Cash-flush Japanese retirees shun risky investments

"Many see investment trusts as middle-risk/middle-return, with the risk of the principal getting hurt and the very near-term return in regular payouts being separated," Kumano said. "People feel safe by letting a third party manage their assets."

Kaz Okamoto at I-O Wealth Advisors laments that friends who have just retired often ask him for advice on how to invest their retirement payout. "I tell them they should've started looking into that sort of thing 10 years ago," he said.

RETIREES WITH MEANS

Data from the Central Council for Financial Services Information, a public entity, shows that about 57 percent of assets owned by individuals in their 60s and 70s are parked in bank deposits and savings, compared with about 51 percent for those in their 40s and 50s.

"This is a generation that has considerable means and isn't pressed to think about financial planning," said Hiroshi Miyai, an executive managing director at Nikko Financial Intelligence.

Their abundant financial power helped boost the value of Japanese investment trust funds to 79 trillion yen ($680 billion) as of end-July, up more than 40 percent since 2005.

Full government guarantees on bank deposits ended that year, while Japan Post, the country's postal service which also runs the world's largest savings bank, started selling investment trusts, or mutual funds.

Meanwhile, foreign-currency-based investment trust funds jumped 75 percent, as the weak yen and higher interest rates abroad made it look easy to increase one's wealth.

Some analysts are doubtful the retirement generation will spur an explosive growth in investment trusts, seeing only a gradual shift in household financial assets out of deposits.

"It's likely that Japan's very low interest rates are driving them to take risks they need not take," Miyai said.