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Weekend reading: Millennials toasted

Weekend reading: Millennials toasted post image

What caught my eye this week.

I have a soft spot for Baby Boomers who appreciate that the younger generation really does have it much harder than they did, financially speaking.

Boomers like Jim, who writes on his blog SexHealthMoneyDeath that:

…if I was a youth today, I’d be damn angry about it. Especially if I read blogs like mine where Baby Boomers in their fifties ponder early retirement and the most tax efficient ways to drawdown their pensions while wondering if they can be bothered taking two long haul holidays a year?

A Baby Boomer, that is, like me who was given a fantastic free education, who took out a mortgage as soon as he started working (required deposit, fifteen hundred quid and a 95% loan) and sat back to watch property rocket over his working lifetime.

Nice work, if you can get it. Which you no longer can.

But while there’s a little bit more inter-generational understanding these days – at least in terms of words, if not actions – Millennials are still regularly hearing guff like the reason they can’t buy a house is because they eat too much smashed avocado on toast. Seriously.

The LA Times notes that the Australian millionaire who doled out that advice actually started his own business with a $34,000 handout from his grandfather.

Good on him for making a success of it, but equally $34,000 buys a lot of avocado on toast – even at the $19 a pop he seems to find it selling for.

At least the youth have Buzzfeed, which collected a super set of Tweets to cheer them up, such as:

From Monevator

Vanguard goes direct to UK consumers [Read the comments, too]Monevator

Out of the archive-ator: Coping with the guilt of losing money – Monevator

News

Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1

Bye Bye buy-to-let? Amount lent to UK landlords falls 80% in a year – ThisIsMoney

Rich US retirees are hoarding cash out of fear – Bloomberg

What the election promises mean for your money [Not a search result, something is going wrong with it]FT

£1 tops $1.30 for the first time in eight months – Telegraph

One good thing to come from our imminent one-party state: Tories to downgrade triple-lock pension to a double-lock, since their base is hardly going to switch to a ’70s-styled Labour – ThisIsMoney

Cautious fund manager Neil Woodford spends £200m on Lloyds shares – ThisIsMoney

US company profits have moved to a higher plateau, killing mean reversion strategies – Morningstar

Products and services

Kingdom Bank – established to fund church expansion – now offers the top cash ISA rate, paying 1.2%. Yes, it’s covered by the FSCS. The answer to your prayers, etc? – Telegraph

Meanwhile a new one-year ‘bond’ from Charter Savings Bank pays 1.55% a year interest (but that’ll still lag inflation) – ThisIsMoney

Ford has launched a new regular savings account paying 4% (with the usual restrictions and caveats) as well as some new cash ISA options – Telegraph

Lloyds and Metro bank are bringing back safes and safety deposit boxes – ThisIsMoney

Not only will you get £10 off your first Thriva blood test kit with the following link, you can use the code ITSMAY at checkout to get a further 50% deduction – Thriva

Comment and opinion

Swedroe: It’s so hard to tell investing skill from luck, you may as well presume there’s no skill – ETF.com

The Snapchat IPO has been a good lesson for young investors – A Wealth of Common Sense

Try to be a little underemployed, says Morgan Housel – Collaborative Funds

How to plan for a future stock market crash [Search result]FT

“A study of consultants by a professor at Boston University found that managers could not tell the difference between employees who worked 80 hours a week and those who just pretended to.”Guardian

Dealing with the ‘unknown unknowns’ of investing – Of Dollars and Data

Doomsters be damned: The US stock market tripled because profits tripled – Investing Caffeine

Profit opportunities exist only until researchers publish inefficiencies – Bloomberg

American Gods: The tech firms the market trusts to trump Trump – Reformed Broker

Michael Mauboussin sits down with Patrick O’Shaughnessy [Podcast]Investor’s Field Guide

Regulation is turning the sell-side business model into an honesty box – Bloomberg

Why VC-funded start-ups – especially ‘Unicorns’ – are often overvalued [Research]SSRN

When Norway struck oil in the 1960s, one savvy investor bet different – The Macro Tourist

Off our beat

Today’s big tech companies might be even bigger than you think – The Atlantic

Want higher-quality Internet content? Maybe we should pay for it – Wired

And finally

“Skyrocketing markets that depend purely on psychic support have invariably succumbed the financial law of gravitation. Unsustainable prices may persist for years, but eventually they reverse themselves. Such reversals come with the suddenness of an earthquake; and the bigger the binge, the greater the resulting hangover.”
– Burton Malkiel, A Random Walk Down Wall Street

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{ 45 comments… add one }
  • 1 Matt May 19, 2017, 6:55 pm

    Whilst I sympathise with property prices for first time buyers, I’m not sure if I’d change places with the boomer generation – I find the Internet too powerful to give up. Sites like this (and many others!) have totally prevented me for making many mistakes my parents’ generation made!

