Can you invest in baby boomer buying habits? Research the stock sectors that could rise and fall with boomer purchases; 10,000 turn age 65 every day.
Every day for the next 15 years, roughly 10,000 baby boomers will turn 65, according to Census data. This well-documented generation represents nearly 26% of the total U.S. population, meaning it’s an economic force to be reckoned with.
Some of what baby boomers are buying may surprise you. We've got the stock sectors that could rise and fall with those buying habits.
Boomers are yogis—big-time. Yes, the big surprise spending category with this generation of mature adults is discretionary wellness spending, says Kit Yarrow, author of Decoding the New Consumer Mind and a professor at Golden Gate University. "They have the money, they feel young, they look young, and want to stay young,” Yarrow says. “They are buying things that will help them facilitate youthful aging.” Those include: yoga pants, health supplements, exercise equipment, golf clubs, and gym memberships.
Think: Health and fitness stocks as well as technology. Why tech? Handheld computing and physical activity measurement devices could stand to gain as boomers look to track their physical health.
Boomers may not be spending more on health care by choice, but it is a necessity. The biotech sector is filled with small, innovative companies that are doing research and delivering new solutions for a variety of health ailments, including oncology, heart failure, and even Hepatitis C treatments.
Think: Health care stocks, including medical equipment and device makers, plus biotechnology.
This group grabs life by the handlebars. Boomers are busy having fun—biking, cooking, gardening, and pampering their pets, for starters. "This generation has worked really hard and they’ve been super high achievers. They want to keep busy, so they’re investing in their hobbies. They are spending big-time on their pets—outfitting them and keeping them healthy—too," says Yarrow.
Think: Consumer discretionary, including recreational retailers; consumer staples, including food and drug stores, organic grocery store chains, and pet supply stores.
Boomers are moving, and they want nice digs. "They’re downsizing and buying smaller luxury houses," says Scott Rothbort, president of LakeView Asset Management. He points to some larger, new-home building companies: "They’re doing a lot of business with empty nesters."
Think: Consumer cyclical and residential construction firms. Research might include major home builder stocks and several exchange-traded funds (ETFs) that include these stocks.
As boomers age, some are transitioning into senior living homes that feature active retirement facilities through advanced assisted living. This, too, is all about demographics.
Think: Real Estate Investment Trusts (REITs) that hold senior living and medical properties.
People are living longer, which means their money needs to stretch further. The average life expectancy in the U.S. has hit 78.8 years, but with advances in health care, experts expect this number to rise. Companies that deliver solutions for retirement and personal finance needs, including annuities, are poised to benefit. "A good percentage of boomers are not prepared and they’re going to need some help," Yarrow says.
Think: Financial services and insurance industry stocks.
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