Millenial Musings
Amongst my fellow Millenials, the oldest of us are turning 40 this year. I’m not far behind that big milestone and for now, the prospect excites and inspires me. I definitely don’t have the same physical fitness for all the antics I used to get up to but that’s a good thing. Sometimes it takes a structural change in our physical reality to nudge us into the mental transitions we need as seasons evolve. Important social and economic shifts are happening all around us, and I regard this decade of the 2020s to be crucial for securing long-term professional and financial success. Millenials are young, but not that young. We need to be careful of what could trip us up or represent missed opportunity at this sensitive time. I am curious what is on your list of opportunities and risks for the decade ahead as I share mine with you.
The 4Cs
Deep into our 30s, we have had the opportunity to strengthen a unique combination of confidence, competence, connections and capital. Of course, this happens to varying degrees according to background and circumstances, and one may not have made all the gains they would have liked to across all four. However, the point is there has been some time to improve in these areas and potentially get to the level where one can plan more strategically about their careers.
As Millenials, we have enough pragmatism and energy to make sure the 4Cs yield the promotions, pay raises, exposure or entrepreneurial venture-backing that move our lives forward. It’s not easy but it’s also not impossible. Doing the hard yards now to be regarded as a senior leader or competent entrepreneur/creative/specialist is probably one of the best things one can do towards career longevity, working on terms that suit us and pay equality as we step into an accelerating digital future. The hunt is on for young diverse talent to occupy management and board positions, and investors have cash to deploy into the businesses we should be starting. This is the season to knock on doors that might have previously been considered inaccessible - with the 4Cs we can deliver if given a shot. Our energy to generate traction is potent in youth, and dissipates with age. Let’s not waste it.
Asking for help at the right time
In the workplace, we know the best traction comes from augmenting performance with building senior sponsorship relationships, demonstrating executive presence, nurturing quality networks and increasing our visibility. However, the shift from the meritocracy mindset to “soft power” based success can be difficult if you don’t have a strategy for where you want to go and a narrative for your value-add. Now is the time to get clear on these two areas with the help of coaching, or a mastermind alliance of peers who can help mirror to you the strengths, opportunities and strategies you might not be able to see for yourself. Without that, it’s easy to go adrift and fail to focus your energy.
Personally, in these past 18 months I've been surrounding myself with accountability partners and career coaches to convert thoughts to action with immediacy. I’m done relying on my own smarts because consistent execution - the very thing that gives us deep impact - is hard and tiresome, and frankly I don’t always want to do the things I know I should do. Smart people and those who have fully-loaded 4Cs can end up with lives that fall short of their intentions and potential because of this execution deficit. Let’s not wait until we feel stuck before we get the help and external support that will unleash the next level of performance and success available to us.
Reading the investing tea leaves
In just about every country, each generation can look back to a specific period “where everything changed” and it either set people up for prosperity or struggle. In Zimbabwe, the period roughly between 2005 and 2015 marked such an epoch. Pensions, savings, investments and market liquidity vaporised, inflation was untenable and the outlook was dire for most were it not for remittances emerging as an indispensable lifeline. We survived partly by creating an army of economic refugees - the negative social effects of which I believe will be long-lasting to our sense of identity and approach to nation-building.
Countries often suffer these changes in isolation but every now and again, our interwoven economies spread shockwaves that reverberate regionally or globally. The 2020s represent to me a watershed moment for our economies and societies, but also for our personal finances that we are all having to deal with at the same time.
Sources like the IMF have gone into great detail about what the global picture of economic recovery looks like. Worsening inequality despite the optimistic headline data has also been covered extensively, and this FT article here gives a snapshot of the issues at a social and geographic level. Then add on top of that the extraordinary fiscal and monetary policy interventions around the world that have kept economies afloat thus far but are creating the foundations for problematically high inflation, asset price bubbles (eg. peak property and equity prices) and a severe financial market crash. Social media influence and the gamification of the investing world have added new levels of volatility and animal spirits - it’s interesting yet scary to observe at the same time.
Financial systems are so complex now that it’s hard to gauge if any market crash in the short to medium term will be profound enough to create a long term depression, how globalised the effects will be or if it will be a reset of how markets work. My bearish opinion of all this aside, I do appreciate there is a lot of money to be made amidst the chaos for now. In this game of investing musical chairs we are playing, Millenials need to be more savvy than Gen Zs because we have less time to recover from a material setback, and we need to be more strategic than the Boomers+ as we’ll have longer to live with the consequences. I’m cautious about chasing the very enticing upside reflected in rising prices without having a plan to protect against the downside because the fall from here could be devastating in my opinion. Retail investors are swimming in the same pool as professional investors who might share our enthusiasm for bullish markets whilst they last, but have the tools to limit their losses if the worst happens. We’re not actually playing the same game, and hence not likely to experience the same pain when the music stops playing.