  • 2 Grislybear May 19, 2017, 8:28 pm

    @Matt. Yes there were plenty of financial mistakes to be made and were made. Equitable Life where your pension returns were all smoke and mirrors, mostly smoke. Company pension schemes where the company just spent all the pension money to prop up the ailing company, Mr Maxwell. Zero dividend Investment trust shares which paid out a preset % return at the end of a specified period, and went bust before the end. With profit endowment funds which were supposed to pay off your mortgage after 25 years and just paid off some of it and left you to come up with the other thousands. Advertisements for investment products which showed that £50 a month could turn into a huge amount in twenty years while ignoring, costs, tax and inflation.

  • 3 Grislybear May 19, 2017, 8:33 pm

    I almost forgot personal pensions sold by financial advisors where where the financial advisor and the Life Company gouged their clients for ridiculous fees.

  • 4 The Investor May 19, 2017, 9:31 pm

    Yes, I’d definitely agree passive investing and all the fee gouging that was done away with by RDR is a boon to the younger generation. To be fair they have to have money spare to actually save in size to take advantage of it though (after student fees, huge house deposit in many cases, high rents, etc).

  • 5 optimistic May 19, 2017, 10:02 pm

    And so this too will pass……

    I find it disappointing that so many commentators on this topic and many other topics , look at the recent past and project it forward into the future for decades.

    The one thing we learn as the years roll on, is that things change, unexpectedly.
    When something is unsustainable, it will cease, admittedly it often takes far longer than one might expect!

    So given the offer of turning back the clock 40 years, I would happily take it because opportunity abounds. Yes young people face difficulties that the older generations did not face but in turn they faced difficulties that the present generation don’t.

  • 6 Learner May 20, 2017, 2:39 am

    I imagine when the millennial generation are entering their 40s in a year or two, and probably even when they’re facing underemployment in their early 50s a decade after that, we’ll still be maligning them as spoiled infants who were always just a few flat whites / iphones / vacations away from the security enjoyed by their elders and betters.

  • 7 Rob Ashton May 20, 2017, 5:34 am

    I think it worth remembering too that baby boomers who come to these pages to read, may not be representative of the affluence of all baby boomers. And, not being a Judge nor a civil servant or otherwise one of the protected class, I lost a lot of money in the Equitable Life debacle.

  • 8 Mr optimistic May 20, 2017, 7:55 am

    Owning shares when I was young was rare in my social caste and buying or selling required an appointment with the bank clutching paper ( money or a share certificate) with a three (?) day delay. Things have changed. Btw, MSW’s column in today’s FT is a hoot. ‘Peanutty’ . Not often you laugh when reading the FT.

  • 9 YamiKuriboh May 20, 2017, 8:33 am

    Millenials are very spoiled with their avocados and flat whites. When i was there age, all i could afford was property in central london from a job involving manual labour :p

  • 10 Old_eyes May 20, 2017, 10:41 am

    I am with you on negative comments about millennials. Too many commentators all over the media and web ignore the favourable circumstances in which they started their lives. My millennial son has the same class of degree as me, is as smart as me, works at least as hard as I did/do, is more mobile than I was prepared to be, but was not ‘born at the right time’. He is probably at least 10 years behind me in establishing himself in the way he wants (not wildly dissimilar to my ambitions at that age).

    Yes “this too will pass”; probably. But will he ever catch up after that slow start due to the state of the global economy?

    The rage and contempt flowing in both directions across the generational divide will hurt us all. Just read BTL comments on the Conservative proposals for social care to see the mutual vitriol. A worthwhile society sees the value of mutual support and consents to give up some some individual rights in exchange for collective ‘insurance’. We will all grow old, and all benefit from education. Most will have children, get sick at some point, and want protection from the predatory behaviour of others.

    Victim blaming achieves nothing.

