While the 1970s are remembered for the crazy fashions and wild music, this was a decade of meaningful change when the ‘poor man of Europe’ joined the EU(!) as well as the oil crisis causing a three-day week, but I did not read by candlelight.
What financial assets would somebody raised as a child in the 1970s have now?
Starting from scratch, I did save in my 20s and 30s, buying a property and allowing asset price inflation to work in my favour over the years.
I have taken advantage of many tax reliefs and allowances, on pension savings, Individual Savings Accounts (ISAs) and other tax efficient personal investments.
Equally, I have provided protection for the family via income replacement, life and critical illness cover. Perhaps this is all in line with my ‘Steady Eddy’ personality wanting to protect those around me, even if I was not around.
Some clients have pursued residential property portfolios instead of pensions and ISAs, having a more concentrated risk - less diversified, but bricks and mortar backing.
Many clients have multiple pensions built-up historically, some with guarantees in place, although the majority will be linked to equity performance. They may not be actively managed and could potentially lack the diversification or direction to bring good long-term performance into retirement.
While now a common move, I was one of the first from my school to attend university, however alternatives such as apprenticeships are now considered to limit student debt. Funding education is a discussion point for parents and grandparents alike.
Some clients have more in cash ISAs than invested ISAs and some entirely cash ISAs with no professional management of these assets. Given the increase in inflation being talked about becoming more ‘sticky’ rather than transient, the real cost of inflation is one that we cannot ignore, undermining purchasing power and real value of these assets when accessed. Inflation in the 1970s – stagflation (a situation in which the inflation rate is high, and the economic growth rate slows) – is something we do not want to see again.
With a hybrid car and a green energy supplier surviving the current turbulence of energy markets (having hedged some of the risk of rising energy prices) the greener approach suits me.
This interest in climate change is shared by many of my clients and a topic of discussion that is becoming more mainstream is investing responsibly, although strict ethical investment criteria are still not common in this age group. I have invested recently in our Responsible Equity Fund (REF) with a view to its potential growth opportunities, as the investment world aims to turn the corner to more ethical investing. For me, the hope is this will not only potentially generate great returns, but I will also value the knowledge I am helping support businesses that are looking to trade responsibly.
Security for me and my age group is more often than not provided by a diversified portfolio of assets, as you do not know what the future holds. I am a great believer in discretionary fund management in the more active part of a portfolio, with its greater equity content.
I have already gone past the stage of which I could take tax-free pension cash, although I have not yet as have no immediate need and I am happy to keep working and keep options open for the future! My family might have ideas on what to spend it on though!