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Japan’s rich: acutely aware of their wealth and not flashy with it

by and

One of the biggest socioeconomic issues in the developed world right now is the widening income gap between the rich and the not-rich. In the U.S., the gap has become so big that the so-called 1 percent have adopted a siege mentality by isolating themselves from the rest of society, in either gated communities or urban condominium towers.

In Japan the rich are different, or at least, they seem to be. It’s often said that in Japan you may live right next door to a millionaire and not know it because his house looks just like yours.

The idea that wealthy people in Japan don’t show off their wealth is perhaps grounded in the Japanese stereotype of not wanting to stand out from the crowd. Still, with Japan’s stock market on a general roll for the last several years, the Japanese media has started talking about the “superrich” (chō-fuyūsō).

But how do you define a rich person in Japan? According to Atsushi Miura, who last year published a book titled “The New Rich,” the financial industry considers a person to be wealthy if their yearly income is over ¥30 million and they have assets of at least ¥100 million. About 1.3 million Japanese people have assets in that range, or 1 percent of the population. Another way to define the rich is that they tend to live off the interest and other capital gains derived from their assets, without ever touching those assets.

In his research, Miura found that Japan’s 1 percent does indeed tend to avoid ostentation. They don’t build mansions — we’re talking real mansions, not condos — and believe it unseemly to “throw one’s money around indiscriminately.” However, the Japanese rich will spend money on things they like and tend to favor the intangible. They’re more likely to patronize the arts and go to concerts than splurge on sports cars or expensive jewelry. They travel often and take cruises.

Miura has also found that the new Japanese rich are looking inward more: They buy Japanese stuff and travel domestically. They prefer expensive nihonshu to foreign wine, and Japanese artworks to Western ones. This is not simply a matter of taste. It is also an expression of civic responsibility. The new rich understand their place in society, and know that Japan needs their money. In a sense they take the “trickle-down” component of the theory of “Abenomics” to heart.

Nevertheless, rich people still try to avoid having their assets taxed, so if they can keep those assets overseas, they will, and it was only this year that the government finally mandated that people with foreign assets of over ¥50 million must report them.

Another characteristic of the new rich is that they are conscious of being rich, whereas traditionally rich people in Japan didn’t ponder their wealth. They took if for granted. That’s mainly because the new rich usually obtained their wealth through their own efforts or through some special skill or idea. Even people who inherit wealth or are in line to inherit wealth tend to get jobs and work their whole lives. There’s no concept of the “idle rich” in Japan.

In fact, what the children of rich people inherit and what keeps them rich is not so much money itself but the tools for making money: the best education money can buy and a fundamental understanding of how money works, neither of which the average person may be able to access so readily.

This idea was explored more fully on a recent segment of the TV Tokyo financial program “Nikkei Plus 10,” in which an employee from Nomura Research named Junji Hatoriya talked about how the new rich maintain their wealth while the vast Japanese middle class continues to just get by. Hatoriya identified three important segments of upper-income earners who “will become the new rich in the future.”

The first segment is composed of the children of rich parents. Miura’s own research in this area dovetails almost perfectly with Nomura’s: The children of the rich are not necessarily inheriting their wealth or expecting to inherit it. Instead, they are learning from their parents’ example and embarking on their own investment strategies. Only 8 percent of the general population has any “experience in investing,” while 24 percent of children of people with assets of over ¥100 million have such experience, and 52 percent have stock portfolios themselves.

Another segment is “power couples,” which Nomura defines as married couples in which both partners work and bring home a combined income of at least ¥10 million a year. Forty-four percent of power couples have investment experience, while only 15 percent of all double-income households do. More significantly, power couples usually employ financial planners and other professionals who advise them on how to manage their money, because they usually don’t have time to do it themselves. They spend their money freely, but mainly on things that will give them more free time, such as housekeeping services and expensive private day care.

The last segment is the one that really intrigues Nomura: “digital seniors.” These are retired people who are tech-savvy and spend a good deal of their time online. They understand how the world works and educate themselves about investments through the Internet. Which isn’t to say they buy and sell stocks online. They still do that the old-fashioned way — through brokers — but since they have deep knowledge about financial trends, they are able to talk seriously to these professionals and make sound decisions.

Nomura estimates that there about 8.8 million digital seniors, whose average assets amount to about ¥26 million, while the average assets of all seniors is about ¥14 million. It literally pays to know how to use your computer.

Yen for Living covers issues related to making, spending and saving money in Japan on the second and fourth Sundays of the month. For related online content, see blog.japantimes.co.jp/yen-for-living.

  • Para-Scanian

    Sabi and wa? (Restraint and harmony?)

  • Dan

    Tokyo has the poorest millionaires in the world.
    Why get rich to spend 16 hours a day in an office only to return home to your shoebox apartment?

  • Steve Jackman

    This article misses several points and perpetuates other myths about Japan.