    Yes some things were shitty in the past, and many things are much better today, but the millennials have a point that on average, and for a larger percentage of the population, it was much easier for the boomers to reach their economic and educational goals.

    I don’t know what the answer is, but fear that unless we find a way to stop the inequality of opportunity and resource racing away it will get very messy indeed.

  • 11 dearieme May 20, 2017, 11:55 am

    Consumerism redux: “Browning’s suggestion is that financial planners urge their thriftiest clients to make big purchases–like a second home or a fancy car–before they retire …”

  • 12 dearieme May 20, 2017, 12:25 pm

    There’s something wrong: your comments thread isn’t displaying.

  • 13 Uncertain May 20, 2017, 1:33 pm

    My main comment is that for some reason I don’t seem to be able to see the comments, there are apparently 12 or were before I posted this but when I clicked on the comments I just got asked to post my own.

  • 14 Uncertain May 20, 2017, 1:37 pm

    Hmm I still cannot see the comments on my computer running Firefox but can on my mobile phone running Chrome.

  • 15 The Investor May 20, 2017, 6:16 pm

    @all — Comments now working, sorry for the tech SNAFU earlier.

  • 16 Richard May 20, 2017, 6:40 pm

    Although millennials are unlikely to catch up while young, it is possible that their DC pensions will ultimately out perform DB schemes. If we return to high growth or high inflation as a lot of DB schemes have caps on their inflation protection.
    One thing to note, I think this talk is primarily aimed at ‘middle class’ / earners. Most working / low earners probably had bad pension provision 30 years ago as they do today. In fact auto enrolment and the improved benefits system would make me hazard a guess that these people are better off today than they were 30 years ago. Of course the rich won’t notice. It is the squeezed middle who are hurting. Why would you aspire to improve yourself? Well, you are still better off but not as well off as those before you

  • 17 dearieme May 20, 2017, 6:48 pm

    It’s interesting that everyone frowns on racism and sexism but ageism is apparently fair game.

  • 18 steveark May 20, 2017, 7:26 pm

    I’m not sure that life is that much different for my three millennial kids (I’m a boomer). Yes I did early retire with more than enough to live very well but I have no pension and two of my three kids do have one. My college was inexpensive but they all had free rides through college including room and board and some extra. I got a great job I kept my whole working life but they all got the jobs they wanted and have no student loan debt, except my medical doctor son and since he staged his degree after his doctor wife’s they are cash flowing his medical college. Within five years they’ll be making well over a million a year so their relative small student loan debt isn’t a problem for them. Sure I inherited a sizable estate from my Greatest Generation dad but each of them will inherit much more from me. They do seem a little more stressed and less happy but not financially and I credit that to the crazed self absorption that goes with their generation. In short I don’t see them as disadvantaged at all. Nor was I, life is good!

  • 19 The Investor May 20, 2017, 9:24 pm

    @dearieme — Perhaps because racism and sexism has been a huge impediment to people’s life opportunities (or worse) whereas being a well-off baby boomer has not.

  • 20 dearieme May 20, 2017, 9:52 pm

    @Investor: you miss the point. The sin in racism and sexism is refusing to judge someone as an individual in individual circumstances and instead treating him or her as in some way representative of his race or her sex. You talk of baby-boomers in exactly that way.

  • 21 Richard May 20, 2017, 10:08 pm

    @dearieme – I would say ageism is frowned down upon in the same way as sexism and racism. However, richism – taking issue with people who are richer or more successful than you or who just seem to have done well out of sheer luck (or just grew old and saw their investments pay off), seems to be widely accepted behaviour whether you are targeting boomers, celebrities, footballers, business people or those who inherited wealth.

  • 22 The Investor May 20, 2017, 11:53 pm

    The difference is that racism or sexism means you potentially don’t get a job or you don’t have a career or you’re beaten up in the street. Whereas Baby Boomer-ism (it’s not even ageism) is pointing out a certain percentage of the older cohort don’t seem to realise that they’ve had it disproportionately good.

    A point evidenced by this thread, and the comparisons made between presumably being made to feel uncomfortable because younger people might feel you may have had it luckier, and feeling bad because you might get punched in the face for your skin colour, for instance.

    And I haven’t missed the point. It is routine to talk about different generations in terms of generalities when it comes to how the economic pie has been split. Obviously not Every Baby Boomer etc.

