Investing for 2050...

consciousobservation

How would you invest your money if you were retiring in 2050+?
Recently I have been questioning what the world will be like when I am at retirement age, and if the stock market alone can weather all the storms or if some other diversification is needed.

I'm by no means well read, but I think there will be some huge disruptive events facing humanity in the next 30 years; climate change/population displacement, AI, huge numbers of jobs replaced by automation, depopulation, increases in life expectancy/non economically active population, wealth inequality, transition from fossil fuels, eco-system collapse, pollution etc.

I realise people have been making the same doom and gloom predictions for thousands of years, but as we know technology progresses exponentially and this time it really does feel different (ha!).

Hopefully we can have an interesting and thought provoking debate over this gloomy Christmas...

tacpot12

If I were retiring in 2050, I would assume the state retirement age will be 70, and that I will have a life expectancy of 50 years after retirement, so actually I would be looking to be invested until 2100, so I would invest in a broad range of global equities and property via mutual funds with someone else being responsible for selecting the underlying assets to ensure that they are the most relevant to the forthcoming economic conditions. Thematically, I think the biggest areas of growth will be health/biotech, energy, waste, and to a lesser extent commodities(raw materials) and technology.

Linton

Buy a globally diversified 100% equity fund, probably a tracker or similar, and make regular inflation-matching monthly contributions via a Direct Debit,  Then forget about it for the next 20 years.

If you base your investments on your, or anyone else's, prediction of the future it will almost certainly be wrong, and you lose out by not investing in the things that actually prove to be really successful.  By investing broadly, globally and blindly you will only get it wrong if the world economic system is overthrown in which case all bets are off whatever you do.

Sailtheworld

I'd be 100% equities in a world equity tracker and would review in 10 or 15 years in the first instance and hoping that capital still flowed towards returns.

If people were good at predicting 50 years ahead we would've known what 2020 was going to look like in 1970. It's pure guesswork what 2070 will look like.

Albermarle

huge numbers of jobs replaced by automation,

Making sure that you have a job/career that was less vulnerable to this trend would probably be a good idea. Even if it means retraining or moving roles.

I would think for most people having a well paid secure job, is much more important to overall financial success than one investment strategy or the other ( although this can have a significant effect of course ) .

Thrugelmir

No differently to how I invest now. The basic rules of investing will never change. Companies will for ever come and go. Focus on the fundamentals, strong balance sheets, quality management etc. Don't overpay for and chase the current fad with the herd. Easy to end up overpaying. 

thegentleway

Thrugelmir said:

The basic rules of investing will never change.

Tell that to the commies

ElephantBoy57

consciousobservation said:

I'm by no means well read, but I think there will be some huge disruptive events facing humanity in the next 30 years; climate change/population displacement, AI, huge numbers of jobs replaced by automation, depopulation, increases in life expectancy/non economically active population, wealth inequality, transition from fossil fuels, eco-system collapse, pollution etc.

In my opinion its not good to be alarmist. Things will happen gradually.

We already have 200,000 net imigration and people coming here in dinghies; so the effects of climate change and war is already here.

Flooding in Wales this month, climate change is already here. Flooding in Wales was predicted decades ago. Its happening already, but gradually.

I heard a news article state that life expectancy had decreased for the first time, I didnt catch the detail, perhaps that was just amongst the poor.

Malthusian

What would you have invested in in 1970 with 2020 in mind?

The answers would probably have included "new sources of oil" and "flying cars", not "ARPANET" and "vaccines against a common cold variant".

thegentleway said:

Tell that to the commies

The commies failed precisely because the rules of investing never changed, although it always feels differently from the inside of an alternate reality. The laws of physics didn't change when geocentrists lost the argument.

barnstar2077

Personally I don't see depopulation being a thing until it is way too late.  There are so many countries where people do not have reliable access to contraceptives, because of economic. religious or cultural reasons. So many people in this world struggle to take care of themselves, and yet their countries populations are in the millions / billions.  People are stupid.

Another_Saver

consciousobservation said:

How would you invest your money if you were retiring in 2050+?
Recently I have been questioning what the world will be like when I am at retirement age, and if the stock market alone can weather all the storms or if some other diversification is needed.

I'm by no means well read, but I think there will be some huge disruptive events facing humanity in the next 30 years; climate change/population displacement, AI, huge numbers of jobs replaced by automation, depopulation, increases in life expectancy/non economically active population, wealth inequality, transition from fossil fuels, eco-system collapse, pollution etc.

I realise people have been making the same doom and gloom predictions for thousands of years, but as we know technology progresses exponentially and this time it really does feel different (ha!).

Hopefully we can have an interesting and thought provoking debate over this gloomy Christmas...

Climate change is, as with most things in this world, likely to affect poorer areas first (climate senstive places don't led themselves to prosperous civilisations). However there are significant capitalisation costs of this transition ahead (no more so than the transitions from canals, to rail, to car and air; from horse to telegram to telephone etc.).

Population displacement is already at the greatest level since the post-war period and same again. I just love hearing people in the UK complain about the distraction, the non-issue of net migration adding 0.25% population growth;as if importing disproportionately ambitious, resourceful and well-educated young adults without having to invest ~15-20 years of parenting/NHS/education costs to raise them, with above average fertility and economic productivity, into a country with a generation of boomers about to retire, creating unique demographics that have never before existed, is somehow a bad thing.

On AI/automation, Erik B... has some interestng thoughts (https://www.ted.com/talks/erik_brynjolfsson_the_key_to_growth_race_with_the_machines?language=en), as does CGP Grey  (https://www.youtube.com/watch?v=7Pq-S557XQU&vl=no). But then, everyone has always said this about every technological innovation and people have yet to run out of demand for services from others or things to do. If you believed in that simplistic Malthusian approach, the world would be divided between the unemployed and the owners of automated capital. However as Andrew Yang has pointed out, the disproportionate effects of recent "progress" has permanentlly affected many specific communities, and the pace of change does appear to be making capital and skills redundant at a faster rate. Whereas the navvies who built the canals learned the trade of building rail with no particular difficulty, modern jobs tend to be more complex and take longer to learn. A lawyer can't just become an accountant, so career moves need to be made easier, and professions more flexible.

Depopulation is unlikely, slowing population growth is likely, terminal demographics in Europe and Asia are a concern.

Wealth inequality fell from the turn of the century, bottomed out in the 70s, has since risen and remained broadly stable since the Millennium. The Great Demograpic Reversal offers perspectives on a swing back from the greater return on capital that has happened since the 1980s "Big Bang" to date, as Boomer retirement decreases the proportion of the population workers make up, towards a greater return on labour (people always think the current economic reality is the new economic reality, until it isn't)