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An ageing world

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The average age of the global population is rapidly increasing; this is a result of increasing life expectancy, declining birth rates and the post World War II ‘Baby Boomer’ generation coming to retirement age. Over 60s will account for 22% of the global population by 2050, equating to roughly 2bn people, outnumbering children.

This social phenomenon has led to a number of opportunities and threats associated with old age, which will have a far reaching impact on our economy and will affect more than just the healthcare industry. All industries will have to adapt and appeal to older generations if they are to benefit from this structural demographic change.

What is causing population ageing?

1.  Increasing life expectancy

Global life expectancy has increased by 20 years from 48 years old in 1950-55 to 68 years old in 2005-10. This is expected to reach 75 by 2050.

2.  Falling birth rates

The fertility decline over the last half century has been one of the main factors explaining global ageing (Source: UN). Global birth rates have fallen from 5 children per woman in 1950, to 2.5 today, and are expected to fall to between1.8-2.2 by 2050.

 

Global birth rates vs. replacement rate of 2.1 children per woman

Source: Bank of America Merrill Lynch, Data World Bank

3.  Boomer bulge

‘Baby boomers’ are commonly defined as people born after World War II, during the years 1946 and 1964. There are roughly 450m born in the spike period, who are now reaching retirement age and are creating a bulge in the age pyramid.

Source: Neilson & BoomerAgers

 

What impact will this have on our economy?

Currently, just over one in ten people are aged over 60, but they account for a much larger proportion of the economic power. For example, the Baby Boomer generation reportedly accounts for c.60% of US consumer spending and c.50% of UK spending (Source: AARP, Saga). In absolute terms the numbers are also big. The spending power of consumers aged over 60 is estimated to be $15tn globally by 2020 (Source: BAML, Euromonitor).

The increasingly older population will have a profound impact on the economy as it controls a larger proportion of wealth and spending power.

Exposed industries

We conducted a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of old age, which helped us to highlight some of the industries which are developing relevant products and solutions for an ageing population, which you can see below. We have also taken a closer look at the financial services industry.

Strengths Weaknesses
 

  • Wealth and more disposable income*
  • Free time

 

 

 

 

 

 

*some are wealthy but this is not universal

 

  • Poor health (living with chronic diseases)
  • Sensory loss (hearing, eye sight)
  • Loss of mobility (giving up driving)
  • Lack of technological understanding

 

Opportunities Threats
 

  • Spending time with family
  • Learning new skills (hobbies & sports)
  • Embracing technology
  • Meeting new people
  • Visiting new places
  • Create a strong future for family

 

 

 

  • Loneliness (loss of family & friends)
  • Caring for others in old age
  • Lack of public transport
  • Diminishing healthcare services
  • Living longer than assets can support

 

 

 

 

           
New experiences Technology Disposable income Loneliness Duration Gap Failing health
Travel companies Social networking Cosmetics Senior living Insurance Senior living
Hotels  

Machine to machine technologies

Retail Travel companies Wealth managers Medical devices
Transport ‘Wearables’ Travel companies Hotels   Pharmacies
   

 

 

Wealth managers Transport   Insurance
    Marketing Pet Stores/Vets   ‘Wearables’
   

 

 

  Social networking   Automation & Robots
          Home adaption

 

Financial Services

Longevity presents the risk that people live longer than expected and have not accumulated enough savings for their life (duration gap). This creates opportunities for insurers and wealth managers that are able to manage assets during the accumulation phase and manage risk during the post-retirement ‘decumulation’ phase.

Wealth of the older generation

–       In the US, the 50+ population controls 80% of aggregate net wealth with an average wealth of $765,000 (source Oxford Economics)

–       In the UK, 50+ households are worth £541,000, and this peaks at £723,000 at age 60-64

Old people tend to have a large amount of investable assets, but only 40% of retirees use a financial adviser. In the US there are roughly 1.9m households with investable assets over $2m, and 56% of those households are headed by someone over 60 years old. Globally, total wealth stands at $240trn with $46trn of this being readily investable.

The ‘Great Transfer’

The additional factor to consider when discussing the opportunity of ageing populations and wealth management is the asset transfer from people born in the 1920s and 1930s to the Boomers. This ‘Great Transfer’ estimates a shift of $12trn of wealth, and this will happen over the next c.30 years as the Boomers die and pass their wealth onto the next generation.

US Investable Assets Transferred by Year

Source: Accenture based on Cerulli Associates

The financial services industry will be very important in a future where state support is diminishing and pension savings are now the responsibility of the individual. Evidence suggests that people are unprepared for their financial futures, with only 6% of households using estate planning services (Source: BAML and Accenture).

We have highlighted a number of companies that should benefit from this structural theme, including global insurer Prudential, which has emerging market exposure, an excellent management team and a number of thriving subsidiaries. Wealth managers, including St James Place based in the UK and AMP Ltd in Australia, are also well placed to benefit from helping people prepare for their financial future.

Important information

Examples of stocks are provided for general information only to demonstrate our investment philosophy.  It is not a recommendation to buy or sell. Note that the view of the Manager may have changed since this article was written.