  • 23 Hospitaller May 21, 2017, 12:26 am

    Hmm. I am deeply suspicious of this notion that millennials have a right to blame blameboomers for supposedly having such an easy ride. Yes, babyboomers who are still with us are often in pretty reasonable financial nick (I’m one) but there is a tendency to look at the pleasant final result and forget the agonies of arriving there. In the early 1970s for example I looked around and felt I was part of a huge failure, an economic desert of a country, with no hope of my ever getting anywhere. Through all my childhood and youth, I remember my parents working out there was no way my siblings and I could ever buy property. When I finally did manage to do that, the Mrs and I sat on fold-up garden chairs for five years. We simply could not afford any nice stuff. If there is intergenerational unfairness driven by politicians to get the silver vote, go out and vote and change the politicians. But please do not come to me and moan and please do not say you want my assets. I got them through thick and thin. Now I am going to keep them.

  • 24 Learner May 21, 2017, 5:15 am

    It’s a bit of a straw man though. Elder generations aren’t blamed for their good fortune – they’re blamed for attempting to cement their advantage by opposing progressive taxation, raising barriers to education, home ownership, etc. Thus it’s noteworthy whenever someone recognizes the disparity instead of blaming younger workers with utter tripe like the avocado toast bit.

  • 25 Old_eyes May 21, 2017, 9:39 am

    @Learner. Absolutely right. You hit the point I was reaching for much more eloquently!

  • 26 The Investor May 21, 2017, 9:59 am

    I agree it’s not issue of blame, it’s an issue of observing the outcomes and deciding where to emphasize next. But making those observations and suggesting course corrections is in my view totally valid.

    E.g. The government’s belated decision to curb BTL tax breaks are one wholly sensible response to inter-generational imbalance. I am also very pleased (and a bit surprised) to see they are using the upcoming coronation as a chance to get rid of the triple-lock on pensions.

  • 27 oldie May 21, 2017, 10:56 am

    Wasn’t it the politicians who invented the triple lock and failed to address the undersupply of housing and rebalance the economy.
    But, clearly someone voted for them.

  • 28 Simon May 21, 2017, 12:15 pm

    I tend to agree with Hospitaller. It is not right to go around blaming babyboomers who survived a whole heap of downs because they are now okay. Equally, trying to now pinch their assets in the name of intergenerational “fairness” is actually to behave completely unfairly. There are, however, a few aspects of historic government policy which are unfair and do need changing, such as paying fuel allowance to people who don’t need it.

  • 29 Steve May 21, 2017, 4:00 pm

    “I have a soft spot for Baby Boomers who appreciate that the younger generation really does have it much harder than they did, financially speaking”

    You treat that as a fact but I really doubt that its true. It was really not much fun being here for lengthy periods before the millennium, you know. I’m amazed so many came through at all, let alone well. People tend to forget just how messed up this country was as leftwing extremism wrecked us. In fact, so easily do people forget history that they are now busily (and to me puzzlingly cheerfully) indulging in rightwing extremism (hard Brexit) so that we can mess ourselves up all over again. My humble and amicable message to you is not to bring babyboomers hard luck stories. They almost certainly have a supply of hard luck stories that are far worse than yours.

  • 30 Martyn May 21, 2017, 6:06 pm

    Seriously? Their glass is 90% full and why the fixation house prices?

    Being born into this country they can enjoy a standard of living that is dreamed of in many other countries. Indeed, fancy being born in Iraq for example?

    Being born into this time… There are no poor in this country anymore, my Grandad wrote that line in his autobiography circa 1980 where he describes helping his mother with the poor in the 1900’s. The description of real poverty in this country is harrowing. Poor todays seems to mean have only one flat screen telly.

    Also I at least did my bit, I voted leave, I was told by those who wished to stay that houses prices would fall dramatically (and if BrExit is hard and immigration reversed, I believe they will.)

    Young people are “rich”, no one can buy their youth back (and we understand compounding).

    First world problems.

  • 31 The Investor May 21, 2017, 8:59 pm

    Yes, seriously. Even in the 60s and 70s school leavers had basically full employment if they wanted it, even if they were unskilled. I’ve read research stating that for instance the 1960s cultural revolution was possible because people could drop in and out of employment on a whim.

