Gaining a true understanding of how different people and different companies choose to invest can be tricky, largely due to the fact that there is usually a wide range of factors and reasons determining how different groups choose to balance the “risk versus return” factor.
One group that those with knowledge of the investment world are keen to understand is one characterized by their low-risk nature: the Japanese housewives with an interest in investing who try to do the best they can with the finances available to their family, commonly grouped together and labeled “Mrs Watanabe” (this last name being one of the most popular in Japan). Historically risk-averse and frugal with all aspects of household management, ever since this demographic has taken an interest in investing, financial experts across the world have started to pay attention.
Although this group might not be one that is particularly well-known in the West, and certainly not as well-known as some of the major investment companies who make big moves and generate global headlines, the “Mrs Watanabe effect” shows that certain markets are perceived as being less risky and also capable of being viewed as trustworthy.
Bringing the Rupee to the Forefront
One area where Mrs Watanabe has shown the way with investing is through backing the rupee as a currency by buying nearly $900 million rupee-denominated Uridashi bonds in 2016. This currency speculation was intended at making as safe an investment as possible, and one which could potentially survive the currency fluctuations that affected the emerging markets and saw some investors getting diminished returns in 2015.
Mrs Watanabe as a group has highlighted that if you are looking to get a real bonus from markets such as the Forex market, then the challenge is to be able to pick the low risk investments that will hopefully ensure a decent return. It is by striking this balance and doing it consistently that has given Mrs Watanabe prominence. We may not all have the financial nous of Mrs Watanabe, but we can be influenced by their low risk approach, with lots of companies these days keen to offer a bonus for would-be forex investors to dip their hand in the water of the market with them without committing too much as an initial spend.
Showing that Bitcoin Isn’t Bust
Another fine recent example of Mrs Watanabe showing the rest of the world the financial way forward is their embracing of the world’s first cryptocurrency: Bitcoin. Bitcoin as a currency has grown in reputation and value ever since being labeled as “digital gold” by financial experts, but perhaps the best vindication of the currency is the fact that the risk-averse Mrs Watanabe group have started to invest in Bitcoin.
In Japan, the Mrs Watanabe demographic has been panicked by low interest rates and poor savings returns, meaning that the previously unpalatable option of speculating on a currency that has previously seen its own price crashes has come to the fore. Investors like Kristoffer Koch have shown that the potential return from Bitcoin investment can be enormous (having made nearly $900,000 after an initial $27 investment), and the Mrs Watanabe group is now looking to capitalize on Bitcoin as they seek stable returns.
Trendsetters?
Such is the power of the Mrs. Watanabe group that it is fair to view them very much as trendsetters. If you’re looking to boost your investment returns, following the latest movements from this group is a good (but like everything else in investment, fallible) way to see where the best investment opportunities may lie for low risk investors and highlights that whilst the average Japanese housewife may not have the same perceived status as a Wall Street broker, they can be just as important in the financial ecosystem.