    First, the wealthy Japanese are just as flashy and flamboyant as any other nationality. Japan has been one of the largest markets for flashy foreign luxury brands for many years, so the data backs this up. Anyone who regularly drives the Tomei or other expressways in Japan knows first hand the brashness, arrogance and flamboyance of rich Japanese drivers of Lexuses, Mercedes Benzs and European sports cars who act like they own these highways.

    Second, when wealthy Japanese try to be low key or discreet about their wealth, it is not due to some cultural sense of modesty or humility. The simple reason is that other Japanese around them can get extremely jealous, antagonistic and hostile due to their wealth, so the wealthy are just afraid to show off their wealth around people they know. Many Japanese do not deal well with others who have much more than they do or are smarter than them (due to Japan’s egalitarian history).

    Third, most of the wealthy in Japan are actually not as wealthy as they are in some other countries like America, Middle East and in Europe.

    Lastly, I think there are actually many more wealthy people in America who live regular lives, without anyone suspecting how wealthy they really are. The excellent 1989 book, “The Millionaire Next Door” does an excellent job of describing this phenomenon.

    • AJ

      I agree with your point that the article is overstated and falls back on stereotypes, but there’s no need to push back by insulting Japanese culture and painting them with your own brush of stereotypes.

      • Steve Jackman

        Why does trying to have an honest discussion about Japan and the baseless myths surrounding it always result in accusations of “insulting Japanese culture”?

        Is this such a totalitarian and authoritarian country, or do you subscribe to the cult of Nihonjinron? Living in Japan, one shouldn’t have to feel that one is living in some place inhabited by religious fanatics who label anything they disagree with as blasphemous.

      • Harry Hirsch

        Exactly! Couldn’t have said it better myself.

      • AJ

        Hyperbole much? I actually agreed with you, ffs. How is that subscribing to the cult, being a religious fanatic, or calling you blasphemous?

        I simply don’t think it is helpful to argue against stereotypes and myths by declaring your own stereotypes and myths. You’re not having an “honest discussion”, you’re simply projecting your own thoughts onto other people.

    • Ken

      I think you are making a contrarian point which is just as true and overstated at the same time. It’s usually the new rich who flaunt money. The “traditionally” wealthy in Japan do in fact exhibit the traits explained in the article. They don’t flaunt their wealth not just because of their fear of jealousy by others (although that may certainly have something to do with it), but because it is also a matter of taste and value. Exhibiting such behavior is considered gehin. Now, how wide spread this more “traditional” ideal of the truly wealthy, I don’t know. That may well be a myth at this point, but it’ll be hard to tell since they don’t come out and talk about it. Just an aside, I personally feel the whole “Japan’s egalitarian history” explanation is overused to explain modern behavior, but it is a often a convenient explanation. Lastly, I don’t disagree with your points, but it’s just another angle to look at it.

      • Steve Jackman

        Yes, but, don’t the old money traditional wealthy display the same traits and qualities in all countries? I don’t think they are any different in Japan than in any other country.

      • Ken

        yeah, that’s true, although the nuance of how that “modesty” (or whatever it is) is expressed is different from culture to culture, I’d think. And if your overall point is how Japan isn’t all that different, then yes, that’s often true. But then, that doesn’t really make for an interesting article headline to get more readers, I suppose.

    • Michele Marcolin

      I totally agree with you. it is many years I live here that is my same feeling. The new rich are particularly visible for their bad and tacky style and tastes. While the idea of hiding the richness for an humble attitude I still have to witness that. The traditionally rich families do not need to boast it so much since people around them already know they are of high status or elite and do not need specific symbols (or divergent kind of symbols are used). But when you get to understand it, you see the differences very well.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • PRADEEP CHATURVEDI

    DIGNITY of labour is widespread in Japan so they will be working all their lives. It was SUPERPOWER so they know what it takes to be rich and famous.

  • Liars N. Fools

    ¥26 million is not exactly a lot of money for the “senior” Mrs. Watanabe to play with considering that the yen carry play has been punctured by devaluation.

    A lot of Japanese wealth is also squirreled into owning small historical villas and gardens or collecting rare arts and craft items, so that there is a cultural preservation and promotion aspect to what some extremely wealthy Japanese do that is extremely commendable even if entree to the villa or collection is extremely limited.

    Then there are public institutions like Suntory Hall, which serve a larger audience. And it is not bad if Inamori-san wishes to sponsor the Kyoto Prize and create connections for renowned researchers and artistes to tell public audiences about their achievements.

  • overmage

    The joke is that even most Japanese people under 20 don’t know how to use a computer. Japan is one of the least tech-savvy nations on the planet among first world nations (ironic, considering the stereotypes, 2ch etc). Barely anyone owns anything more than a smartphone and nationwide survey systems only switched to computerised tracking TWO YEARS AGO.

  • Senad Brkic

    God allows people to be rich,
    as long as they pay their religious dues.
    Late payment is fine with God.