Will the younger generations be more financially successful than baby boomers?

I often write on Quora.com, where I am the most viewed writer on financial matters, with over 248.3 million views in recent years.

In the answers below I focused on:

  • Will the younger generations be more financially successful than baby boomers?
  • What advice would I give to younger people joining the workforce?
  • How can people not waste their youth?
  • Why is America doing well economically, but has done terribly in terms of the pandemic?

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Will the younger generations be more financially successful than baby boomers?

Nobody knows for sure, but I suspect we will see some of the following trends.

Firstly, the average amount of wealth accumulated in most developed countries by younger people is low compared to what the bombers had at their age.

Yet the following new trends might change that

  • Inheritances are getting bigger. Much bigger than when the bombers were young. That could help some younger people catch up.
  • The following point is huge. Let’s say you have a very successful younger person who is worth $2m at age 35, earns $300,000 a year, but won’t get a large inheritance. He/she could be overtaken in wealth (but not income) but at least 10% of their cohort who are earning much less.
  • Some trends in the economy, like the trends towards technology, finance and online business has helped younger people. Even though the average bomber did better than the average young person in many developed countries, the top 20% is a different matter. The number of highly paid tech workers, or online business owners, has skyrocketed. The gap between the rich and poor has grown in general, but especially amongst younger people.
  • There has been a move away from final salary pensions in many developed countries. That means that the number of people who will have a big pot of money at 60, 65 or 70 will skyrocket compared to being offered a salary. You could argue this is taking with one hand and giving with another, as $1m is just like being offered a $40,000 final salary pension, at least indirectly. Yet there is a key difference. Most final salary pensions would die when the person does. A pot of money doesn’t.
  • We are moving into a more tech-focused and entrepreneurial world. That could benefit a certain type of younger person. A 19-year-old has more time to get their YouTube channel up to speed before monetizing, as opposed to a middle-aged person who needs to pay a mortgage.

In addition to that, workers in the developing world, and even in mid-income countries, are much richer than their parents were at their age, and they will also get big inheritances in some cases.

The populations in these countries is also high, and will continue to grow rapidly in some of the fastest growing economies in the world -for example in some African countries.

It also depends on when people graduate and many other things. A lot of research has been done in economics about “scarring”.

If somebody graduates during a recession, their income and wealth can be affected for life.

I saw how many of my friends who graduated before 2008 did better than those who graduated between 2010 and 2012.

In some cases, people who graduated one, two or three years earlier got those entry level graduate positions which can be so vital in some industries.

That doesn’t mean everybody who graduates during a recession will do badly, it merely makes it more difficult.

The speed of the recovery from Covid-19, which has so far been better than expected, will affect younger people more than older generations.

So, it is a mixed picture, but globally, it isn’t a very bleak picture. What happens in developed countries (both in the West and developed Asia) will be more interesting.

What advice would you give to a young person just entering the workforce today?

I will give you an example to illustrate a wider point.

What is the one thing many small and medium sized businesses need?

A better social media presence. It is also one area where many small and medium company heads know less than many younger people.

In addition to that, a certain percentage of young people don’t need a lot of money if they are living at home.

Therefore, you could try something like this:

  • Research some companies, and industries, you would be interested in
  • Identify which companies have a weak social media presence and do more research into those firms.
  • Then email those firms with a short two, three or four paragraph summary about how you can help
  • Agree to work for free for sixty or ninety days

If you do that, there is a reasonable chance you will be offered a paid position if you give value.

Besides, it will help your CV. Not every young person is good at social media.

The point is, think outside the box and play the long game.

Working for free for a couple of months is a small price to pay for a full-time position and/or a better CV.

I would also

  • Focus on getting paid on performance and not just results when you are young. Getting paid a higher base salary but lower bonuses can be a bad trade off long-term. Take calculated risks when you are younger
  • Work harder than others in your 20s. If you work double as hard as people from age 22–26, you have as much experience as the average 30 year old. Also work smart.
  • Get good at something for a number of years and then start a business if that is what you want. Don’t try to start a business with just a good idea in 99% of cases
  • Invest your time wisely after you come home from work. That doesn’t mean always working. You need some downtime. Yet the more you earn, the more you will earn long-term
  • Invest money wisely. It is one of the easiest ways to gain more by leveraging the power of compound interest.
  • Focus on further improving your straights as opposed to working on your weaknesses.
  • Travel and emigrated at least once in your life if you can. Together with reading a lot, it will open your mind if you do it right.

I would also focus on skills you are good at which can’t be automated easily, such as people skills.

