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.
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 Ambroch on Feb 4th, 2017 8:55 am, edited 2 times in total.