    Today even an entry level minimum wage job is looking for “vibrant team players” with a CV and references, etc.

    Lower paid middle class boomers could buy houses (which is where the main inter-generational contention is) and get full pensions (which is where most of the rest of the contention is), even if just school leavers who joined the big company nearest to where they grew up.

    And a bunch went through grammar schools to free university, whereas today’s lot have to get a useless £30-40K degree just to get their foot in the door at those entry level jobs (many of the interesting jobs outside of STEM also requiring months/years of unpaid/very lowly paid labour that basically only those with rich parents can afford).

    I agree about the 1970s being economically dicey due to the Loony Left etc, but even a 65-year-old was 18 in 1970. This is not the generation that fought WW2 and saved into their dotage because they remembered eating salt and pepper sandwiches (that previous generation did suffer huge hardships and I’m full of admiration for them).

    Fully agree it’s better generally to be alive now, compared to 40 years ago. That is largely about technology and an increasingly liberal society, not economics.

    It’s obviously true that young people are rich in potential (I wrote an article on that years ago) and I’d go back to being 20 and take my chances again in a heartbeat. You’d be a fool not to, you only live once. But any sensible person can see that’s not the issue, outside of fable.

    The issue is that every previous generation has seen a path to doing at least as well as the prior one, whereas now structural issues currently look to have at best turned that path into feudal hand-me-downs when their parents die. (Again from a generational perspective. Obviously some people can make their own luck etc. But equally many millions will get nothing, and are shut out from that wealth cascade).

    Also agree that absolute poverty and so forth has been largely reduced. That’s not the point.

    Would also add that say a baby boomer in the Rhondda Valley or one of the northern would-be powerhouses that was hollowed out in the 1980s had a tough time of it, clearly. Perhaps tougher than today.

    But that’s not the issue, again! The issue is the broad direction of travel for age cohorts, not whether we live in a communist utopia where every last person has an equal outcome.

    This article is a decent even-handed take on the situation (I googled it for the graphs, initially. It’s anti-Brexit, of course):

    https://flipchartfairytales.wordpress.com/2016/06/08/why-are-the-boomers-so-angry/

    The article also points out what I would have thought was obvious, that it’s not a matter of blame or conspiracy — the Boomers didn’t get together in 1975 and plot out for things to go this way.

    There was no conspiracy by the baby boomers. Their relative good fortune is largely an accident of birth. Their working lives coincided with the lucky half century when the economy grew at a rate never seen before, when wages peaked as a percentage of GDP and when middle-earners got the largest slice of the pie. Rising incomes meant that more people could buy property which then appreciated in value. This, together with long service and occupational pensions, enabled older generations to hang on to their gains. It is unlikely that later generations will be able to pull off the same trick.

    It is also worth noting that a lot of this came about during the period when Britain was a member of the EU. It’s impossible to know what might have happened had the UK stayed out but those in their 60s and 70s have certainly done well out of the status quo.

    I would agree with the comments that say it won’t necessarily be ever thus, things can change. E.g. Brexit could crash the economy, for example. The kids have already lost the opportunity to live and work in 20+ countries with equal rights like their parents enjoyed, but ho hum, at least they may be able to afford a flat.

    But anyway, waiting around to see if things change and shrugging if they don’t isn’t really the way to determine public policy.

    Also the fact that some particular boomer did badly with some particular investment is unfortunate, but just anecdote. The statistics are clear that the boomer generation had the best pensions, even despite things like the EL debacle. (The millennials may eventually do ok thanks to auto-enrollment, but they’re going to have to pay up more for it I believe).

  • 32 Richard May 21, 2017, 10:03 pm

    I would think most kids here would take affording a flat over being able to work in 20+ countries any day. What % of UK youth actually took advantage of being able to work in these countries anyway. Though of course even better being able to afford a flat and work in 20+ countries.
    But isn’t globalisation part of the issue as well? Being able to work abroad also means your job can move abroad. Our parents didn’t have to choose between leaving their home towns, friends and neighbours. They got good, safe relatively local jobs (even if it was down south). So now you either specialise in some well paid subject (and are there enough of these for all the youth in the country) and move to where there are jobs (whether you want to or not), or you join the scrap heap and get told you are lazy and stupid for not specialising and not wanting to move to where there are jobs.

