Cash-flush Japanese retirees shun risky investments

RISK VS RETURN

Many younger investors took advantage of the recent sell-off in financial markets to pick up stocks and other risky assets on the cheap, but 59-year-old Hiroo Ban wasn't one of them.

Ban, who retired from a top-tier consumer electronics firm a year and a half ago, said he sat tight during the week that the Nikkei share average dived 9 percent to a one-year low.

"It's very important to contain risk. Otherwise, it's bad for your heart," Ban said, adding that he would wait until markets calmed to decide whether to sell any of his stock and investment trust holdings or pick up new ones.

"This generation is typically very conservative about asset management because they saw Japan's biggest banks fail and the economic bubble burst at the end of their careers," said Naoki Sugihara, a spokesman for Sumitomo Trust and Banking.

Financial institutions say products comprising sovereign debt or other fixed-income instruments offering returns of less than 7 percent find plenty of demand among risk-averse older investors.

Such returns are still far higher than the 1-1.5 percent coupons offered on retail-targeted Japanese government bonds.

"They don't seem too eager to take the risk for higher returns as long as they are guaranteed around 5 or 6 percent," said Yasukatsu Kakuyama, assistant general manager in the marketing support division at Mitsubishi UFJ Asset Management.

Products with regular payouts to supplement pension payments and 10-year products that can be redeemed or reinvested are also popular.

Analysts say many baby boomers are knowledgeable about financial products but not all that informed about investing.