Today, he founds investment strategies on demographics, the most powerful tool for investing clients’ money over the long term. As a professional speaker and workshop facilitator, he simplifies how demographics affect personal investing and how it can be used to invest successfully.
DEMOGRAPHIC EXPERTS say our economy is about to collapse into the biggest DEPRESSION of the past 100 years, But first we will have history’s biggest economic boom, starting with a Housing Boom and then Commodities followed by Stocks.
DEMOGRAPHICS & THE ECONOMY
People spending are what drive the economy. A fancy name for this is DEMOGRAPHICS. For the past 20+ years, the spending patterns of Baby Boomers have caused extremes in our economy, and this will continue until approximately the year 2040.
THE SPENDING CYCLE AND 5 STAGES OF LIFE Through our life, our spending habits are predictable, even as we change.
STAGE 1 - 0 -15: CHILDHOOD Rely on parents for everything from toys to shelter, food and clothing. They spend no money as they have no money.
STAGE 2 - 15-34: YOUNG ADULT This is when you enter the job market and your skill levels are low. Therefore, your income will reflect this fact. You are trying to finish your education, dating, saving for a used vehicle or you may be buying your first home, if you are getting married. Therefore, any money you have left is very little. Not enough to spend on big ticket items that drive the economy like houses and new cars.
STAGE 3 - 35-59: THE FAMILY YEARS The age for spending peaks at age 46.5. The reason for this is Baby-boomers were married at an early age and had their children also at an early age. Now, the children have left home to go to college, etc. This was the family’s biggest expense. The mortgage, the next major expense has also been paid and now leaving you mortgage free. The final part that causes a spending frenzy is that you are no longer at the entry level of your job. You are now earning the big dollars your qualifications demands as a journey man, manager or even a self employed owner of a small business. Your Career is now stabilized, with more Disposable income.
If you’re a male this is when you experience the typical mid life crisis. The first thing you do is with all your new found money, typically, you go buy a Harley Davidson.
Have you ever looked around on a Sunday and seen all the old guys riding bikes. What happened to all the biker gangs with colours? They are Baby-boomers now. Buying the bikes they always wanted. That is why there is a 2 year waiting period for a new Harley. Just think if Harley Davidson paid attention to Demographics they would have built more factories so they would have the capacity to produce more bikes and of course increase the bottom line on their balance sheet.
If it’s not a Harley, then it’s a BMW, MERCEDES OR JAGUAR.
Not your typical North American car. But an EXOTIC OR OLD CLASSIC. That is why many North American Auto companies are having problems. They still produce the family cars, while the Baby Boomers want something different, something that sets them aside from others. So right here you have the Big ticket items being purchased that drive the economy but wait, what about the wife’s needs.
Yes, you guessed it she is no longer satisfied with the three bedroom home you bought her. She wants that Trophy Home or what she calls the Dream Home. What is worse she has already figured out that you can afford it, because interest rates had dropped to 4% from 8.5% .Meaning your monthly payments would be no different than what you were paying for before and with the large down payment you will get from selling the home you are in now, plus the increase. This is because Baby Boomers are buying new homes at a record pace will reduce the mortgage too.
Of course it does not stop there, she wants a nice bright new car in her new drive way because she does not want to have the old car in front of her new home. Then the new furniture and of course the man typically wants the big screen TV.
As you can see when you reach 46.5 years of age with all this new found money, it is not long before you find places to put it. When you have 83,000,000 people in the U.S. including immigrants all doing this at the same time you have one heck of a Boom. Just as they did in Japan in the late 80’s.
Remember also for every dollar going into housing, 60 cents of it comes back out as earnings for companies that supply the Housing Boom, from Natural resources to build it, and banking stocks that refinance all these big purchases. This is then followed by money going to the retail markets that supplies materials that go into these new big homes, for example, furniture. Then all the stock, on these shelves has to be restocked, which means manufacturing picks up and of course you need raw materials for this.
All this money goes to each company’s bottom line creating higher prices for these stocks as Baby-boomers are forced to save for retirement.
This all started with a Housing Boom and we just went through the biggest housing boom in history. Do you not think the stock market will not follow especially when the same Baby Boomers have only saved on average $100,000 for retirement?
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Daniel E Tiffin, President of Tiffin Financial Corp, is a demographics expert. A financial Consultant for more than 24 years, he enhanced a Money Movement Strategy that netted his clients an average 24% return over a documented period between 1990 to 1999.