The guessing game about what U.S. Federal Reserve moves will be follows. After Jerome Powell’s remarks overnight the current thinking is that the size of interest rate hikes may be smaller, but that rates will peak higher than expected.
Of course, the catch remains inflation. On that score, Amit Nath, thinks the next U.S. CPI print is going to be an inflection point in both inflation and therefore rates. Because of what are known as base effects, he expects U.S. inflation increases to slow, which could be good news for investors.
The headlines might be dominated by Fed machinations, but some longer-term issues are persisting here at Firstlinks. And then there’s this little thing called demographics.
In Australia, millennials are on the verge of surpassing baby boomers as the country’s biggest generation. The impact this has had is made clear in a new report from the Australian Bureau of Statistics (ABS).
Outside of Australia, the leading countries of birth for millennials are India and China. That’s compared with the Baby Boomers and Generation X in England and New Zealand in 1991 and 2006, respectively.
Also very different are the living conditions of the various generations. Millennials are less likely than members of the previous generations (Generation X and Baby Boomers) to have married and become parents in their time. 53 percent of millennials have never been married, compared to 44 percent of Generation X in 2006 and 26 percent of Baby Boomers in 1991.
The fact that millennials are having fewer children may have something to do with the cost of houses. More of them are renters and apartment dwellers than previous generations.
Millennials are doing more homework too. Almost 80 per cent have a non-school qualification (certificates, diplomas, degrees and postgraduate qualifications) compared with nearly two-thirds for Generation X in 2006 and less than half Baby Boomers in 1991.
It is therefore only natural that today we have a strong demand for higher education as high income earners are themselves higher educated. Taking top income earners (top 15%) nearly two-thirds of top-earning Millennials (64%) had completed at least a bachelor’s degree, far more than among their counterpart generations.
The next few decades of Millennial success stories will be an intriguing read. They may be lucky in that it has been said that they could receive up to $3.5 trillion over the next 15 years. While advisers used to spend the bulk of their hours working with clients to accumulate money, they seem to be spending more time now working with Baby Boomers to preserve and spend it, as the following chart from Russell Investments indicates. Soon enough, Millennials will be seeking guidance on the assets they will inherit. It may end up being a busy time for the wealth advisory business.
Don Ezra, a former Co-Chair of global consulting at Russell Investments, weighs in on what those planning for retirement should do after a terrible year for markets. He has down-to-earth advice, especially for people nearing or in retirement.
And Noel Whittaker looks at a fresh take on a retirement income product. Lyn says that AMP has a product that is a mixture of account-based pension and annuity and that he can see some merit in this product.
Meg Heffron is here again, this time with a summary of what the Budget has to say about superannuation. She laments that there was not much to excite, but then reels off a plethora of unseen decisions that would influence the sector.
We also look at how recency bias, or the tendency to extend recent events into the future, has tripped up a lot of investors, especially this year. The question is how investors can avoid this mistake and construct a portfolio that has what it takes to weather market cycles.
As some investors are down in the dumps, Andrew Lockhart is upbeat specifically about private debt as an asset class. He believes that in a rising rate environment private debt can provide both capital preservation and strong risk-adjusted returns.
Finally, Christine Brown and her university co-authors, Chloe Ho, Hue Hwa Au Yong and Chander Shekhar, shed more light on the changing regulatory landscape for capital raisings in the wake of Covid-19. They note while that these changes were ephemeral, they have had a lasting effect on company behaviour when it comes to raisings. And that has benefited retail investors.
It particularly stands out how many Millennial couples live together and don’t have children, compared to earlier generations.
