Economics: Do Millennials Have A Grim Future?

(Drivebycuriosity) - "America´s Millennials will wake up to a grim future", claims Bloomberg (bloomberg). This is quite nonsense.  Every generation had a brighter future than their ancestors - and so will the Millennials
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                                                      (data.worldbank )

The US economy is growing annually on average 2-3 %. This is a long term trend which has been keeping up over a century at least. As a result per capita incomes have been doubling every 30 years or so (thanks to the interest compound effect calculator). When the Millennials will reach retirement ages per capita income will have tripled.

Perpetual rising incomes are lifting household worth (stocks, bonds, real eastate ). The chart above shows the long-term trend of real net worth in the US, which has risen on average by about 3.5% per year over the past 66 years (scottgrannis).

There is no reason that the positive historical trend should stop or reverse its course. Humans have always found ways to achieve a better life - for themselves and for others. We all benefit from technological advances & entrepreneurship which have been boosting productivity, comfort and wealth. And the progress is still accelerating. Almost any day something new comes up which makes our life more comfortable: Self-driving cars will have fewer accidents; Internet connected watches will help to monitor out health; in 2013 the first kidney grew in vitro in the U.S. and the first human liver grew from stem cells in Japan (wikipedia).

Millennials will live even longer and healthier than their ancestors thanks to science and the ongoing technological progress (forbes). They will benefit from new medicine; nanotechnology will create new and better materials, including carbon fibers that are much stronger & less heavy than steel; 3D printing will make many things much cheaper; stem cell therapy will treat or prevent more and more diseases. And Internet is making life easier and more comfortable (Uber, E-commerce, Airbnb, more will come).

Millennials can participate in the perpetual economic growth if they save a part of their incomes (meaning a bit less smoke, booze, party and such) and invest the money into stocks. They can buy the US stock market, represented by the S&P 500 index, in one piece by purchasing index funds or ETFs (Exchange Traded Funds) on the S&P 500. These funds have very low costs because they don`t need a fund manager, they don´t have research and they don´t speculate with their customer´s money. These investments follow exactly the up-and-downs of the stock market. Yes there will be corrections (a loss of 10%+), bear markets (a loss of at least 20%) and crashes. But all these losses are temporary and they all got erased over the time as the recent all-time highs show.

The chart above shows that the US stock market, represented by the S&P 500, grew on average annually 6.7% since 1950, even that dividends are not included (annually 2-3%). Investors who reinvested their dividends got an even higher return. The University New York calculated that since 1928 the US stock market (S&P 500) created an average return of about 10% p.a (stock market gains plus dividends reinvested nyu.edu/ investopedia). So an investment into the stock market doubled its value every eight years, thanks to the interest compound effect (compound). That makes 4-times after 16 years and 8-times after 24 years. Even a small investment can grow into a fortune over decades, good for retirement.

Unfortunately such pessimist articles are a vogue. So Bloomberg gets more readers, more clicks and more advertising. But such scaremongering fawns defeatism and suicidal tendencies, it discourages savings and investments. Shame on Bloomberg!