Investing In The Future
Demographics play an important role in our nation’s economy. It’s no secret that the boomer generation has changed the economy, driven housing and other markets and transformed lifestyles. As the first boomers reach their retirement age what lies ahead? When you consider investing in the future, the following are some industries that are sure to grow in the next twenty to thirty years in response to this maturing population.
Financial Services
As people age their financial priorities change, moving from debt to asset management. Not only have higher earnings enabled the accumulation of assets, many boomers will be inheriting their parents’ assets. People acquiring large sums of money in one lump sum need advice to help them invest it wisely. As a result, banks, financial planners, mutual fund companies and investment dealers should show major growth.
Insurance companies should also benefit from increases in insurance on valuables, extended care and travel insurance to name a few.
Health Care
An older population needs more health care. The reduction in funds to universal health care should open the doors to more private industry to provide services previously offered in hospitals. Due to shorter hospital stays the demand for home care, hospital follow-up, caregivers as well as meal delivery and routine house cleaning and maintenance offer a lot of opportunities if the services can be delivered profitably.
Drug companies are a promising investment for long-term growth as the need for medication increases as the population ages. Drugs and medical devices that can reduce the need for surgery will also find a huge market.
Real Estate
Real estate in the form of vacation properties, fifty-plus condos, retirement villages, aging-in-place complexes and nursing homes will increase.
Leisure and Recreation
Gardening has become popular and will continue to be. It is a great business as gardeners need a constant supply of books, magazines, tools, soil, fertilizer, plants and seeds to name a few. There is also a demand for expert advice and labour.
Upmarket travel will be popular. Seniors will want something exclusive and exciting that will still offer comfort and personalized service. The travel business is highly competitive and if a company can deliver good quality to this niche market they will show good profits.
Gambling is one of the fastest growing activities and gamblers tend to be people over fifty who have enough discretionary income to afford this pastime. Find some sinful stocks to invest in to take advantage of this trend.
The home fitness industry should grow. Older people would rather buy their own equipment than frequent a fitness club (that’s for the younger crowd).
Shopping
Retail stores for the older generation will stress quality and service primarily rather than the lowest prices. People will pay more for added value whether in a small store or large franchise. Personal shoppers, home delivery and set up, and a calm, friendly atmosphere will appeal to these customers.
Any products that will make life easier and are not too complicated to set up will do well. Also, wellness and anti-aging products for this group who thought they would always stay young.
Investing In The Future
There are a lot of companies that could be poised to take advantage of the maturing of baby boomers. When considering how to invest your money, choose stocks in well-managed companies that will jump at the opportunities that become available.
There could be short-term volatility determined by other world events but overall these areas should be booming in the long run.
There are aspects of each of the areas you mentioned that are changing. In medical care, people are living longer and may need long term care. In real estate, communities are popping up for people who are in active retirement. Homes with master bedrooms on the first floor or one story homes that are wheel chair accessible are increasing. There will be more changes as people retire.
@krantcents: The challenge for investing is to find companies that are forward thinking enough to benefit from the coming changes with new products and services.
Personally, I doubt if the amount of funds coming under management will really boom with the retirement of the baby boomers. I mean with a flat US stock market for ten years and such a low level of savings amoungst such a high percent of the population I don’t know if there is really that much extra cash that will be going into the system.
Though, I totally agree with you on the increase in the retirement home market and medical services for older people 😉
@Juan: If the inheritance money is just transferred to the boomer generation there won’t be much additional funds under management – just in different hands. Where the changes will be to the economy is if the echo generation inherits as they are still in buying mode while raising their families.
The generation that are the parents of the boomers are probably the last group of big savers.
I agree that the Health Care and Real estate sectors could stand to benefit. In fact you can find some good investments in REITS whose properties are focused on long-term care facilities and benefit from both. I also agree that the need for financial advice will be greater as wealth is transferred from one generation to another. Firms offering full service wealth management will benefit. I’m not as sure however that financial services will benefit greatly from a return perspective. A large part of the wealth mentioned is already being managed somewhere. Also, banks make a lot of their profits on the retail side. With higher capital ratios, more cautious lending practices, and potentially higher loan losses as interest rates rise the robust returns on Canadian banks is likely to moderate. That said, Canadian banks are still a good long term investment…..