■ With 1 million yen, you get just under 30,000 yen annually. However, do not use them as a ‘substitute for savings’!
For 20 years, you will receive just under 30,000 yen annually (after tax).
This is the interest income you would receive if you held 1 million yen in face value of the ultra-long-term government bonds that will be available for purchase at Rakuten Securities starting October 15th.
Individual government bonds (10-year floating) are at 2.05% (before tax; the same applies below), and 10-year bank time deposits are around 1.25%.
In contrast, the 20-year bond is at 3.7% (fixed interest rate), which is a significantly high level.
However, these ultra-long-term government bonds have pitfalls that individual government bonds do not.
If you sell them before maturity, they will be traded at market price, and if the price has fallen, you will lose principal.
For example, a 20-year bond issued 8 years ago during an era of extreme low interest rates has seen its market price fall to 74.26 against a face value of 100.
It is actually being traded at a price more than one-fourth lower than its face value.
Let’s consider who these ultra-long-term government bonds are suitable for and who they are not.
To give you the conclusion first, I do not recommend using them as a ‘substitute for savings’.
Note that since the start of sales at Rakuten Securities is on the 15th and the third Friday update would be too late, this update has been moved forward to the 13th.
Rakuten Securities Notice: https://www.rakuten-sec.co.jp/web/info/info20260831-01.html
■ In conclusion──
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Suitable for: People who have finished building their assets and want to earn interest income
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Not suitable for: People who want to use them as a substitute for savings, or people who are still in the process of growing their assets
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The differences from individual government bonds are significant, so be sure to check them!
■ Ultra-long-term government bonds are attractive for their high interest rates… but there are various items to check
Government bonds with a maturity period exceeding 10 years are called ‘ultra-long-term government bonds.’ There are 20-year, 30-year, and 40-year bonds.
A major advantage of these ultra-long-term government bonds is, first and foremost, their high interest rates.
Currently, as of October 2026, the initial applicable interest rate for 10-year individual government bonds (floating rate) is 2.05%.
10-year time deposits at many banks are at 1.25%.
Compared to those, the ultra-long-term government bonds (the bonds being sold at Rakuten Securities this time) are──
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20-year bond 3.7%
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30-year bond 4.0%
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40-year bond 3.8%
The interest rates are set quite high. These are fixed interest rates.
In the past, the dividend rates of financial stocks were also around this level, making them a target as high-dividend stocks.
Because we have already entered a world with interest rates, the stock prices of financial stocks have risen across the board.
As a result, although dividend amounts have increased, dividend yields have fallen to the 2% range.
It is quite difficult to start buying now just for the sake of dividends.
There are also risks of stock price fluctuations and dividend cuts.
Compared to that, it is fair to say that holding ultra-long-term government bonds has the advantage of ‘being able to earn stable interest income’.
■ What does it mean to be an ‘outstanding bond’?
There is another major difference from government bonds for individual investors.
What is being sold at Rakuten Securities this time are already issued government bonds ── so-called ‘outstanding bonds’.
Since outstanding bonds are traded on the market, they have price fluctuations.
For the ‘197th 20-Year Bond’ that is starting to be handled at Rakuten Securities, the purchase price for a face value of 1 million yen at the time of writing is around 990,000 yen.
Conversely, 30-year bonds, which have slightly better interest rates than 20-year bonds, are priced at over 1 million yen.
Oh, I should probably write this here too. The aforementioned interest rate, ‘3.7% for 20-year bonds,’ is the coupon rate relative to the face value.
Since there is also a difference between the purchase price and the redemption amount at maturity, the ‘final yield on the invested capital’ will be slightly different.
For example, let’s say you purchase a 20-year bond with a face value of 1 million yen for 992,000 yen.
Against a coupon rate of 3.7%, the annual interest yield on the actual investment amount will be approximately 3.73%.
Furthermore, since the face value of 1 million yen will be redeemed at maturity, the 8,000 yen difference from the purchase price also becomes profit. Including this, the final yield becomes approximately 3.77%.
In this pattern, it doesn’t result in a huge difference, though.
When bonds are heavily discounted, the difference profit at redemption becomes larger even if the interest rate is low.
When ‘buying outstanding bonds traded in the market,’ there are these kinds of troublesome parts.
When purchasing outstanding bonds, in addition to the purchase price, it is also necessary to settle the accrued interest from the previous interest payment date on a pro-rata basis.
……It’s troublesome. Well, once you understand the mechanism, it’s not that big of a deal.