  • 33 martyn May 21, 2017, 11:19 pm

    People find houses unaffordable – yes they do. People who do not high high skills find it difficult to obtain employment – yes they do.

    Even when they do find work they struggle to exert any price control.

    This is the fault of the baby boomers? Not especially.

    Both you and I operate in the IT business and as such we are in a world economy and have to compete with that world, there are no borders on the internet. Fortunately even in a world context IT demand exceeds supply – hence we do alright.

    However the world has a huge and exploding population and most of it is poorer than us. The unskilled are not in short supply. This country acts as magnet promising wealth and opportunity. Without any way to limit the influx supply will always exceed demand, that supply needs somewhere to live and hence the price ratchets up (building “enough” houses to meet this demand is currently impossible and I seriously doubt makes any sort of sense).

    Whos fault is it that the UK finds itself in this situation? It’s the fault of the progressive liberals who opened the country up to mass immigration.

    We do alright out of this, however the bulk of the population do not. The baby boomers are only guilty is so far as they voted in the Governments that caused this problem, however you could argue that they eventualy saw the light and put in train events that will correct the error.

  • 34 SurreyBoy May 22, 2017, 12:04 am

    Perhaps I’m too focused on personal investing, but the “performance” of the boomer generation, and the general living standards of the west in the past 100 years are probably an outlier and mean reversion will come into play.

    The Boomer Bunch had excess returns and complaining 30 year olds today with modest intelligence earn £40k whilst a couple of billion smart people from the developing world use technology to hustle into these markets.

    Its mean reversion stupid…. Don’t worry about Boomers v Millennials. It’s the decline of the West. A century from now the UK will be filled with extended families living in one home and houses will be dirt cheap because no one wants to move away from the emotional/financial/physical safety net.

  • 35 The Investor May 22, 2017, 9:11 am

    @SurreyBoy — Depressing, but it’s an interesting way to look at it and a good point.

  • 36 Factor May 22, 2017, 11:46 am

    There will always be change. Trim your sails to the wind.

  • 37 Bastiat May 22, 2017, 6:43 pm

    This perception that millenials can’t afford to buy a house seems very London-centric. Not everyone needs to live in central London just like not everyone needs to have a private jet. Living in central London is a luxury but there are many great parts of the UK which are very affordable.

  • 38 Grislybear May 22, 2017, 9:47 pm

    @ Investor.I was one of those people who was working in the 1970s. The main reason houses were cheap then was quiet simple, most people had very little money after buying the necessities to live. Wages were very low and stuff was expensive for example nearly everybody had to rent a TV (it was usually crap and broke down a lot. Perhaps more disposable income now means there is more money to spend on house purchase and hence higher prices. As @Bastiat says houses are cheaper outside London if you really want to buy one. As a matter of fact anybody can move up north get a low paid job in the public service which guarantees you a gold plated pension and then buy a cheap house and relive the 1970s. There is no guarantee that your house will be worth millions in the future but that guarantee didn’t exist in the 1970s either.

  • 39 hosimpson May 22, 2017, 10:10 pm

    I don’t think it’s the boomers alone. Automation is having an impact too. Robotics is clearing out entire floors of the City’s back office staff. In the 70s and 80s growth in financial services meant more reasonably well paid reasonably easy jobs that could be done by chaps and chapeses with average IQs. This is no longer the case.
    Millennials are wrong that’s it’s the reluctant to retire boomers who are killing their prospects. It’s my generation – GenX – who got machines doing human jobs better than humans ever could. There are too many people in the West, and I don’t even mention the developing world where folks have to work in a toxic dump “recycling” our mess.
    And (I know, BUT) I’ve met some Millennials (in a job interview situation) who in my estimation did themselves no favours (“do you mentor junior staff?” and “how often would I be able to work from home?”…. well, sweetness, if you expect to be mentored, it might be a good idea to turn up at the office where, y’know, your mentors-to-be hang out). I’d take a robot over those particular specimen anytime.

  • 40 marked May 22, 2017, 10:32 pm

    @TI

    You’re comment on Triple Lock Pension, whilst I agree with it, in my opinion is a waste of older generation good will. With Brexit, getting immigration into the 10’s of 1000’s (ha ha, May couldn’t do it as Home Secretary for 6 years) there is no way CPI is going below 2.5% again. That is to say whilst worth removing at some point in the future, she’s hurting her capital with the older generation by having it as a manifesto pledge now when it won’t unlock for the foreseeable future).

