Demographic Investing. Investing in the Economic and Social Trends that are Driving America’s Future Growth

Demographic Investing is a strategy designed to target the regions around the country with the greatest potential for growth and invest in the goods and services that the country’s largest population groups are likely to consume.

There are 3 major population groups to take into consideration when discussing Demographic Investing:

1. Seniors – represent about 12% of the US population (roughly 34 million Americans).  These individuals are 65 and older, the parents of the Baby Boomers, and are living much more active and longer lives than the generations in the past.  According to the Society of Certified Senior Advisors, “The population aged 85 and over is currently the fastest growing segment of the older population…this is of great importance because of additional assistance needs and healthcare that is required.”


2. Baby Boomers – represent about 27% of the US population (roughly 78 million Americans) and are born between 1946 and 1964.  Baby Boomers are now starting to reach retirement and control about ¾ of the financial assets in the US.  They are spending a great deal of money on preventative and elective healthcare (i.e. cosmetic treatments).  The children of this generation are approaching adulthood, so condos and luxury apartments are common places for these empty-nesters to move into.  According to the Department of Health and Human Services, “From 2010 to 2030, the population aged 65 and over is expected to grow by 75% to over 69 million.”


3. Echo Boomers – represent about 26% of the US population (roughly 76 million Americans) and are born between 1982 and 1994.  These are the children of the Baby Boomers.  They are now just starting their own households and bring a strong demand for apartments.  According to Multi-channel News, “Within the next few years, Echo Boomers will take over 25% of household purchasing budgets.”

Where are these groups going?

According to the US Census Bureau, “Between 2000 and 2030, 88% of the nation’s population growth is projected to occur in the South and West.”  The Southern and Western United States has seen the largest population increases for seniors.  The Echo Boomers are fueling new demand for apartments in the South as they are starting new households and enter adulthood.  The top ten fastest growing states are Arizona, Nevada, Idaho, Georgia, Texas, North Carolina, Colorado, Florida, and South Carolina.

How can you capitalize on these trends?

There are great opportunities for investors to reap the benefits of these trends by matching up the needs of these groups with the best growth markets around the country.  Housing and healthcare are basic goods and services consumed by these groups and continue to provide opportunities to capitalize on these major demographic trends. 

Class A apartment housing is in great demand for these populations groups in certain regions of the country and the children of the baby boomers (echo boomers) will be coming of age in next decade and enhance the demand for rental units.  In areas experiencing rapid growth, the supply of housing will be unable to accommodate the rising number of young households.  There is an even bigger increase in the number of older renters (55 and up) than younger renters (under 35) and the majority of this demand will take place in the South.

Healthcare is another essential industry with long-term fundamentals.  As America’s population continues to expand and grow older with baby boomers entering their 60’s, investor can find ways to take advantage of this shift.  Since these boomers are living longer than generations in the past they are more likely to use more healthcare services. 

Many investors are zoning in on these trends by investing in demographic-favored products and services by purchasing stock in related companies or by owning the buildings in which they operate.

Remember all investment strategies carry elements of risk. Demographic investing is no different and carries with it market risks as well as specific investment risks.