What Demographics Can Tell Us About Investing

What is demographic investing?

From “Boomernomics” to TikTok trends, a long-term demographic investing strategy starts with investing in generations—Baby Boomers, Gen-Xers, Millennials, and Gen-Zers. Each generation has unique needs, preferences, and goals that signal investment opportunities.

Generations by the numbers

• Born between 1981 and 1996, Millennials make up the largest population in the US, followed by the Baby Boomers (1946–1964), Gen Z (1997–2012), and Gen X (1965–1980) (1).
• The lion’s share of the wealth in the US is held by the older generations: Baby Boomers, with 50.4 percent ($71.08 trillion) and Gen Xers, with 29.9 percent ($42.16 trillion). Millennials own just $9.38 trillion (6.6 percent) (2).
• Gen Xers tend to spend the most ($83,357 on average annually), followed by Millennials ($69,061 on average annually) (3). The sheer number of Millennials in the US, however, gives their spending a lot of power.

Investing search tip #1: There are a few ways to invest in demographics, from individual stocks that a particular generation loves to mutual funds or ETFs that include a diverse range of assets focused around a particular demographic (4,5).

For example, on the AI investing assistant, a search for “invest in demographics” shows a range of stocks and funds. You might see a golfing stock that is popular with aging Baby Boomers; a fund that focuses on equality, a hot topic for Millennials; or funds broadly addressing aging or pharmaceuticals.

Millennial trends

Millennials are financially behind compared to Generation Xers and Baby Boomers thanks to a number of factors, from higher student debt to financial crises to the COVID-19 pandemic. Nonetheless, Millennials are reaching their peak earning years, and as older generations head into retirement, they are spending on what makes them happy and productive, from video games to smart gadgets for working out, home, and parenting. Yet Millennials care about more than price—they also care about a company’s core values.

Investing search tip 2: Investors who want to check out the companies that Millennials love can easily find current share prices and useful information like dividend shares.

On Magnifi, “invest in Nike” will bring up NKE stock and mutual funds and ETFs that include Nike stock—as well as share prices and changes. Simply click or tap on NKE to see more information for investors, like its dividend yield and market cap.

Baby Boomer trends

Mortgage-free home ownership and retirement have given Boomers some financial leeway to spend big on their golden years. And as an aging generation, Baby Boomers’ healthcare needs and lifestyle preferences will drive demand in the healthcare industry for years to come.

Investing search tip #3: Investors who want to invest in Boomer-influenced companies can see how those stocks, mutual funds, and ETFs weather market ups and downs over time.

On Magnifi, try searching for “invest in Baby Boomers” to get an array of investments, from cruise stocks to funds that focus on aging populations or pharmaceuticals. Click or tap on the name of an interesting investment to see a chart that tracks a stock’s or fund’s performance over the past few years.

Gen-X trends

Gen-Xers may be few, but their spending has power. They’ve moved beyond their “slacker” phase into the peak of their earning, all while weathering the swings of market highs and lows. As Gen Xers look ahead to retire, many may also be supporting both children and aging parents—so education, as well as health care, is essential. Yet there still seems to be time (and money) for buying the latest gadget and experiencing the good life.

Gen Z trends

Ranging from preteen to 25, Gen Z is already an economic force. More diverse than any other US generation (6), Gen Zers are also digital natives. Their values drive their spending, with sustainability and diversity being their guiding stars.

Why invest in demographics?

Looking at macrotrends affected by demographics is one way to bring “long-term” into your investment strategy. After all, no matter what the stock market does on a given day, Baby Boomers, Gen Xers, Millennials, and Gen Zers will strive to live full, productive lives.

Here are several sectors and technologies being transformed by generations:

Health and well-being

As Baby Boomers age, spending on healthcare, medicine, health tech, pharmaceuticals, and more is expected to grow. All ages are seeking healthier, more sustainable choices.

In 2030, all Baby Boomers in the US will be older than 65 (7). While Baby Boomers have longer life expectancies than previous generations, more than half of Boomers have already been diagnosed with at least one chronic medical condition.

So it’s no surprise that spending on their healthcare will increase, from telemedicine to drugs. The combination of aging in place, chronic conditions, and living longer will also lead to an increased need for in-home care. However, Boomers won’t be spending their days in a recliner. They want to be active (creating a demand for joint replacements, and affording medical device makers and distributers a big growth opportunity).

From Baby Boomers to Gen Zers, people want to eat food that’s fresher and more natural—and more convenient, especially Millennials who have children. From organic food, farm-to-table products, meal kits, craft beer, and “clean” products, more and more companies are looking to support these choices.

Technology

From the Woodstock generation to the TikTok generation, tech is increasingly part of everyday life. Millennials’ spending power is increasingly driving a lot of the industries that rely on tech today, like e-commerce and smartphones.

Millennials might be at a disadvantage financially, but they are willing to spend more on better quality. As they do things in more data-driven ways, they (and Gen Zers) will lead the adoption of the next wave of technologies. Both are ready to share their information (in safe and secure digital platforms) in order to use innovative and convenient services like Uber, Lyft, and Airbnb; meal delivery platforms like GrubHub, subscription services, and more.

Millennials are leading the adoption of wearable technology. Millennials grew up with video games, and also like watching other people play video games—driving the eSports industry. Yet even Baby Boomers (and their money) are turning to tech solutions to access health care, manage their finances, age in place, and connect with family and friends.

Sustainability, diversity, and ESG

What kind of investments are the next generations looking for? Ones that align with personal values.

Generation X (69 percent) and Baby Boomers (63 percent) and about 73 percent of Millennials said they invest in companies that align with their personal values. So it’s no wonder that companies are increasingly striving to hit ESG benchmarks, with the value of total ESG assets expected to hit $50 trillion by 2025 (8).

How to Invest in Demographics

Just as there is no “one” kind of Baby Boomer or Millennial, there’s no “one” way to invest in demographics. Search on Magnifi for demographics, Millennials, Baby Boomers and more on Magnifi is a great place to start:

Check out your new AI investment assistant today and discover all the ways Magnifi can help you along your journey.

References:

1. Yuan, Meaghan, “Resident population in the United States in 2022, by generation,” December 14, 2021, https://www.insiderintelligence.com/charts/united-states-population-by-generation/.
2. Cook, Alex, “Millennials’ Net Worth Has Doubled Since Start of Pandemic,” July 25, 2022, https://www.magnifymoney.com/news/net-worth-of-millennials/
3. “Consumer Spending by Generation,” accessed January 19, 2023, Oberlo.com, https://www.oberlo.com/statistics/consumer-spending-by-generation.
4. Mutual Funds and Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
5. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.
6. Carter, Allison, “To Gen Z trends in 2023,” December 12, 2022, PR Daily, https://www.prdaily.com/top-gen-z-trends-in-2023/.
7. Vespa, Jonathan, and Lauren Medina, and David M. Armstrong, “Demographic Turning Points for the United States: Population Projections for 2020 to 2060,” revised February 2020, Current Population Reports, P25-1144, U.S. Census Bureau, Washington, DC, https://www.census.gov/content/dam/Census/library/publications/2020/demo/p25-1144.pdf.
8. Baker, Brian, “Investing trends and statistics for millennials in 2022” Bankrate, 23 November 2022, https://www.bankrate.com/investing/millennials-investing-trends-and-stats/.