How returns build on returns, the difference between contributions and growth, and why fees, taxes, and inflation matter.
Compounding means returns generate further returns, so time and consistent contributions matter enormously — but fees, taxes, and inflation quietly reduce the real result.
When an investment earns a return and you keep it invested, next period’s return is calculated on the larger balance. Repeated over years, this snowballs. A one-time ¥1,000,000 invested and left to compound annually would grow to roughly: at 3%, about ¥1.34m after 10 years, ¥1.81m after 20, and ¥2.43m after 30; at 5%, about ¥1.63m / ¥2.65m / ¥4.32m; at 7%, about ¥1.97m / ¥3.87m / ¥7.61m.
The pattern is that higher assumed returns and longer periods both matter, and the later years contribute disproportionately — which is why starting earlier, even with small amounts, is powerful.
Monthly investing shows the same effect. At an assumed 5% annual return compounded monthly, investing ¥30,000 at each month-end would produce roughly ¥4.66m after 10 years, ¥12.33m after 20, and ¥24.97m after 30. Your own contributions over those periods total ¥3.6m, ¥7.2m, and ¥10.8m — so in the early years most of the balance is your own money, but by year 30 investment growth exceeds everything you paid in.
This is why persistence beats intensity: continuing a modest amount for decades lets growth do the heavy lifting, whereas stopping and restarting resets the clock.
Compounding cuts both ways. A 1% annual fee on a ¥10m portfolio is about ¥100,000 in the first year, but because that money is no longer invested, the drag compounds over decades into a much larger sum. This is the core case for low-cost index funds and for tax-free wrappers like NISA, where qualifying gains escape the usual 20.315% Japanese tax.
Finally, distinguish nominal from real returns. A 5% nominal return with 2% inflation is only about 3% in real purchasing power. When planning, label your return as an assumption, and consider the real figure — the one that actually determines what your money can buy.
Brokerage (NISA/iDeCo) · Rakuten Securities
A leading low-cost brokerage for NISA and index-fund investing, integrated with Rakuten points and Rakuten Bank.
Fees: Many domestic funds and trades are low- or no-commission — verify current fee schedule.
Brokerage (NISA/iDeCo) · SBI Securities
Japan’s largest online brokerage by accounts, with a very broad low-cost fund lineup and full NISA/iDeCo support.
Fees: Many trades and funds are low- or no-commission — verify current fee schedule.
Brokerage (NISA/iDeCo) · Monex
An established online brokerage often chosen for US-stock access and research tools, with NISA and iDeCo support.
Fees: Commissions vary by product; some funds/trades are low-cost — verify current schedule.
This is education, not a recommendation. Most beginners research low-cost, broadly diversified index funds — for example all-country (全世界株式) or S&P 500 trackers — rather than picking individual stocks, because low fees and diversification are within your control while returns are not. Understand that values fall as well as rise, match the risk to your time horizon, and never invest money you may need soon.