Sociocultural Trends That Can Impact Longterm Investments
Benjamin Franklin wrote an essay titled Observations Concerning the Increase of Mankind, peopling of Countries, etc. The essay has outlined dozens of ways that would have an impact on the country. And as it turns out, he was right.
Economists and investment strategists know a lot about the important role of demographics when it comes to stocks, economies, and investors. Investing is figuring out the world trend investment in a decade or longer period of time. This is determining who will strive and fail before it really happens by considering the generational, cultural, and social patterns. It would be difficult for the investors to anticipate the boom of consumers in the 1980s and 1990s, if they haven’t appreciated the economic and cultural significance of baby boomers. It would be wise to invest in themes that humanity cannot ignore, as said by Dave Haviland, Beaumont Capital Management lead portfolio manager.
Here are 5 cultural, generational, and social trends that impact the global economy in the coming years:
Taking root of Millenials
Despite the record about millennials moving out of their nest too slow, the Americans born from 1982 until 2000 are making up the biggest group of home buyers accounting more than a third of all purchased, according to the National Association of Realtors.
As the prime nesting years come for the millennials, the household is expected to be higher over the next 15 years. This is a good sign for investments in real estate. Mortgage meltdown has slowly been healing after a Mahir financial crisis. The opportunity comes in betting on homebuilders. Around 1.3 up to 1.35 million new households are expected to be built every year in the next 5 years. This comprises about 30% higher than the average increase every year.
Prescription Intake of the Boomers
Baby boomers born from 1946 to 1964 (70 million Americans) are getting older. According to Haviland of Beaumont Capital, there are about 10,000 Americans that retire every day. The number of people aged 65 will double between years 2000 and 2060. This not only implies an increase in financial services but in a significant sector, healthcare.
According to QuintilesIMS Holding, there is an expected increase of 4%-7% in prescriptions in the United States by 2021. The pace of inflation is doubled yearly with a projected growth of 2.2% rate for the economy of the United States within the stretch. It is best to research about the sector of healthcare due to its increased boom potential.
Resurgence is being enjoyed in the city as empty-nesters downsize and move back in urban areas. And in even larger urbanization scale overseas. Africa and Asia are currently having a massive migration to the center of their cities and it is estimated that by 2025 half of the global population would live in the cities of Asia, said the United Nations.
Taimur Hyat said that we are in a unique point of the history of having an unprecedented pace of urbanization and that every year, about 60 million up to 70 million people move to the cities. This requires serious infrastructure amounting to $50 trillion through 2030. The investment opportunity can be seen in construction, from the construction of roads to sewer lines and other related products in migration. This also reflects the growth of the middle class in the developing countries where the economy is shifting from export to domestic growth.
The Narrowing of Gap Between Genders
A gender gap still exists but women today tend to earn 80 cents a day a man earns with similar experience. This reflects that the gender gap is getting narrower. Women are doing great in education. More women are going to college than men, according to the National Center for Education Statistics. The salary is also being made transparent by technology which even makes the close gap clearer. The opportunity is in gender equality where the strong representation of women on boards and management has higher equity returns, consistent payouts in dividends, and low volatility in stocks according to studies. The workplace can be less hostile and more diverse is a good sign.
India Going Digital
Over the past decade, China has been the focal point for the rising market of investors. The far less developed economy of India might lead the way over the future. In 2010, India introduced National Identification program where the government has enrolled 1.3 billion citizens to lay the groundwork for increasing access to banking digital payments. This is done at the same time while improving their archaic tax system.
Indian shares make up less than 9% of MSCI Emerging Market Index vs. the 30% Chinese equity. India is expected to surpass China’s population by 2024 and their millennials are starting to be more serious about being part of the workforce. There are several opportunities relating to this development.
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