Diversifying well
Having the discipline to sell when you’ve reached your target returns, investing no more than what you can afford to lose, not using debt to fund over-priced or volatile assets and diversifying well are some of the approaches that we have all heard about for peace of mind should markets move against us.
Diversifying well is really hard to do given the range of risks in front of us. Distributing risk looks like making sure that you have a mix of assets (equity, bonds, crypto, property and gold for example) and then within that asset mix going deeper to make sure the underlying investments have diversification too. Ideally, some should provide income and others capital growth, some should have fairly stable returns while others can go up or down sharply. Diversifying well requires some thought about the following kind of splits:
Equities and bonds spread geographically, across sectors, single names and Exchange Traded Funds;
Cryptocurrency spread across different coins;
Property could be residential, short-term holiday units, commercial rentals like offices or shops or farm land;
Gold exposure could be in coin format as well as equity in gold miners.
I’m aiming to put 80% into the areas where I’m most confident of modest returns for medium risk and 20% into areas where I hope for high returns at high risk. Life has no guarantees, and I’m not an expert in these matters so take all this with a pinch of salt, and certainly not as a recommendation! My 80/20 split is pretty conservative because what I want most right now is “structural irreversibility” in my finances i.e. building a base strong enough to maintain my lifestyle and be resilient to emergencies and job loss rather than maximum overall gain at higher risk.
We all have different levels of risk tolerance but what’s most important is that we do take some risks - savings and pension funds are not enough. We need to invest and make it our business to understand how to get more upside for the money we have worked hard for. That includes getting smarter about tax! I know…it also makes me tired just thinking about it. But take a look at your payslips again to see the tax deductions being made and that might give you the resolve to meet with a tax consultant to see what can be done to lawfully optimise your tax contributions and find tax-shielded investments according to your specific situation.
The other sidebar to this is managing our family responsibilities and contributions so that we don’t over-extend ourselves and leave enough capacity to invest in the first place! When I assess my financial goals at the start of the year, I set a capped amount of my income that I budget for and track on a spreadsheet for these matters. I find that it helps to lead transparent conversations about what I can commit to. The discipline of sticking to the cap is important to sustaining an attitude of giving willingly and without expectations - that’s why I don’t want to use the phrase “black tax” anymore. Prioritising my own safety net could be regarded as selfish in some social circles but I genuinely believe it’s a necessary form of self-care.
Stranded Assets
The definition of a stranded asset is “something — a piece of equipment or a resource, for example — that once had value or produced income but no longer does, usually due to some kind of external change, including changes in technology, markets and societal habits.”
I’d like us to challenge ourselves on whether any stranded assets we have genuinely offer little value, or if they could be made productive again with some effort? Sometimes in the chasing of “more stuff”, we either don’t take time to fully audit what’s there or we undervalue assets that are already in our own care or within our broader family inheritance pool.
In my social circle, the topic of land and homes in Zimbabwe often come up as examples of stranded assets - usually with complicated inheritance issues attached. While some situations are not worth fighting for if family dynamics are hostile, others might remain unresolved simply for lack of initiative and coordination. Property investment requires vision and perseverance in a future possibility that many others don’t see or don’t have the energy to create. Perhaps it’s time to challenge the way things have been up until now, and be willing to lead a different path forward if you have a vision you’re committed to. Being diligent and productive with what we already have could turn out to be our biggest advantage and a lucrative way of unlocking trapped value.
Wrapping up
“Stay ready so you don’t have to get ready.” That line was often repeated in one of my favourite series called David Makes Man. It’s the story of an African American teenage boy growing up in a rough neighbourhood who faces daily challenges in staying alive, staying in school and staying sane amidst all the chaos that threatens to swallow him whole.
Even as the world is concurrently suffering and recovering from the COVID-19 pandemic at different paces, the idea of “building back better” from this period of adversity is on many people’s minds. But how, when like David, the challenges seem so many and are coming from multiple angles? My Millenial brain keeps thinking about how we can stay ready to survive potential crisis or capitalise on unexpected opportunity going forward. It’s a vague statement, I know. Much depends on context and circumstance. I find it pushes me to be thoughtful rather than passive since I do feel like the 2020s are a time for important global and social change where fortunes can be made or dismantled. I’m looking at optimising career opportunities in formal employment or entrepreneurship, guarding personal finances with an eye on downside risk as well as on profits then unlocking value from overlooked assets - knowing that energy and focus are precious and time is limited.
Maybe I am creating my own hype - it’s rather easy to live in an echo chamber these days! Even so, doing the maximum possible as early as possible to have a catalogue of choices for one’s best life can’t be a bad strategy.
