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Elderly market?
Today is like any other day my boss walks to me and gives me ideas. Most are great ideas, others are quite crazy. Today is one of those days his idea is weird.
He says in France, we are starting to put our focus on the elderly market, it makes complete sense! Because old people are loaded with cash, stop travelling around the world, and spend most of their time at home. They will invest heavily in furnishing their homes, and so it represents a big market for us. I completely agree, but I don't feel good about what is coming next.
Then he says, I think we should look into this opportunity in Singapore too. I almost choked. Don't get me wrong, i believe there are enough elderly in the Singapore market deserving my respect, but I this market is not going to come to us until another 10 years' time.
First of all, the ratio of old vs not old is higher in France than in Singapore, that already shrinks our market size in comparison. Secondly, which I think is the more important reason, is that wealth accumulation in Singapore among elderly people is not the same as, in fact much lower, than France. The reason I believe, in the difference in rate of GDP growth vs Inflation rate of both countries.
In France, GDP growth that the current generation of elderly French experienced was low, say not more than 5%. I haven't done any research on numbers, but if I am close, the story will be consistent. And this GDP growth rate is close to or just a couple of % above annual inflation rate. Savings rate is low (but still higher than that in US) since personal income tax rate is high and social benefit is in place, most build their riches on asset.
Over in Singapore, GDP over the last 20-30 years has been quite phenomenon, say on average 8%. Inflation on the other hand grows at a consistent rate, but certainly far below 8%. Now, Singapore implemented the CPF in 1955, after seeing that we are a bunch of savers anyway. So assuming that elderly people right now were the same group that started contributing savings into CPF back then, the rate of wealth appreciation would never have caught up with the rate of GDP growth. What that also meant was that the portion of cash kept aside as savings would suffer in value, and less money was invested in assets that would have appreciated at the rate closer to GDP growth.
Another point worth pondering, how many of us are earning more than what our parents are earning within the first 5 years of employment? My starting pay was already 15% higher than what my mum was drawing at the same time. OK this doesn't apply if your parents are above middle management :p Those who converted their cash savings into some other forms of savings would have avoid this terrible wealth erosion.
So, it brings me back to my original point. Not only do I say that this elderly market has not arrive here yet, it is a complete waste of time to even think about it. The elderly Singaporean who have wealth accumulated in the form of property, would have to sell of their property (probably the only one they co-own with spouse) in order to become wealthy. Then, where may I ask, do they install the switches and sockets they purchased from us after selling the house?
He says in France, we are starting to put our focus on the elderly market, it makes complete sense! Because old people are loaded with cash, stop travelling around the world, and spend most of their time at home. They will invest heavily in furnishing their homes, and so it represents a big market for us. I completely agree, but I don't feel good about what is coming next.
Then he says, I think we should look into this opportunity in Singapore too. I almost choked. Don't get me wrong, i believe there are enough elderly in the Singapore market deserving my respect, but I this market is not going to come to us until another 10 years' time.
First of all, the ratio of old vs not old is higher in France than in Singapore, that already shrinks our market size in comparison. Secondly, which I think is the more important reason, is that wealth accumulation in Singapore among elderly people is not the same as, in fact much lower, than France. The reason I believe, in the difference in rate of GDP growth vs Inflation rate of both countries.
In France, GDP growth that the current generation of elderly French experienced was low, say not more than 5%. I haven't done any research on numbers, but if I am close, the story will be consistent. And this GDP growth rate is close to or just a couple of % above annual inflation rate. Savings rate is low (but still higher than that in US) since personal income tax rate is high and social benefit is in place, most build their riches on asset.
Over in Singapore, GDP over the last 20-30 years has been quite phenomenon, say on average 8%. Inflation on the other hand grows at a consistent rate, but certainly far below 8%. Now, Singapore implemented the CPF in 1955, after seeing that we are a bunch of savers anyway. So assuming that elderly people right now were the same group that started contributing savings into CPF back then, the rate of wealth appreciation would never have caught up with the rate of GDP growth. What that also meant was that the portion of cash kept aside as savings would suffer in value, and less money was invested in assets that would have appreciated at the rate closer to GDP growth.
Another point worth pondering, how many of us are earning more than what our parents are earning within the first 5 years of employment? My starting pay was already 15% higher than what my mum was drawing at the same time. OK this doesn't apply if your parents are above middle management :p Those who converted their cash savings into some other forms of savings would have avoid this terrible wealth erosion.
So, it brings me back to my original point. Not only do I say that this elderly market has not arrive here yet, it is a complete waste of time to even think about it. The elderly Singaporean who have wealth accumulated in the form of property, would have to sell of their property (probably the only one they co-own with spouse) in order to become wealthy. Then, where may I ask, do they install the switches and sockets they purchased from us after selling the house?
pleased
irritated
studious
