People in their 20s in Japan are buying luxury cars like Porsches, high-priced luxury goods, and jewelry with money grown through stocks. Japan's stock market has risen for four straight years since 2023. This year, fueled by the artificial intelligence (AI) boom, the Nikkei 225 has jumped more than 30%. In this soaring market, 1 in 3 investors in their 20s who made profits said they would use the money on "high-priced goods." As a result, department store sales of jewelry and precious metals across Japan have risen 19% for two straight months, marking a boom.
On the 16th (local time), SMBC Nikko Securities said the valuation gains that Japanese households would receive above purchase prices if they sold the stocks they hold at current prices have increased by about 150 trillion yen (about 1,418 trillion won) over the past three years even after deducting inflation. Bloomberg said a wave of first-time investors who began stock investing through the new NISA system joined this rally. The new NISA is a system under which capital gains and dividends from investing in stocks or funds in a dedicated account are not taxed. Earlier, in 2024 the Japanese government raised the annual investment limit and made the tax-free period indefinite. This has made it easier for beginners seeking to start with small amounts to enter the stock market.
In its survey, SMBC Nikko Securities found that 34.6% of investors in their 20s who made capital gains or valuation gains said they had spent or planned to spend the profits on high-priced goods. That slightly exceeded the share who said they would reinvest the profits (34.5%). In response to the same question, only 11.5% of people in their 30s chose high-priced consumption, about one-third the level of those in their 20s. Elsewhere, the shares were 17.4% for those in their 40s, 15.8% in their 50s, 10.9% in their 60s, and 9.3% for those 70 and older, with those in their 20s the highest across all age groups. Only 9.1% of people in their 20s said they would move profits into safe assets like deposits. Respondents in their 20s cited clothing and accessories, travel, and leisure as their main spending categories.
As young customers have increased for the first time in a while at retailers struggling with an aging population, department stores have moved to expand eye-catching jewelry and high-end product lines favored by young consumers. In May sales at department stores nationwide (172 locations at 68 companies) tallied by the Japan Department Stores Association, the art, jewelry, and precious metals institutional sector rose 19.3% from a year earlier. That outpaced the department stores' overall sales growth rate (8.3%) by more than double. In April as well, sales in this category increased 19.2% from a year earlier.
Conspicuous consumption is spreading faster via TikTok and Instagram. Keitaro Takada, head of the social media marketing firm Resource Creation, said, "Right now the biggest influence on young people in Japan is social media," adding, "For attitudes toward money, ways of consuming, and even investment information, most of it—good or bad—comes from social media." Bloomberg assessed that in an era of surging living costs, displays of wealth have taken hold among young people as a kind of social currency.
Behind the rise in luxury spending, wealth gaps within the younger generation are widening quickly. In a survey conducted in January by credit card company JCB, 38% of people in their 20s said they had increased luxury spending over the past two years. At the same time, 1 in 3 said they prioritize saving as much as possible. According to Nomura Securities, the wealth gap between the top 20% and bottom 20% under age 30 has widened by about 13 million yen (about 123 million won) over the past decade. This increase was the largest across all age groups.
Nomura Securities said, "As job changes increase among young office workers, income disparities are widening further." Takahashi Katsuhide, who founded the asset management consulting firm Malibu Japan, said, "Economic polarization in Japan is certainly worsening," adding, "Wealthy young people are growing their assets through rising asset prices, but many young people still live paying monthly rent and getting by on convenience-store meals." He said, "Money that earlier generations might have used to buy a house or invest in the future is now being squandered on Louis Vuitton and luxury cars," adding, "If the stock market collapses and profits disappear, these young people will find themselves in serious trouble."
Bloomberg said that unlike Japan's once-proud bubble era, economic anxiety persists even among young people who have grown their assets today. Entrepreneur Dateno Taisei, 27, interviewed by Bloomberg, started an animation business at 19 and sold it for several hundred million yen two years ago, and he grew his assets by putting a significant portion of the proceeds into stocks. He said, "If you are properly on the securities market, anyone can become comfortably wealthy," and recently bought a Porsche for about 20 million yen (about 190 million won). The price of this car exceeds five times the average starting salary for a university graduate in Tokyo.
However, he added, "I thought I would feel rich if I had several hundred million yen, but in reality I don't feel that way at all," and, "The house I want to buy is far beyond my budget, and there are still too many things I want to do and buy but can't, so I don't see myself as wealthy." As of May, the average price of a newly built apartment in central Tokyo rose about 14% from a year earlier to 106.6 million yen (about 1.07 billion won). That is more than five times the price of the Porsche he bought. Bloomberg said, "For many young people, consumption is becoming not proof of prosperity but a substitute for it."