Cashing in on the grey tsunami
You don’t have to go far to find a young person complaining about baby boomers. They had lower house prices. More job stability. Free university education.
But what about cashing in on this ageing population? Experts say the grey tsunami offers opportunities for savvy young investors, if they know where to look.
Shares
The future is bright for shares in companies that provide things such as rest-homes and healthcare products.
The global population of all those aged over 65 is predicted to be twice what it is today by 2040. As people live longer, their health and care needs increase.
Fisher & Paykel Healthcare recently became the most expensive share on the NZX. Investors could look for its prices to come off a bit and then buy in – the ageing population is likely to keep demand up for its products. Ryman Healthcare, which provides retirement homes, has seen its share price come off a bit but has been another strong performer over recent years.
If you don’t want to pick particular stocks you could look for an exchange-traded fund that invests in a bundle of companies that fit into the trend.
Shares that deliver solid dividends could also be a good bet as increasing numbers of people look for investments that will allow them to turn a nest egg into an income in retirement.
Adapt your rental properties If you own rental properties, consider adapting them to become wheelchair-friendly.
With more New Zealanders renting in later life, there will be more need for properties that can cater for those with mobility issues.
It is expected that by 2021, home ownership levels in people aged 65 and over will have dropped below 50 per cent.
Kay Saville-Smith, consultant for the Population Ageing Technical Advisory Group, said there was little rental accommodation that was targeted to or catering for older people. There are grants available to modify housing but Saville-Smith said many investors incorrectly thought the work would reduce the value of their properties. ‘‘In general it will increase the value of their houses.’’
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Financial adviser Liz Koh said new business opportunities and careers would appear.
These included in-home personal and health care, fitness, wellness, skin care, pet care, funeral directing, in-home technology support, travel and leisure, financial advice.
‘‘Baby boomers will take their wealth into retirement with them but will be looking for investment opportunities – perhaps they will provide the funding for the new business opportunities for the younger generation.’’
ASB’s general manager of wealth, Jonathan Beale, said there could also be opportunities in businesses that dealt with exotic travel and cruises, as increasing numbers of older people embarked on regular travel.
... or buy one
Koh said there could also be a surfeit of businesses for sale as their owners tried to retire. There are about 110,000 self-employed New Zealanders aged between 50 and 59, according to the Ministry of Business, Innovation and Employment.
‘‘There could well be a surplus of businesses come on to the market with fewer buyers than sellers, meaning they could sell at a discount.’’
There would be opportunities for career progression too.
‘‘As baby boomers retire, senior
"You can live in some really nice houses – as long as you like cats and dogs you’re fine." Jonathan Beale, ASB general manager of wealth
management positions will open up – there will be a shortage of business leaders.’’
Financial coach Hannah McQueen agreed that was a key opportunity.
‘‘A lot of baby boomers will be in business and will need to exit that business.
‘‘The easiest way to exit is through sale, so I think there will be a lot of opportunity around buying businesses cheaper in the future,’’ McQueen said.
House-sit
House-sitting for baby boomers was one way to avoid housing affordability issues, Beale said.
‘‘I know of people who don’t own a house and don’t rent but just house-sit all the time for people who are away a lot … you don’t have to worry about unaffordable housing, or prices in Auckland, you just live in baby boomers’ houses for the rest of your life. You can live in some really nice houses – as long as you like cats and dogs you’re fine.’’
Maximise your KiwiSaver Get the most out of your employer while you can with their contributions to your KiwiSaver. Beale said that, and the Government tax credit each year, was a benefit that many baby boomers had not received.