Individual Government Bonds: Fixed 5-Year at 2.24% vs. Floating 10-Year at 1.95%—Which One?

I will start by writing only the most important thing.

The application deadline for the October issuance of individual government bonds is September 30. If you are considering it, there are few days left, so please keep the deadline in mind first.

I am Hiro, a 31-year-old local government employee. Based on the “Individual Government Bonds and New Window-Sold Government Bonds Currently Open for Subscription” (as of September 9, 2026) published by the Ministry of Finance, I have organized the information for this October issuance (as of September 25, 2026).

Current Interest Rates (from Ministry of Finance documents)

• Fixed 5-Year: 2.24% per annum (1.7849440% per annum after tax)

• Floating 10-Year: 1.95% per annum (1.5538575% per annum after tax) *Interest rate changes every six months

• Fixed 3-Year: 1.96% per annum (1.5618260% per annum after tax)

• Subscription Period: September 3, 2026 – September 30, 2026 / Issue Date: October 15, 2026

It is often said that “when in doubt, choose the floating 10-year,” but this time, the fixed 5-year has a higher rate, which is a slightly unusual situation.

Why does the fixed rate exceed the floating rate?

The floating 10-year interest rate is determined by “base rate × 0.66,” while the fixed 5-year is determined by “base rate – 0.05%.” As the level of the base rate rises, the reduction caused by the “× 0.66” factor becomes larger, making it easier for the fixed rate to exceed the floating rate, as is the case this time.

However, this is only a comparison of the current starting point. For the floating 10-year, only the first interest payment (for April 15, 2027) is fixed; from the second payment onwards, the interest rate is reviewed every six months. Which one will be more profitable in the future depends on interest rate movements and cannot be determined in advance.

How much will you get after tax if you invest 1 million yen?

Interest is subject to a 20.315% tax each time. Here is an estimate for an investment of 1 million yen.

• Fixed 5-Year: Pre-tax interest of 11,200 yen every six months → approx. 8,925 yen after tax. The 2.24% annual rate is fixed for 5 years (10 payments), totaling approx. 178,500 yen

• Floating 10-Year: Initial pre-tax interest of 9,750 yen → approx. 7,770 yen after tax. From the second payment onwards, it depends on the revised interest rate

Comparing the first six months, the difference after tax is about 1,155 yen per 1 million yen. I believe the deciding factor should be “whether you want to lock it in for 5 years or have it move with future interest rates” rather than the difference in amount.

What is easy to overlook is the rule for early redemption.

While the Ministry of Finance’s subscription terms state that early redemption through government buyback is possible at any time after one year has passed since issuance (with no risk of principal loss), the following two points are also noted.

• In principle, early redemption is not possible for the first year after issuance

• Even if you redeem after one year, an amount equivalent to the last two interest payments (before tax) × 0.79685 will be deducted (for a 5-year fixed bond of 1 million yen, (11,200 yen + 11,200 yen) × 0.79685 = approximately 17,849 yen).

In other words, for the October issuance, you generally cannot move the money until one year has passed from the issue date (October 15). I do not consider it suitable for money you might need within a year (such as for vehicle inspections, moving expenses, or emergency funds).

If you are a public servant, you should also compare with mutual aid savings and asset formation savings.

Public servants already have “automatic deduction” options like mutual aid savings and asset formation savings. When comparing these with government bonds, I believe the three key points are: 1) aligning interest rates after tax, 2) comparing the time until withdrawal is possible, and 3) considering the effort required for procedures. Since the interest rate for mutual aid savings varies by the association you belong to, you should first check your own association’s current rate before comparing it with government bonds.

Summary

• October issuance: Fixed 5-year at 2.24%, Floating 10-year at 1.95%, Fixed 3-year at 1.96% (Ministry of Finance, as of September 9, 2026)

• Applications are open until September 30, and the issue date is October 15.

• Floating 10-year is “Base Rate × 0.66,” and Fixed 5-year is “Base Rate – 0.05%.” The higher the interest rate level, the more likely fixed rates are to outperform floating rates.

• In principle, you cannot redeem them for one year after issuance. Upon redemption, the last two interest payments × 0.79685 will be deducted.

• The deciding factor is “when you will use that money.”

Calculation tables and sources are on the blog.

The 1-million-yen calculation table, intermediate redemption calculations, comparison tables with mutual aid savings, asset formation savings, and time deposits, as well as links to primary information from the Ministry of Finance, are summarized on my blog because they are difficult to follow in text alone.

▼ Click here for interest rate comparison tables, 1-million-yen calculations, and intermediate redemption calculations.