[Verification Log #24] The truth behind 'investing is scary.' The 'invisible risk' that causes 10 million yen in savings to shrink.

'Investing is risky, so savings are the safest option.'

This is a very common way of thinking in Japan.

Admittedly,
stocks and FX have price fluctuations.
As someone who builds EAs in MQL4 myself, I understand that fear.

However, as an engineer,
when I think about a 'system for protecting assets,'
a design that relies too heavily on a single variable is quite dangerous.

In fact,
the state of only having savings
is by no means risk-free.

Rather,
even though it looks quiet on the surface,
there is a risk that it is being slowly eroded behind the scenes.

This time,

• price inflation

• exchange rate fluctuations

From these two perspectives,
I will consider the risks of being 100% in cash.

Verification Log Summary

This verification theme

How to think about the 'decline in purchasing power'
that occurs when you are 100% in cash and deposits

What you will learn in this article

• The impact of a 2% inflation rate on 10 million yen in savings

• How the weak yen affects the cost of living in Japan

• A perspective on thinking about investing not to 'increase' but to 'protect'

• How to think about the safety margin you should really be aware of for side FIRE

1. Inflation erodes value without changing the numbers in your bankbook

The Bank of Japan still maintains a
2% price stability target
.

This '2%' might feel small
when you look at the number alone.

However,
for those who hold their assets only in savings,
it is quite significant.

For example,
suppose you have 10 million yen in the bank,
and the interest rate is almost zero.

On the other hand,
the prices of goods in the world rise by 2% every year.

Then,
even if the number in your bankbook remains 10 million yen,
the things you can buy with that money will gradually decrease
.

To put it in easier terms,

• There are things you can buy with 10 million yen now

• A year later, you will need 10.2 million yen to buy them

• But the cash you have on hand remains 10 million yen

This is the situation.

In other words,
even though the amount of money hasn't decreased,
its value has decreased.

This is the important part.

I consider this to be
'a state where you think you are protecting the number in your bankbook, but your purchasing power is being eroded.'

What you should really protect is
not the bank balance, but
what you can buy with that money
.

2. Holding only yen is close to going all-in on Japan

Another less visible risk is
exchange rates.

'I live in Japan and I live my life in yen, so it doesn't concern me.'

It is easy to think that way.

But,
in reality, it is quite relevant.

Our lives
are heavily supported by imports.

• Energy

• Gasoline

• Certain food products

• Daily necessities made from raw materials

The costs of these items tend to rise when the yen weakens.

The Bank of Japan also mentions that as of 2026,
the depreciation of the yen is becoming more likely to spill over into consumer prices through import prices
.

For example,
if you had 10 million yen when the exchange rate was 100 yen to the dollar,
that would be roughly equivalent to 100,000 dollars.

If the rate becomes 150 yen to the dollar,
10 million yen becomes equivalent to about 66,000 dollars.

In other words,
the purchasing power of your money
from a global perspective drops significantly.

Of course,
you don't pay for your daily life directly in dollars.

However,
if import prices rise,
it will gradually affect the cost of living within Japan as well.

Thinking about it that way,
holding only yen can be seen as a state where your life is heavily dependent on the Japanese yen
.

3. It makes more sense to think of investing as 'defense' rather than 'offense'

I
do not consider investing as a means to get rich quick.

Rather,
I think of it more as a
defensive measure to protect your life from changes in the external environment
like inflation or a weak yen.

For example,

• Against rising prices, hold some assets like stocks or real estate

• Against a weak yen, include some foreign currency assets or overseas stocks

In this way,
you gradually add backups to the foundation of your life.

That is the idea.

Of course,
investing involves price fluctuations.

Because they go up and down in a visible way,
it is easy to feel scared.

However,
being 100% in cash also has a different kind of fear.

That is,
the fact that while it appears not to fluctuate, its value is quietly being eroded
.

I believe that
this less visible risk
is actually quite troublesome in the long run.

4. What matters for Side FIRE is not the 'numbers' but 'whether you can maintain your freedom'

In Side FIRE,
the amount of assets itself is also important.

But what you really want to protect
is not that amount itself.

What you want to protect
is the power to maintain your current lifestyle
.

For example,

• Can you support a family of four?

• Can you withstand sudden expenses?

• Can you avoid cutting into your free time?

• Can you avoid having to rush back to your old way of working?

These are the kinds of things.

In that sense,
cash is important.
I also place a lot of importance on cash.

However,
if you rely only on cash,
you become vulnerable to 'silent deterioration'
like inflation or a weak yen.

That is why I view it not so much as a way to increase investments, but

as diversification to protect my freedom.

Summary. There is also risk in doing nothing.

'Investing is scary'

I understand that feeling well.

It is because prices fluctuate.
It is because you can see the gains and losses.

However, what is truly scary might be
the risk that progresses while remaining invisible.

• Prices rise

• The value of the yen falls

• The cost of living gradually increases

In that environment,
believing that only savings are safe
feels a bit dangerous to me.

That is why,
rather than 'whether to invest or not,'
I pay more attention to whether I am too heavily skewed toward 100% cash.
I consider that more important.

There is also a risk in doing nothing.

I believe that just having this perspective
will significantly change your asset planning.

For example, out of 10 million yen,
try moving just 100,000 yen into a different asset first.

Even a small step like that
should be the first step toward reducing
the vulnerability of your life's system.

About the Verification Log series

In this series,
25 million yen in assets, family of 4
to continue a side FIRE lifestyle under these conditions,

・Side hustles
・Investing
・Fixed cost hacking
・Failure stories

are all being disclosed.

Including not just successes but also failures,
'the reality of how not to get stuck'
is what I am writing about.

If you are interested, please follow me
and read the next verification log.