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Created on 31.07.2019

Silver economy – demographic change provides investment opportunities

The silver economy has nothing to do with silver coins. But it still presents exciting investment opportunities: the name “silver economy” is used to refer to all business activities carried out by a company which are tailored to the requirements and consumer wishes of older people. The continuous ageing of the global population makes the silver economy an attractive area with great potential for investors.

Major global demographic change is taking place – the number of senior citizens worldwide will double from just under a billion to around two billion by 2050. In industrialized nations, the number of over-65s is in fact growing around three times more quickly than younger generations. Senior citizens are a rapidly growing age group – and an increasingly wide range of services is available for them on the market. The silver economy is benefiting not just from this high and fast rate of growth, but also from the silver generation’s increasing purchasing power.

Baby boomers – a highly lucrative market for various industries

The generation born between 1955 and 1969 – known as the baby boomers – is particularly important to the silver economy market. They benefited from full employment in the post-war period. This helped them to set money aside and accrue assets – not least because they made long-term investments and provisions for their retirement. As a result, they have a high level of purchasing power. Coupled with the consumer enthusiasm of the new senior citizens and the demographic change, they are a particularly lucrative target group for companies. Demand for healthcare services and medical products also generally increases with age. Companies operating in this sector can benefit from this. The baby boomer generation is also a key market for other sectors – such as the financial, insurance and leisure industries as well as wellness, lifestyle and technology.

Companies providing specific services for senior citizens have great potential

Companies in these sectors are particularly attractive:

Insurance

Worldwide growth in life expectancy goes hand in hand with increased demand for insurance products. Life and pension insurance schemes benefit from this in particular. In countries which do not have modern social insurance systems that cover living costs, the demand for private retirement provision products is already rising. Most insurers invest significant resources in developing tailored solutions for this target group.

Technology

Today’s senior citizens want quality of life and to live as independently as possible into old age. Technology companies that provide these kinds of tech products and services are benefiting and offer great potential. They include the manufacturers of smart alarm systems, health apps and gadgets, e-bikes and voice-based products. Social media, home delivery and mobile technology are also popular amongst the silver generation. An “independent life” increasingly also means an interconnected life. Tech solutions which somehow help to combat loneliness and isolation meet a genuine requirement of this generation.

Consumer goods

The silver generation generally places greater value on leading an active life – not least because they also have a higher life expectancy. This makes this target group all the more attractive for companies in the consumer goods sector. The demand for nutritional supplements, cosmetic products for older people, fashion and smart household appliances will increase accordingly – and so too will the demand for luxury goods. As the first post-war generation, the baby boomers are particularly enthusiastic consumers.

Health

The older the population becomes, the greater the demand for healthcare services – and the ageing of the global population is leading to a rise in chronic health problems, such as diabetes and cardiovascular diseases. This poses a real challenge, but is also a good opportunity for the entire healthcare sector. Pharmaceutical companies and innovative healthtech firms – such as medical technology, biotechnology and pharmatechnology – anticipate a strong increase in demand. The ageing of society has a greater impact on the healthcare sector than on almost any other industry.

Investing directly in companies or silver economy funds

The demographic change of an ageing society presents a growing challenge for the economy, government and society. At the same time, higher life expectancy also creates opportunities. By putting money into products that invest in healthcare, the finance and insurance sectors and technologies and consumer goods for the silver generation, investors can benefit from the constant growth of this consumer group. They can also invest directly in companies that provide products and services for the over-60 generation. Companies in the above-mentioned sectors that already provide services for this target group or are developing innovative products are especially attractive. There are also thematic funds which specifically invest in silver economy companies, presenting an opportunity for investors to participate in this attractive market with a diversified portfolio.

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