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December 21, 2016 | Generation M

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

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In Vancouver, Jacques is perplexed.

“Garth, I’m a big fan of your blog,” he sucks.  “For the life of me I can’t figure out what is a “moister”?  Is it some kind of Generation Y of Z? Please explain!”

Well, Jack (it’s Vancouver, so get a proper name), one benefit of writing a blog without an editor – and not caring that much about the readers – is inventing words, creating language and eschewing the conventional, polite way of referring to people who cry out for appropriate labels. Like Millennials. They’re hilarious, all whiskas, plaid shirts, eBikes, shiny phones, multiple degrees, fear of failure and impossible expectations.

They’re not quite cooked yet, either. At least they weren’t when I started writing about them five years ago, referring to the ‘moist Millennials’. The dampness isn’t only behind the ears. It also comes from panting for things they’re not achieving, but nonetheless craving. It’s a generation that can’t wait to trade freedom for a mortgage, for example, expecting the Bank of Mom to pony up the cash, and generally choosing the basement over some tawdry rented space.

A lot of it, psychologists speculate, stems from risk aversion. This might be the single most scared generation… ever. Having seen the 2008-9 credit crisis crash their parents’ mutual funds when they were in high school, then graduating into a low-energy, slow-growth, no-jobs world, yet with extreme amounts of (expensive) education, they’re jaded cynics. The big job and paycheque didn’t materialize. The world’s not exciting. It’s kinda hostile.

To them, real estate looks safe. Stock markets are terrifying. They want guarantees. Risk sucks. The number of twentysomethings I talk to who put their meagre TFSA dollars into 2% GICs or 1% bank accounts is striking. Confidence in the future is thin. And everybody wants to grow up to be their parents. Youth’s no longer a destination, just a station stop. Sad.

Anyway, Jacko, ‘moist millennials’ became ‘moisters’ because I hate typing. Just like so many of them hate the thought of severing the umbilical.

We already know that a little over half of first-time homebuyers make a big withdrawal from the maternal institution in order to buy real estate and become joyfully indebted. This week a new study (American) tells us an astonishing 40% of Millennials are living at home. That’s the greatest number since w-a-y back in 1940 when the Great Depression was being cured by a World War. That’s right. Seventy-five years later adults are once again children.

moister

Fear of failure outside the nest may be a big part of the moister curse. That’s the case when it comes to money. Earlier this year Sun Life asked the kids where they’re putting their investments funds. Turns out 44% self-described as ‘risk-averse’, with an equal number professing to be ‘conservative.’ Over half said they would gladly take a lower rate of return on their investments if they could avoid some volatility.

“This could potentially be putting their retirement savings in jeopardy,” a Sun Life spokesguy concluded, “by investing so conservatively.” Damn straight. Interest rates may be slowly grinding higher, but it’s unlikely anyone in the next decade will get ahead putting their cash into ‘safe stuff.’ As far as real estate or equities go, saving’s been a consistently losing strategy.

By the way, Sun Life also found roughly 70% of moisters are pessimistic about where the economy is going over the next five years. It’s this dark world view that exacerbates their risk and keeps them in the basement with their online high-interest savings accounts. The kids (now outnumbering Boomers, so this stuff matters to society) see corporations as greedy, globalization as exploitative, politicians as jokes (except cute ones with tats, promoting weed) and markets as rigged.

In the financial business, such beliefs perplex the banks, who naturally like to Hoover everyone. Moisters would rather give their money to a robo algorithm to buy assets they don’t understand than trust [email protected] with a clutch of mutual funds. Suspicion and doubt abound. But the fact robo-advisors in Canada are dying on the vine, while cash deposits keep growing, tells you northern Millennials may be even more boring than their US cohort.

On balance, Jack dude, moisters are doing themselves no favours. Real estate will prove to be far less stable than most of them (or their parents) believe, while the significant debt they take on could prove to be crushing as servicing costs rise. As for investing in growth assets that trace equity markets, when your time horizon is three or four decades, risk evaporates. This generation need only harness the power of one single tax shelter – the TFSA – to reap big gains. Finding a hundred bucks a week to put into assets averaging 7% over 35 years will deliver a nestegg of $786,000, of which $604,000 is tax-free growth.

If you stuff the same amount safely into a high-interest savings account, the total is $218,000, or which only $35,000 is growth. What an astonishing difference.

The world delivers no shortage of reasons to be scared. Just think of the Kardashians. Or the Trump kids. But the financial risks today are hugely overstated. After eight years of crappy recovery and inflated housing, we’re on a different path, paved in promise. Tell your daughter that, as you kick her out.

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December 21st, 2016

Posted In: The Greater Fool

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