In Australia, the amount of under 24s who own crypto has over doubled in the last 10 months, which means that it is around the 40% now. People are yet to fully understand the ramifications of this, but in the next 15 years, these by then, long-term crypto holders and users will start being in management positions in companies, making strategic decisions. This will increasingly and fundamentally shift the way businesses approach crypto and blockchain technologies, as they look to capture the wealth with their business models.
But there is more to it than this. While the favorable conditions for the boomers of job security, low housing to earnings debt ratios and interest rates on savings account that rival index fund investments are gone, the wealth sinks that have been stored are now starting to be released into the economy. As they say, you can't take it with you - and no one lives forever.
We have already seen this generational transfer taking place and it is one of the reasons that in Australia for example, housing prices are skyrocketing. The bank of mum and dad is increasingly being used to fund people to get into a house and fuel a massive surge in prices. This is somewhat a symbiotic relationship, as it allows for the older generations to put their profits back into the sink for their kids, as many know that the markets are inflated and crashes are coming, plus, they no longer need to put more into their superannuation.
The estimate from Australia is, that about 3.5 trillion dollars will be unsinked and transferred from boomer to child in the next 15 years and to put that into perspective, it is about 20% of the entire GDP of Australia in that time. This injects a massive amount of capital into the hands of those whose parents have managed to keep themselves financially successful. Of course, this is actually going to work on a spectrum, with the minority transferring the most, to those who probably are already doing okay already, as that is how the economy is structured.
However, it is interesting to note that a around a quarter of the future inheritance receivers banking on the inheritance money to save them and provide for them. Which doesn't bode well for what is actually going to happen to all of that "free" money. Some research has found that 40% of the recipients if getting the money today, would put it straight into their savings - which is going to cost them 4% in inflation a year. One third would look to invest and almost 205 would buy the things they couldn't otherwise afford.
Back at the Global Financial Crisis in 2008, I was surprised by Finn's reactions to economic conditions of business downturn, increasing unemployment, diminishing job security and earnings prospects and a general crash in overall earnings. The surprise to me was, people from one of the most educated countries on earth, did nothing. The government didn't react and the average person kept spending as normal - even luxury car sales remained at the same level. As a result, for the first time in history, Finland didn't return to positive numbers and continue to operate on debt, while the countries surrounding Finland recovered quickly.
In order for people to maintain their lifestyles whilst in the midst of economic downturn, what they did was sell off their inheritances, with summer places being dumped on the market to the point where there were articles complaining that they were being purchased by Russians, posing a security threat to the country. I don't believe that, but what was made evident, was that many people's lifestyles weren't sustainable with a downturn and I discovered that quite a number of my friends, (people around 30 at the time) weren't as independent as they had appeared, with many getting parental support in some way. I was of course blinded by my own financial perspective in this, as I didn't get an inheritance of a house, car or money, so my approach never considered getting any kind of bonus injection.
My point of this little interlude was that people have already started selling their inheritances, even while their parents are still alive. This isn't necessarily a bad thing, but luxury cars and holidays don't appreciate in value, which means come another economic downturn, there might not be too much more to sell for some people.
I believe the next generation of inheritance recipients are going to be more polarized in their financial literacy, with a few being able to manage what they get well, pushing it into the right pools to keep generating more wealth. But the majority, I believe they are going to squander it, because they haven't had to live in a world of hardship before, meaning that they will choose to use it to maintain their lifestyle quality in the hard times, rather than build a foundation that can take advantage of the good times to follow.
In the coming decade, there are going to be monumental shifts in wealth dynamics across the globe, as not only will there be an "unstaking" of wealth that gets transferred to the younger generation, but there will be a change in product and service demand also. This shifts business models and as said above, the people making the decisions are far more likely going to be crypto entrenched, meaning that there is a potential for a huge amount of flow into the cryptosphere economies. Not only this, the launch of Bitcoin as a mainstream investment option yesterday, will lead to more of the interim Boomer money looking for late in life gains, so this will drive value in that will give more energy to capture later.
For most though, 15 years feels like an eternity, so they will not invest into that kind of position, which is why they will be on the wrong side of the polarization. Just think, it has only been thirteen years since the inception of Bitcoin and, there is far more to come, even in the next five. But, the entire space has investment potential and it will be the places that are able to capture the attention of investors long-term, that will do the best.