How can I waste my youth?

You can:

  1. Not care about your health at all and regret it later
  2. Not work on your career, hobbies and interests
  3. Only focus on the short-term. So, if an exciting job comes up which doesn’t pay much but has great long-term earning prospects, you should reject it because you will earn less in the short-term.
  4. Care about what random people think about you, even though you probably don’t like them, and they aren’t even interested in you in the first place.
  5. Worry about the things you can’t control. Ultimately, there are some things we can’t control. Some people make all the right health decisions but die in their 20s, whilst another person can be unhealthy and live until 100. The same is true in wealth. There are no 100% guarantees, but you need to make the decisions which will increase your chances of success.
  6. Not be true to yourself. Fail to be brave.
  7. Refuse to take calculated risks even though now is the best time to do it
  8. Spend 100% of your money and never invest it even though now is the best time to invest due to compounded returns. You can also take fewer risks by focusing on the long-term.
  9. Get into excessive use of vices like gambling and drugs. I would list getting into negative habits in general as well. Examples of that can be using social media too much and for the wrong reasons, and blaming others for everything. Another example is getting into some forms of radical politics which seeks to protest about “the rich”, even though most of the people attending themselves want to be rich.
  10. Get into toxic relationships with other people instead of focusing on “networking up”.
  11. Failing to travel and see the world, such as emigrating, whilst you have the chance. Together with reading, which is another good habit, this opens your mind.
  12. Giving up if you fail to achieve what you want too soon.
  13. Stop spending time with your friends and family. This is something people regret if that person dies.
  14. Not knowing what you want and allowing society to define success for you.
  15. This quote is also true:

Balance is important. There is nothing wrong with occasionally doing some things which might not seen productive. It becomes an issue if that is all somebody does all day.

Having said that, I guess you asked this question to avoid most of these mistakes, so I am sure you have your head screwed on.


America failed at COVID-19, but the economy’s okay. Why?

There are several factors here. Firstly, America was one of the worst performing during the first wave of Covid-19, alongside the UK and a few other countries.

Yet the vaccine program has been a success. In addition to that, many of the countries which did well during the first wave, like Germany and several Eastern European countries, are now doing badly.

Bulgaria is now inside the top ten worst performing countries for Covid-19, as measured by deaths per million – worse than the UK and the US.

That is despite their original good performance. Even some Asian countries which previously were doing OK, like the Philippines, are now seeing record numbers.

So, let’s wait until the pandemic is fully over before judging which countries have done the best and worst.

Now the economy is different. Whilst it is true that if injections go up, and the economy has to lock down, that will affect GDP, there are several other factors to consider.

These include

  • How strong the economy was before COVID-19
  • If a country has stimulated enough in terms of fiscal and monetary policy
  • If there is an overhang of debt.
  • If the banking sector is lending
  • Many other factors as well.

In 2008–2009, interest rates were reduced to 0% and QE was bought in, yet the fiscal stimulus was small.

People paid down their debts. All of that meant that a lot of the stimulus didn’t go into the hands of people.

Compare that to today, where the fiscal stimulus is much bigger, people aren’t paying down debts and the banking system is stronger.

Remember also, the stimulus this time was more sudden than in 2008 (see below), and there has been extra despite the economy recovering

This is probably one of the biggest reasons why the economy is recovering faster this time in the US and some other countries.

It took US GDP 2–3 years to recover from the 2008 crash, despite a small initial drop, and over 7 years for unemployment to get back to pre-crisis levels.

This time GDP has already recovered (or will do in April) and unemployment is where it was in 2015 – a full 8 years after the crisis.

With the US posed to grow by up to 7% this year, and unemployment back to around 3% most likely, people will start worrying about “overheating” and inflation.

Humans are a curious animal. First, they worry about a Great Depression like the 1930s.

Now they worry about “too strong a recovery” in addition to fiscal stimulus pushing up inflation!

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Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 248.3 million answers views on Quora.com and a widely sold book on Amazon

Further Reading

In the article below I answered the following questions:

  • Somebody asked me “as a stock trader how much attention should I pay to the news?”. I explain why the answer is zero! 
  • How can people build a wealth mindset? From reading, a social network or doing something more radical like emigrating? 
  • Has the economic crisis caused by CoVid-19 and associated lockdowns affected rich or poorer people more, or is it more complicated than that? I explain how we need to look at this from numerous angles, including what sectors people work in.
  • Do people who earn higher grades at school, and indeed university, become millionaires more often than not? Many people assume this, but do some people peak too early?

To read more click below

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