「国債」とは国が発行する債券であり、安全性が高く少額投資が可能な金融商品。国債を保有することで元本や利息が返済される。日本国債は日本銀行や金融機関が保有しており、個人向け国債も存在する。国債のメリットは高い安全性や利息が定期的に受け取れること。デメリットは引き換えができないことや収益性が低いことが挙げられる。さまざまな種類の国債があり、投資家のポートフォリオに組み入れる選択肢もある。株式会社SMILELIFE projectは個人向けトータルライフプランニングサービスを提供しており、資産運用に関する相談が可能。
Many people may have heard the term “government bonds,” but few may actually own government bonds or understand their mechanisms and contents. Since government bonds can be an important element in asset management alongside stocks, it is important to understand these points.
100-year life plan for living with a smile in society “Lifebook(R)”
What is a government bond?
Advantages and disadvantages of government bonds
Types of government bonds
Summary
When it comes to government bonds, it is one of several types of bonds. So, what exactly is a “bond”? First, let’s explain about “bonuses.”
What are government bonds?
Government bonds are a type of bond issued by the government or local governments, corporations, etc. When borrowing funds from investors. Each bond issue specifies conditions such as interest rates, interest payment dates, and repayment dates (the date on which the borrowed amount is repaid), and investors who purchase bonds can receive interest while holding the bonds. On the redemption date, as long as the issuer does not go bankrupt, the face value of the bond will be repaid.
For example, if you purchase a government bond worth 1 million yen with a nominal interest rate of 0.5%, you will receive an annual interest of 5,000 yen until the redemption date. On the redemption date, you will receive the principal amount of 1 million yen. Unlike stocks, bonds have a repayment obligation.
Bonds are named differently depending on the issuing agency:
– Bonds issued by local governments -> Municipal bonds
– Corporate bonds issued by companies -> Corporate bonds
– Bonds issued by the government -> Government bonds
What is a country’s debt?
Government bonds are bonds issued by a country and are issued in various countries around the world. Government bonds issued by Japan are referred to as “Japanese government bonds,” or simply “JGBs.”
Generally, tax revenue is used as the source of funds for social security and various infrastructure projects, but if tax revenue alone is not enough, the government issues government bonds to borrow funds from investors. When investors agree to the government’s bond issuance, money flows into the country.
So, who owns government bonds?
References: Ministry of Finance International Data “Breakdown of Government Bonds, etc.” per person (2020 December End Preliminary Report)
As shown in Figure 1, the Bank of Japan (BOJ) holds more than half of Japan’s government bonds, with most of them held by financial institutions such as banks and private insurance companies.
Advantages and Disadvantages of Government Bonds
What are the advantages and disadvantages of buying government bonds?
Advantages of government bonds
Let’s look at the main advantages.
High Safety
Government bonds are issued by the government, making them safer compared to other financial products. For example, with stock investments, there is a risk of the principal amount decreasing due to price fluctuations, but as long as you hold government bonds until maturity, the principal will not decrease unless the government goes bankrupt.
Possibility of Small Investments
Individual government bonds can be purchased starting from 10,000 yen, making them attractive due to the low investment threshold.
The interest rate for individual government bonds, which is higher than that of regular savings, is 0.36% on a 5-year fixed interest rate (as of April 2024). The interest rate on a 5-year fixed-term deposit at a major mega bank is about 0.02% (as of April 2024), showing that government bond interest rates are higher.
Disadvantages of government bonds
Let’s also look at the disadvantages.
Cannot be Redeemed Immediately
Individual government bonds can only be redeemed after one year, and cannot be exchanged for cash immediately.
Early Termination Adjustment Fee
Government bonds can be redeemed one year after purchase. However, if you redeem them midway, an adjustment amount called the “mid-term redemption adjustment amount” will be deducted, which may reduce the principal amount in reality, so be careful.
Low Earnings
While government bonds have low capital loss risks and are very safe, they often have lower returns compared to investments in stocks or unit trusts. For Japanese government bonds, even though interest rates have been rising recently, with a yield of less than 1% and considering that it is simple interest, it can be said that they are not suitable for those seeking high returns.
Types of Government Bonds
Here, let’s explain the types of Japanese government bonds.
Types of government bonds
There are several types of government bonds sold in Japan. Let’s briefly summarize each of them.
Fixed-rate government bonds
Fixed-rate government bonds refer to government bonds where the interest rate at the time of issue is fixed and remains unchanged until maturity. There are maturity periods of 2, 5, 10, 20, 30, and 40 years, with interest payable every six months.
Variable-rate government bonds
Variable-rate government bonds have interest rates that vary according to the level of interest rates. Interest can be received every six months.
Individual government bonds
Government bonds are issued for individuals and cannot be purchased by corporations. There are two types of individual government bonds: 3-year and 5-year fixed-rate loans, and a 10-year variable-rate loan, with different applicable interest rates depending on the period. With a minimum purchase of 10,000 yen, high safety, and a guaranteed minimum interest rate of 0.05%, it is ideal for personal investment.
New government bond sales counter
New over-the-counter government bonds are government bonds sold through a new over-the-counter sales method. Alongside individual government bonds, they are one of the easiest government bonds to purchase for individuals. Fixed-rate government bonds with maturities of 10, 5, and 2 years. The minimum purchase is 50,000 yen.
Reconstruction Support Bonds
These government bonds were issued to support the reconstruction from the Great East Japan Earthquake. The recruitment period was until December 2012, and currently, no recruitment is taking place.
Inflation-Linked Government Bonds
These refer to government bonds where the principal value fluctuates depending on the movement of prices. While the interest rate itself remains unchanged until maturity, the principal itself is affected by inflation, resulting in interest rates going up or down depending on prices.
Summary
Japanese government bonds have low interest rates due to long-term monetary easing policies and relatively low yields, so they are currently more commonly used for savings than for asset management. While not covered in this article, bonds are also traded on the market, making them one of the financial products with price fluctuations. If you want to include bonds in your portfolio, you also have the option of investing in bond unit trust funds.
Currently, consultations on asset management and investment are frequently conducted at financial institutions such as banks. On the other hand, on the internet, various people are sharing investment methods through YouTube and social media from their respective perspectives. However, is their advice really right for you?
In a society where various financial products are in circulation, it is an era where you need someone to support and protect you.
Interviewee: Miki Fujiwara
CEO of SMILELIFE project, first-class financial planning expert. Established the SMILELIFE project in September 2017. Started the individual total life planning service “LIFEBOOK® Service” in anticipation of the arrival of a 100-year society. Established an independent franchise advisory system focused on consulting fees rather than selling financial and insurance products and aims to create a new franchise advisory system by utilizing the latest knowledge of financial planners and an advisor training program based on the American model. “Form of life.” Contact: 03-6403-5390 (SMILELIFE project)
SMILELIFE Project Co., Ltd. (Website)
Issued by: Kyoto Media Line ()