A lot of people are increasingly wary of sinking and locking up funds into something like a house, so they want to stay liquid or close to liquid in order to maintain lifestyle or react to strong movements in the markets if needed. These days, it is possible to build "digital houses" where wealth can both be secured like in a savings account, as well as appreciate in value and be used. I think more are going to opt for these alternatives, which will increase wealth capture and therefore, potential for goods, services and more economic tools to be built upon them. The flows of wealth are going to change and through this, opportunities for many will arise.
Opportunity to use skills is one thing, but it is far easier to get off the ground if there is a little capital support in the background. Some will use the wealth transfer form their parents to fund a better lifestyle for a period of time, some will use it to build a better life for themselves and others. Money is just a tool to be used. What we use it for, dictates the future.
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Beta
Housing prices in the US are also skyrocketing like they did before the 2008 crash. Rental rates are absurdly high, too. It's just not sustainable, and I fear this time it may also be the first sign of money supply inflation and interest rate manipulation leading to even greater turmoil. Maybe I'm just a pessimist here, but between COVID and policy cuts to production, money supply increases, corporate cronyism crushing small businesses for "public safety," and political authoritarianism escalating across all sectors, we are in for hard times, and this is only the beginning.
No more than me. This has been the fastest transfer of wealth and assets from poor to rich in the history of the world.
I think it is more that younger people are getting desperate and realize there is very little way for them to get ahead of the rising inflation.
Too much future thinking in this article....do you ever take a little to simply spend for the now?...lol
That is what I have two jobs for :)
Generational shifts are absolutely huge with this technology. It makes me think about the story of how hand-washing was discovered in medicine -- it took an entire generation of doctors to retire back in the 1800s before hand-washing went from "crazy talk" to the common sense. Feels like there's a parallel between that kind of thing, and the crypto vs. fiat "debate."
Yeah. I remember reading a story about a (I think) Hungarian doctor who on observation, told doctors that there are "little animals" on our skin that were making people ill and they should wash their hands. They were moving from touching dead bodies to delivering babies without washing at that point and - he was ridiculed and thrown out of practice. It was only some time later that the first microscopes were developed and they saw germs.
The idea is that it is of no use to receive any inheritance if you have no experience in how to handle it. This is why winning the lottery for many was in fact the biggest misfortune that ever happened to them. I believe in the journey of acquiring on your own what you desire because you can take that experience and multiply the success. I am not entirely sure that a big chunk of money given out would do the intended good to the receiver.
There are rimes in my life where I have knowingly had access to great opportunities and just a few thousand euros would have made it possible. It would have been quite a different experience the last 20 years had I been able to take one or two of them!!
Opportunities appear all the time, you just have to be ready to grab them when you can
I think, if it goes like this, there won't be much inheritance to be left for the next generation in my country. Many people have sold their assests such as car, house to go through the pandemic.
What I don't understand is that the housing prices are skyrocketing in my country as well, despite high loan rates. Who buys?
Investors are buying. In every population, there is always a wealthy class - so even if 80% are struggling, 20% have the possibility to take advantage.
After reading this post of yours i ran a quick search about crypto holder statistics worldwide. I was curious about it for a while, but have never looked it up before… Actually the high percentage you mentioned: “40%” triggered that i wanted to know the data. What i’ve found is not even close to this number. So the data i found: under 24s population in Austtalia is around 30%, crypto holders in Austtalia is around 3,4%. Based on this two number the 40% you mentioned is way too high. Wether the data i found is out of date or the 40% is not correct. In case i found some out of date data i would appreciate if you could give me something that is not.
Thank you in advance! :)
A study was done in Australia a few months ago, where in January, there was estimated to be around 15-16% under 24 and in late August, it was 30-53%. It was run by Finder.
https://dvh1deh6tagwk.cloudfront.net/finder-au/wp-uploads/2021/08/Finders-Cryptocurrency-Report-2.pdf
Well its representative and based on monthly 1k ppl only, but have to admit this year is the first year of the outbreak! These numbers should turn in the FOMO in many :))) Thanks for sharing this survey!
@tarazkp recently started to document myself about the crypto world and how it works, it is impressive how much and how fast it advances, it is still a new world for me even though I know it is here to stay. ! thanks for the facts
Good to hear! Just make sure you do your own research on thing and be aware of the various risks and challenges. Have fun :)
Dear @tarazkp, Is the reason you left Australia to go to Europe because you did not have the opportunity to build wealth in Australia?
No, I had more opportunity to do it there than here. I was already moving on a career path.
Hello @tarazkp… I have chosen your post about “-KO Boomer-” for my daily initiative to re-blog - vote and comment…
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