Investing

Investing during the 1970's and 80's versus today

  • Last Updated:
  • Feb 6th, 2017 12:15 pm
[OP]
Jr. Member
Aug 6, 2008
126 posts
74 upvotes

Investing during the 1970's and 80's versus today

As a millennial (born in '84), I feel that we don't have many of the advantages that the baby boomers had when they were early in their careers. There was little globalization and income was more evenly distributed, giving more people a steady income without racking up significant debt to get an advanced education. There were little to no cost for climate change and the government racked up significant debt paying for services that benefited the baby boomers that later generations will have to pay back.

However, I realize that when my parents were in their late 20's and early 30's, when they started having a steady income, their options to invest in the stock market was fairly limited. There was no TFSA, RRSPs were limited to 10% foreign content. Indexing was not a "thing" and there were no low fee index funds or ETFs. Unbiased and low cost investments information were limited. To buy a stock, they probably had to read the newspaper, then find a broker that charges them $100 to buy or sell a stock. They had to pay taxes on any gains and probably thought stock picking and market timing was the way to go.

But today, with TFSAs, low cost EFTs and cheap and instant trades, it's literally a gold mine that our parents never had. If you max out your TFSA and invest only in a low fee broad market EFT, earning an after inflation return of 7% a year (historical average of TSX), then in 30 years, it'll turn to $1M, tax free, in today's dollars. Our parents never had this opportunity. What a great time to invest. I hope every millennial start saving in their TFSA as early as they are able to and invest in a low cost index fund. This is truly one advantage that millennials will have over the baby boomers.
Last edited by serjiang on Feb 4th, 2017 8:55 am, edited 2 times in total.
11 replies
Deal Addict
Jul 21, 2001
4310 posts
402 upvotes
Calgary
With technological advancements the market is much more accessible than it ever has been, creating both liquidity, volatility, and opportunities. I remember when it costs $30 per trade, with minimal capital that was quite the barrier to entry. I would imagine in today's world, there are more and more active traders, investors, and suckers.

I am thankful that we have the infrastructure, technologies, and tools that enables us to have the chance to profit from the markets movements. The advantage of being able to buy and sell in my shorts at home, at work, or anywhere anytime is huge.
"i love my girl friend and my girl friend loves me ok so you cant love me"
Banned
Nov 21, 2016
105 posts
37 upvotes
On the flip side, we had the "crisis" and since then billions of stimulus money have been pumped into the economy and it doesn't appear to be working. There is a lot of uncertainty about the future. And the actions of the governments weigh in very heavily compared to the past. Things are more complicated... but so are we and so is our technology.
Deal Addict
Mar 10, 2011
2198 posts
308 upvotes
Toronto
Back then you needed a stock broker to buy stock and the commissions were a flat fee + a percentage of the trade, so the more you bought, the more you paid. It was not unusual to pay $100, $200 or more in commissions on a trade.
Compare to today where some RFDers complain about payng a $9.99 commission :)

Add in the vast array of information online these days to do ones own research and things are much better today when it comes to selecting and purchasing investments.

RRSPs have been around since the late 1950s, but of course there was no TFSA. Not sure how old your parents are, but one advantage they probably had was lower taxes to grow their investments along with better tax deductions. Tax rates are higher now and the tax credits in the current tax system are not as lucrative as the old tax deductions your parents probably enjoyed.
Deal Addict
Mar 8, 2013
2500 posts
1216 upvotes
Sorry, but I can't get past 'verses' versus 'versus'.
Sr. Member
User avatar
Feb 13, 2009
553 posts
156 upvotes
Montreal
Agreed, millenials should start invest early, and stay invested over a lifetime, in a few low-cost & broadly-diversified index funds or ETFs. In their mid-50s, on average, they should become millionaires.
Deal Addict
Jul 23, 2007
3934 posts
1836 upvotes
In the early 80's I don't remember paying anything more that $30 to buy a stock. In fact I found one broker who would to it for $15 per transaction. The important thing is my wife and I were both savers not big spenders. We were debt averse and always lived within our means. Without savings, you can't invest.
Deal Addict
User avatar
Feb 1, 2012
1225 posts
1538 upvotes
Thunder Bay, ON
Jungle wrote: What about mutual funds?
In the 1980s it was very common for mutual funds to have a front-end sales commission of 9% and a MER in the 2+% range. Advisers would try to convince investors to borrow 90% of the amount invested, under the guise of leverage increasing returns, but it was really so they could get a big up front sales commission, compared to DCA. Some Investors Group funds had both back-end and front-end loads. It was not until 1987 that Mackenzie Financial introduced the revolutionary Industrial Horizon that had a deferred sales fee... you only had to hold it for 7 years and the DSC would drop to zero. Harder to believe still, companies like Investors, Ed Jones and insurance companies still sell DSC funds today.

All through the 70s and 80s foreign content in an RRSP was limited to 10%.
I solemnly swear, to never assume I have an inkling at which direction the market will head, and to never make any investments based on a timing strategy.
Jr. Member
Oct 5, 2014
182 posts
68 upvotes
Madden, AB
"If you max out your TFSA and invest only in a low fee board market EFT, earning an after inflation return of 7% a year (historical average of TSX), then in 30 years, it'll turn to $1M" ?
Base on my calculation, after 30 yrs, 7% return after inflation, annual contribution of $5500 (in today's dollar), will only give you $519,534 after 30 years in today's dollar
[OP]
Jr. Member
Aug 6, 2008
126 posts
74 upvotes
akaManny wrote: Sorry, but I can't get past 'verses' versus 'versus'.
Sorry, fixed.
irislf wrote: "If you max out your TFSA and invest only in a low fee broad market EFT, earning an after inflation return of 7% a year (historical average of TSX), then in 30 years, it'll turn to $1M" ?
Base on my calculation, after 30 yrs, 7% return after inflation, annual contribution of $5500 (in today's dollar), will only give you $519,534 after 30 years in today's dollar
My calculation was pretty rough, but it was based on the max contribution room as of today, $52,000, continue to contribute $5,500 per year, with a constant annual return of 7%, at the end of year 32, you'll hit $1,059,394.
Most people who's maxed out their TFSA since 2009 would have done pretty well and will be well ahead of the $52,000 starting balance.
Sr. Member
Oct 11, 2010
962 posts
301 upvotes
Charlottetown
I feel like the ease of investing and rise of ETFs/robo advisers will eventually lead to lower than average market returns in the coming years

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