References

Accenture

Age Concern

Campaign to End Loneliness

Bank of America Merrill Lynch – The Silver Dollar

Sarbjit Nahal, Beijia Ma.

Oxford Institute of Ageing

Royal Geographic Society

United Nations Department of Economic and Social Affairs

World Bank

World Health Organisation

Photo: Francisco Osorio via Flickr

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News, blogs and comment from Alliance Trust Investment. Articles are either original or previously featured in Alliance Trust’s SRI Hub.

Environment

How to be More eco-Responsible in 2018

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eco-responsible
Shutterstock / By KENG MERRY Paper Art | https://www.shutterstock.com/g/kengmerrymikeymelody

Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.

Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:

1. Energy – produce it, save it

If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.

It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.

While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.

energy efficient

Shutterstock Licensed Photo – By My Life Graphic

Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!

2. Don’t be just another tourist

Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.

3. Let your beauty be also eco-friendly

eco-friendly

Shutterstock / By Khakimullin Aleksandr

We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t  mean that some of the product’s ingredients haven’t been tested on some poor animal.

To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.

It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.

4. Know thy recycling

People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.

People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.

5. Fashion can be both eco-friendly and cool

Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.

All in all

The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.

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Energy

Top 5 Changes You can Make in Your Life to Reduce Your Carbon Footprint

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reduce carbon footprint
Saving money and reducing your carbon footprint? What isn’t to love? - Image from Shutterstock - https://www.shutterstock.com/g/thodonal88

In a world, where war rages and global warming threatens our very existence, the inhabitants of earth need to be extra vigilant in their efforts to go green. This includes reducing your carbon footprint on the earth and leading a more sustainable life.

Many homeowners feel perplexed by all of the options available to reduce their carbon footprint. They may even feel (falsely) that making their household more green will fail to make that much of a difference in the fight to save our planet.

Even a single home going green has a massive impact on the environment. We can win this battle on home at a time. If you’re interested in accepting the challenge of making your household a green home, read on below for a few of the top changes you can make in your life to reduce your carbon footprint. We all stand to benefit from making the earth safer for future generations – and your wallet won’t complain when you start to see the savings in annual energy costs.

Switch From Dirty Energy to Clean Solar

The ION Solar reviews tell it all–solar is the best way to go. Whether your goal is to slash your energy bills, or to reduce your carbon footprint, the sun is a fantastic source of renewable energy.

It’s important to get past the hype from solar installers. Instead, listen to the plethora of impartial customer reviews that mention everything from a $20 energy bill, to the incredible feeling of knowing that you are doing your part by going green and minimizing harmful emissions in to our atmosphere.

The average investment is $15,000 to $30,000 for installation and purchase of solar panels. Optional battery power packs can help provide consistent power during both night and day. And many government agencies provide federal, state or local grants to help offset upfront investments in clean energy.

Depending on which installed you choose, your household may qualify for low-interest or zero interest loans to cover the up-front cost of your installation. And the loan payments are usually less than your current monthly power bill.

It really is a win-win, as home buyers are looking for homes that feature this technology – meaning solar power installation improves the resale value of your property.

Home Modifications

And there are a number of additional home modifications that can help improve the energy efficiency of your home. A programmable thermostat can better manage energy consumption from home cooling and heating systems while you’re away from home. And weather stripping your doors can help keep cool air in during the summer, and warm air in during the winter.

Of course, energy conservation starts at home. And this includes setting a powerful example for your kids. Teach your children how to close windows, strategically keep doors open or closed based on airflow, and encourage them to leave the thermostat alone – opting for adding or removing layers of clothing instead.

Unplug Appliances and Shut Off Electronics

Unplugging your appliances when they aren’t in use, such as the toaster and the coffee maker, has more of an impact than you might think. Set your TVs and stereos on sleep timers, instead of letting them run around the clock. The cumulative impact of wasteful electronic device usage is horrible for our environment – putting unnecessary strain on our electrical grid.

Recycle

One of the simplest and easiest ways to reduce your carbon footprint is by recycling. You are already throwing this stuff away anyway, right? It doesn’t take much more effort to just put recyclables in a separate container to be recycled, now does it?

Oh, and did I mention that you can earn money for recycling? Yes! Many cities and towns have recycling centers that will purchase your clean plastic and glass bottles for reuse.

Minimize Your Water Usage

Water is one of the easiest things to forget about when it comes to reducing your carbon footprint. Preserve water by turning off the faucet while brushing your teeth. Shorten your shower by a few minutes and turn down the heat on that water heater. You’ll be surprised at how much lower your water bill and your energy bill will be.

Saving money and reducing your carbon footprint? What isn’t to love?

These are just a few of the top ways that you can reduce your carbon footprint and start living a greener lifestyle. And we aren’t factoring in all of the advantages that we’ll reap from public investments in a smarter energy grid.

From decreasing your water usage, to switching to solar for your home’s energy needs, you will feel good at the end of the day knowing you are doing your part to save the future of this planet for generations to come!

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