I’ve been reading on something interesting lately – the shift we’re going to expect to see in consumer spending habits as the Millennials age, and the Generation Z starts entering the work force.
Generation Z is expected to shift away from traditional goods and beliefs – books, tobacco, exercising and are likely to live a life indulged in virtual reality – think of Tik Tok, Fortnite, and Facebook’s Oculus.
A majority of the Generation Z’s grew up with technology, and have literally had all of the world’s information at their fingertips. What’s going to control the information that they get? Algorithms. Many of the online platforms that we engage in daily track our behavior through web trackers, cookies, analytics, and so on. They monitor our browsing habits, and based on our habits, they immediately suggest to us other “Recommended Reads For Us” or “Products That We Think You’ll Enjoy”. There is unlimited potential in money making for these companies, and it’s all possible through the data that they receive from us and the technology available today. (Looking at you software engineers!)
The world as we know it is growing at a pace we’ve never seen before. The rate at which technology is growing will be exponential. Think about it for a second. Think about the difference between the 1990’s and the 2000’s, then the 2000’s and the 2010’s, then compare the 2010’s to 2020. The main differences? The creation of the internet, smartphones, and now the integration of those smartphones into our day to day life. Mobile pick up, QR codes to open menus when eating out at a restaurant,
What do I expect to see as an outcome of all this?
The increased trend towards care for the environment, reduced emissions in manufacturing, more sustainable practices in energy, fulfillment through life, a virtual world, and of course, Netflix.
We live in a very progressive world here in the US. It’s commonly accepted to really shift towards more sustainable practices for companies, an overall care for the world, and to pursue a sense of “fulfillment” in life.
It’s definitely got to be the differences in which life has offered the two groups – one group being given technology, which has led them to instant gratification, and the other group having to survive – immigrants or baby boomers.
That being said, we’re going to expect a shift towards the theme of instant gratification. What blew my mind one day was when I was at my friend’s house, and his brother was playing NBA, and literally playing pick up basketball….virtually. This blew my mind! Why not go to the park?
The younger generations also seem to just spend all that they have on experiences – whether it be a cup of coffee, yoga classes, the newest clothes from LuLuLemon / Adidas / Nike / Supreme. While there really isn’t a problem with that, it seems that Gen Z or millennials for that matter don’t accumulate a nest egg. “Generation Rent”
With seeing Real Estate trending upwards, these Generation Z’ers and Millennials will fail to accumulate the capital needed to purchase a home in the future. They’re going to continuously throw their money towards rent, which won’t be accumulating any equity. The good news? Their parents! When their parents start to get older, sick, and eventually move on, their children will be the ones to inherit the property.
While I’ve gone off on a bit of a tangent, ultimately the point is that the world is changing. Spending habits of the past 30 years will be different for the next 30 years. Investing in the things you do now might not be the best idea in the future.
Side Note: Tesla has just recently been put in the S&P 500! This is big news! It means that the index funds that represent the S&P 500 will now own a bit of Tesla. Electric Vehicles are all the rage nowadays. The world doesn’t have as big a focus on industrials (steel, mining, railroads) and is geared towards sustainability and future endeavors (space).
Really think about how the world is changing here…
