It pays to take a long-term view when investing. What will be the biggest trend in the next decade?


Gen Y – Justine Davies


THERE’S great Warren Buffett quote: “I buy (shares) on the assumption that they could close the market and not reopen it for five years”. It’s good advice, evidenced by Vanguard’s 30-year index chart, released earlier this month. The chart tracks the growth over a 30-year time frame of a $10,000 investment. So had you invested $10,000 30 years ago and reinvested all income, you could now have:


  • $268,733 if invested in Australian shares;
  • $190,702 if invested in US shares;
  • $168,900 if invested in listed property;
  • $105,786 if invested in cash.


While the chart demonstrates the value of long-term investing, it also shows the value of following a broad trend rather than focusing specifically on any one fad.


What do I mean? Well the Australian shares result above is calculated on the S &P/ASX All Ordinaries Accumulation index. This index represents the 500 largest companies listed on the ASX – but over the past 30 years the top five hundred companies have changed. Some examples are the float of the Commonwealth Bank, of Woolworths, of Telstra and the various airlines.


So the biggest trends in the next decade? Same as before. Property and shares. Property will do well because everyone loves it and it receives government support. Shares will do well because they represent our economic achievements. Which ones? It doesn’t matter. Follow the trend and ignore the hysteria.


Justine Davies is finance editor and commentator with financial research and ratings firm Canstar.


Gen X – Bruce Brammall


YOU want “long term” from Generation X? Seriously?


At Planet X, we don’t do long term. We think in minutes, maybe hours. Famous for it. Or were, until Gen Y showed up with their attention spans measured in bytes and nanoseconds. Picking long-term investment trends? Most turn to fluff, or collapse just as the public get wind of them. It started with tulip-mania in the 17th century. Skip forward 400 years for tech booms, BRIC (Brazil, Russia, India, China) funds, resources booms, gold and Aussie dollars, just in the last decade.


You want predictions? Check the internet. They’re largely about catering to booming global populations. Food, energy (oil, green and nuclear), technology and Asia’s mega-middle-class story. Gen X’s best investment trend over the next decade? Easy. You. Invest in your home. Pay down your mortgage. Invest as much as you can in shares and property. Buy index funds.


You’ll win. Probably be in the top half. And that’s better than being the idiot who started investing in technology stocks, or tulips, or the Aussie dollar at the wrong time.


Bruce Brammall is the author of Debt Man Walking and principal adviser with Castellan Financial Consulting.


Baby Boomers – Mark Bouris


THE next 10 years are going to bring a lot of uncertainty to the market.


Most of the world is still recovering from the global financial crisis and trying to figure out how to move forward in unchartered territory. We have a global economy in transition, which makes predictions that much more difficult. In this low interest rate environment, equities are soaring while fixed interest is doing it a bit tough. We are also seeing property starting to make a comeback.


That’s what’s happening now, but can you remember back two years ago? When the cash rate was 2.25 percentage points higher, we were singing a different tune. So it just goes to show you how tough it is to try to pick a trend. So rather than do that, let’s look at the facts. For all you Boomers out there, you should be looking at prioritising income over growth as you go from working life into retirement. So focus on more defensive assets such as cash and fixed interest, even in this environment when growth assets are doing well.


The thing with being at this age is that “trends” shouldn’t really be defining your investment strategy. What you should be focused on are assets that are going to deliver on your objectives.


So stick to the fundamentals of matching your investment mix to your risk profile and maintaining adequate diversification. Let’s face it, if we could predict what’s going to fly and what’s going to plummet, we’d all be rich.


Mark Bouris is executive chairman of wealth management and advice firm Yellow Brick Road.


Retirees – Kerrin Falconer


FOR me, the standout trend for investors in the decade ahead is healthcare.


There are several reasons for this. Firstly, populations are living longer. Retirees know full well that as you age, eyes don’t see as well, ears don’t hear so acutely, hips can be hopeless and an increasing number have trouble remembering what they had for breakfast. As the population ages, demand for quality retirement and nursing home care is growing.


However, it is not just the golden oldies who are bumping up health care bills. It is at the other end of the scale as well. These days almost every kid is lactose, gluten or sugar intolerant. Many have allergies, asthma or ADD and 25 per cent of them are overweight. Then there are the Gen Xers who want Botox, help with having babies and are starting to get diabetes and dicky knees. As well, the Boomers believe that they will be forever young. They are prepared to ensure that this happens and will put pressure on the Government and their own purses to provide what they want in both cures and care.


Yes, we have made huge leaps in curing many diseases once thought terminal. But it all costs money. Not just for the research, but for tests to identify disorders. According to the Royal College of Pathologists of Australia, about 580,000 medical genetic tests were performed in 2011 – up 280 per cent from five years earlier. This will be a continuing trend going forward.


Kerrin Falconer is a finance writer with 15 years of financial planning experience.