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Roughly 20 years after the Japanese government first put up the banner of "from savings to investments," young people are showing a keen interest in investments, probably out of concern for their post-retirement funds. Deep-rooted wariness about investment losses, however, remains an impediment to a greater embrace of risk assets.

The focus will be on whether the government initiative can inspire the largely conservative public to pivot away from bank deposits.

"With this year as the first year of my 'asset income doubling plan,' we will promote, boldly and fundamentally, the shift from savings to investments," Prime Minister Fumio Kishida said in a video message at an event held by the Japan Securities Dealers Association (JSDA) and other organizations in February.

https://www.japantimes.co.jp/news/2023/04/25/business/economy-business/savings-to-investments-japan/

How does the government benefit from having people put their money into stocks instead of savings account? The government is trying to encourage people from investing their money into stocks, and giving them ample incentives, but does the benefits outweigh the costs? How does it benefit the government when the government can use the savings that finance their bonds and the government itself can invest into Japanese stocks?

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How does the government benefit from having people put their money into stocks instead of savings account?

It more directly stimulates the economy if the population is investing in companies more directly. Money parked in a savings account is eventually invested by banks, but that's a more indirect process.

does the benefits outweigh the costs?

There's no simple answer to this, it depends how much savings we're talking about and potential need for liquidity. There's surely more risk passed on to the [direct] investor, but there also potentially higher returns etc.

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  • Why would direct stimulus (by amateur individual investors) be any more stimulating to the economy than indirect stimulus (by professional bankers)?
    – Steve
    Sep 27, 2023 at 16:19
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    @Steve: because amusingly banks are more limited by laws/regulations in how they can risk their [customers'] money. Sep 27, 2023 at 16:47
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    @Fizz "it depends how much savings we're talking about and potential need for liquidity" Japanese households have historically been extremely conservative, investing money mostly in postal accounts and if not there in very conservative, low risk investments. While the lack of clarity in the general case is a hard call, almost no developed country in the world is more biased towards savings accounts v. other investments than Japan, so it almost surely makes sense there to encourage alternatives.
    – ohwilleke
    Sep 27, 2023 at 18:33
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    @Steve "individual investing is better than bank investing primarily because the average returns to investors are negative" The average return to stock investors has been positive and well in excess of risk free treasuries for every decade in U.S. history bar maybe one carefully chosen ten year period that is close to break even. This is not the economics of individual investing. Postal account investing and savings deposit investing are frequently generating net returns of less than inflation.
    – ohwilleke
    Sep 27, 2023 at 20:20
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    @Steve "why don't banks invest in them?" In the U.S., in order to invest in stocks you have to be an investment bank. Commercial banks aren't allowed to invest in stocks. Japan has similar regulations.
    – ohwilleke
    Sep 28, 2023 at 8:06

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