    I am very worried about May. I see her either as a liar or inept. She’s talking about the cap on demential tax now, after her pension’s minister said “100K is a reasonable inheritance to leave”. It was in effect a stealth Inheritance Tax, but worse – it was only for the middle class (since care costs for really wealthy are negligible), or put differently the dementia tax was specifically targeting her voting base. Incompetence beyond belief.

    Also, whilst I rarely disagree with you, I’m not sure that the BTL tariffs imposed by Osbourne are really fair. I note BTL mortgages down 50% according to CML. Surely less BTL houses means less choice and higher rents at least for the short term until we start building 300,000 houses a year.

    On the 300,000 houses a year comment, try getting a brickie to lay a brick for less than a £1 a brick in the hotspots, meaning said bricklayer, if there wasn’t snow and rainy days (which there are less of in the SE anyway) is probably earning £125K a year if you take off his or her Caribbean holidays, etc. And he or she will be earning it as a contractor. What does that tell you? Too many people retiring, and not enough funnel of new blood coming into the trade(s). Supply (or lack thereof) and demand for skills in the construction industry means 300,000 houses per year is a dream…..!

  • 41 Adriana @MoneyJourney May 23, 2017, 1:52 pm

    My parents, who by the way have also had access to free education (!), still compare old times to the present. While Millennials do have tons of advantages Baby Boomers did not have access to, it’s clear that times have drastically changed. We live in stressful financial times. However, like someone mentioned above, you never know how things are going to change in the future. We’ll just have to wait and see.

  • 42 Scott May 23, 2017, 5:21 pm

    I think the idea that baby-boomers had it so-much-better is only true for the middle class. Back then, there was a huge working class (class divisions less clear these days?) who didn’t have it so good. My parents grew up in large families in what would now be considered extreme poverty, but at the time, in their environment, was the norm.
    Staying on at school, going into further education, the idea of buying a house, were fanciful notions that wouldn’t even have been considered. My father left school as soon as he was able, and went into a manual trade (yes, at least there were jobs.) He’s still in the same line of work now, mainly due to having no pensions and very little savings, so will be solely reliant on the state pension when he’s eventually allowed to retire, after what will be a 51-year working life in a physically demanding job. Would many millennials want to trade places?!

  • 43 Mathmo May 23, 2017, 6:45 pm

    Thanks for the links this week, TI. I enjoyed the “be underemployed” exhortion. The joy of playing is wasted on the kids — we must remember to do it ourselves and feed our curiosities. That is true wealth.

    I wonder at the idea of the BTL tax helping millenials — that presumably just means that it’s expensive to get debt so only the very wealthy can engage in the rental business, and they can set whatever rental standards and prices they feel like as the competition is reduced and enforcement isn’t very strong. It did look to me like a government signal for landlords to coordinate and hike prices.

    One more avenue for earning cut-off for the millenial, and while a few may become buyers, those who don’t make it to the lifeboats are doomed… And I don’t really understand how it affects the price of property — surely that’s governed by the number of people who live on this sceptred isle and the number of dwellings on it and their average occupancy. Presumably a significant tax on unoccupied properties (or even occupied ones) is the real answer to making sure that properties are better used, and those overseas investors who want to shelter their assets in UK property, benefiting from perhaps a more stable financial and legal set-up than in their home countries — are charged for it.

  • 44 Steve May 23, 2017, 8:10 pm

    @ hosimpson “I don’t think it’s the boomers alone. Automation is having an impact too.”

    Spot on. Fanuc have set up a big new factory here. The robots have officially arrived. Heaven help anyone now in an automatable job. Eventually, society will find a way to keep everyone going financially in a highly robotised world but I suspect for several decades there will be those who have reasonably well paid jobs and those who have no job at all and no prospect of getting one. As Springsteen said, “don’t get caught on the wrong side of that line”.

  • 45 Troy @ Market History May 25, 2017, 7:10 am

    I know that millenials have it a lot harder than their grandparents’ generation. Back in the 70s and 80s, university here in Australia used to be free (now it’s around $10k a year).
    But I also think that millenials are a lot “softer” than previous generations. A lot of young adults are too preoccupied with complaining about how “unfair” everything is. Meanwhile, they waste an hour on Facebook/Snapchat/phones every day!

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