Investors seeking to grow their wealth need a long-term plan that recognizes current economic conditions and also focuses on long range trends. For example, Nelson Alves says investors should include gold in their holdings in today’s unsettled economic climate. It is also important to look past immediate concerns about a possible recession. Alves discusses the need to consider the impact of demographic trends in global markets as indicators of long-term investment planning.
Demographics In Global Markets: Japan
Four of the most advanced or economically developed world markets are Japan, the European Union, the United States and China. Japan is an interesting case. This country’s experience is probably a harbinger of things to come in other regions. A greater proportion of the Japanese population is age 65 or older than is the case in other regions. However, people in advanced societies tend to consume less after age 55. When you factor in Japan’s low birth rate, you have a situation in which consumer spending will grow very slowly and may even decline over time.
The European Union & The United States
The population profile of the EU is similar to that of Japan in many respects. Absent other factors, it would seem to offer much growth potential for investment. However, the EU continues to attract a significant number of migrants. These migrants help to keep the population age distribution balanced because they tend to be young and want to improve their circumstances.
United States demographics offer more long-term investment opportunities. A size-able number of millennials are just beginning to reach age 30. This group will continue to increase their earning and spending ability for the next two decades, so market growth is likely to continue.
China: A Major Growth Market
For investors, China appears to offer excellent growth potential. The population of millennials nearing age 30 is enormous. In light of China’s growth-orient policies, this region holds great opportunities for investors. Alves does advise a measure of caution because Chinese corporations are not required to maintain the same level of transparency US investors expect from publicly traded companies. This increases risk due to the heightened possibility of accounting fraud or other abuses. To counter this risk, you can seek out large, well-established exchange traded funds that provide built in diversification. With such diversified holdings, the negative impact of a single “bad apple” on a portfolio is minimized.