Savings Account: 400,000 Yen Per Year (Pre-Tax)

Suppose a savings account pays around 0.4% per year. Deposit 100 million yen (about $700,000) and the yearly interest is 100,000,000 × 0.4% = 400,000 yen. After the 20.315% tax, you take home about 320,000 yen, or roughly 27,000 yen per month. For reference, during the negative-rate era at 0.001%, the same deposit earned just 1,000 yen a year (about 800 yen after tax) - roughly 5 cans of coffee. Rates have risen 400-fold, yet 27,000 yen a month is still nowhere near a Mercedes.

Time Deposit: 400,000 Yen Per Year (Pre-Tax)

A time deposit (at a hypothetical 0.4%) yields 100,000,000 × 0.4% = 400,000 yen per year. After tax, about 320,000 yen - roughly 27,000 yen per month. Enough to cover a phone bill, but nowhere near a Mercedes payment. A Mercedes C-Class (about 7 million yen) would take more than 20 years of interest to buy.

Index Fund at 5%: 5 Million Yen Per Year

Invest 100 million yen in an index fund returning 5% annually. The yearly return is 5 million yen. After tax, about 4 million yen - roughly 330,000 yen per month. At that rate, you could buy a Mercedes C-Class in about a year and a half. Even an S-Class (about 15 million yen) in under 4 years. "Buying a Mercedes with interest" is genuinely possible with an index fund.

However, index funds carry the risk of losing principal. A 5% return is a long-term average; in any given year you might see -20% or +30%. Your 100 million yen could temporarily drop to 80 million. "Living off interest" requires the mental fortitude to ride out volatility and the cushion of several years' living expenses held in cash.

Building the 100 Million Yen Comes First

The "Mercedes from interest" dream is fun, but first you need 100 million yen. Investing 50,000 yen per month at 5% annual returns, it takes about 47 years to reach 100 million. At 100,000 yen per month, about 35 years. At 200,000 yen per month, about 25 years. The numbers are daunting, but with compound interest they are not impossible. The key is to hold the goal of "living off interest" in mind while putting every possible yen into the compounding cycle starting today. The Mercedes is waiting at the finish line.