Japanese Government Bonds for Individuals 2026: Complete Guide to Safe Yen Investment

What are Japanese Government Bonds for Individuals?

Japanese Government Bonds (JGBs) for individuals are government-issued bonds specifically designed for retail investors. They offer a safe way to earn interest on yen-denominated investments with the backing of the Japanese government.

Key Features

Feature	Details
Issuer	Japanese Government (Ministry of Finance)
Minimum Investment	10,000 yen (~$70)
Interest Payment	Semi-annual
Safety	Backed by Japanese government
Tax Treatment	20.315% on interest (Japan)
Early Redemption	Available after 1 year (with penalty)

Advantages

Safety: Government-backed, virtually no default risk
Minimum Guaranteed Rate: Floor rate of 0.05% per year
Accessibility: Low minimum investment amount
Liquidity: Can redeem after 1 year
No Market Risk: Face value guaranteed at maturity

Types of Individual JGBs

There are three types of JGBs available for individual investors.

Product Comparison

Type	Term	Interest Rate	Rate Adjustment
Variable Rate 10-Year	10 years	Variable	Every 6 months
Fixed Rate 5-Year	5 years	Fixed	None
Fixed Rate 3-Year	3 years	Fixed	None

Variable Rate 10-Year Bond

Rate Formula: Base rate × 0.66
Base Rate: 10-year JGB market yield
Floor Rate: 0.05% minimum
Adjustment: Rate resets every 6 months
Best For: Rising interest rate environment

Fixed Rate Bonds (3-Year and 5-Year)

Rate Determination: Fixed at issuance
No Rate Risk: Known return at purchase
Best For: Stable or falling rate environment

Current Interest Rates

As of January 2026, here are the current rates for individual JGBs.

Current Rates (January 2026 Issue)

Type	Interest Rate	Yield After Tax
Variable 10-Year	0.72%	~0.57%
Fixed 5-Year	0.55%	~0.44%
Fixed 3-Year	0.35%	~0.28%

Historical Rate Trends

Year	Variable 10-Year	Fixed 5-Year	Context
2022	0.05%	0.05%	Near-zero rates
2023	0.28%	0.15%	YCC adjustment
2024	0.50%	0.35%	Policy normalization
2025	0.65%	0.50%	Rate hikes
2026	0.72%	0.55%	Continued normalization

Rate Outlook

The Bank of Japan has been gradually normalizing monetary policy:

Negative interest rate policy ended in 2024
Yield curve control (YCC) adjustments continue
Rates expected to rise gradually
Variable rate bonds benefit from rising rates

How to Purchase

Individual JGBs can be purchased through various channels.

Purchase Channels

Channel	Features	Fees
Banks	Convenient, in-person service	Free
Securities Companies	Online purchase, wider services	Free
Post Office	Nationwide access	Free

Purchase Schedule

Issuance: Monthly (around 15th)
Application Period: About 2 weeks before issuance
Settlement: Deducted from linked bank account

Purchase Process

Open account at bank or securities company
Apply during subscription period
Specify amount (10,000 yen units)
Funds automatically deducted
Bonds credited to account

Early Redemption

Type	Earliest Redemption	Penalty
Variable 10-Year	After 1 year	Last 2 interest payments
Fixed 5-Year	After 1 year	Last 4 interest payments
Fixed 3-Year	After 1 year	Last 2 interest payments

Comparison with Other Investments

How do individual JGBs compare to other safe investment options?

Safe Investment Comparison

Investment	Yield	Risk	Liquidity
JGB (Variable 10Y)	~0.72%	Very Low	After 1 year
Bank Deposit (1Y)	~0.10%	Very Low	High
Corporate Bond Fund	~1.5%	Low-Medium	High
US Treasury (10Y)	~4.0%	Low (FX risk)	High
High-Yield Savings	~0.30%	Very Low	Very High

JGB vs. Bank Deposits

Yield: JGBs offer significantly higher rates
Safety: Both very safe (government backing vs deposit insurance)
Liquidity: Bank deposits more liquid
Recommendation: JGBs for medium-term savings

JGB vs. US Treasuries

Yield: US Treasuries offer much higher yields
Currency Risk: US Treasuries expose you to USD/JPY fluctuation
Tax Treatment: Different tax implications
Recommendation: JGBs for pure yen savings; US Treasuries for yield + diversification

Investment Strategy

How to incorporate individual JGBs into your investment strategy.

Suitable Investors

Conservative investors prioritizing capital preservation
Retirees seeking stable yen income
Those building emergency funds (after 1-year lockup)
Investors wanting to reduce portfolio volatility

Portfolio Allocation Suggestions

Investor Profile	JGB Allocation	Rationale
Conservative	30-50%	High safety priority
Balanced	15-25%	Stability anchor
Aggressive	5-10%	Emergency reserve

Laddering Strategy

Consider a bond ladder approach:

Divide investment across 3-year, 5-year, and 10-year bonds
As bonds mature, reinvest at current rates
Provides liquidity and rate flexibility
Reduces interest rate timing risk

Current Environment Recommendation

In the current rising rate environment:

Favor Variable Rate 10-Year: Benefits from rate increases
Avoid Long Fixed: Locks in lower rates
Consider Short Fixed: For known near-term needs

Individual JGBs offer a rare combination of safety, reasonable yields, and government backing. In an era of rising rates, the variable 10-year bond is particularly attractive. While yields may seem low compared to foreign bonds, the absence of currency risk makes them an essential component of yen-based portfolios for conservative investors.

Bond investment carries some risk. Interest rates may change, and early redemption results in penalty. Please make investment decisions based on your own research and judgment.