welfare costs and healthcare, etc. (One result of this sort of change is that people are incentivized to take care of their health - those who manage to stay fit and healthy can keep what savings they realize - this is one channel by which spending can be controlled.)

The government should act as a last resort insurer of sorts, to ensure that the disadvantaged among us are not left in the gutters.

The government should not act as a monopolistic service provider for all, when most Japanese families could look after themselves perfectly well if left with more of their income to do so, without bureaucrats taking a slice for themselves and spending without the same degree of discern as the earner of that income would.