How to be a millionaire before turning 40

A good friend had the ambition to become a millionaire before his 40th birthday, a common ambition in Hong Kong, and he was well underway until recession struck. Fortunately, he is an educated businessman and understanding mega trends made him change his strategy dramatically; he switched from selling power tools to young men to selling electric powered bicycles to elderly women.

Most businessmen are more short sighted. According to McKinsey’s latest (September) Economic Conditions Snapshot, executives around the world believe that geopolitical risks in the Middle East, volatile oil prices, the spike in food prices and a sharp slowdown in China’s economic growth are the likeliest shocks to the global economy in the next 12 months. Asked about the next 10 years, oil and food prices still occupy the top positions.

These risks however are all correlated and don’t really change the business environment in the long term; beneath these are mega trends which shape the future. Sovereign debts, the ecological crises and technological breakthroughs have a much more profound impact. Technology, economy and ecology are notoriously difficult to predict, and actually there is only one safe bet: demography. To be more precise: ageing, older people becoming the largest proportion of the population.

The projections for the world’s population for 2050 vary widely; the United Nation’s predictions range from a high 11 billion in 2050 to a low of 6.5, from its current 7 billion.

However, we can predict a lot more accurately how many people will be aged 60+ years in 2050: 2,031,337,000 give or take a few million, as can be seen in the graph below from a recent UN study. The surprising part of this mega trend is that the ageing population in developing countries is growing much faster than many realize, as emerging markets were always synonymous with a young population.

Click the image to enlarge.

In many countries, notably India and China, the gender ratio is skewed towards males, mainly due to their preference for male offspring. But when a population ages, the majority are females, as women fight, smoke and drink less than men, as well as drive more safely – all ingredients for longevity.

The table below shows that the world is demographically converging; the population is ageing fast everywhere with Japan and Hong Kong having the largest proportions of elderly people and, in all countries, women living longer than men.

Click the image to enlarge.

Many elderly women are poor and they are less wealthy than men, but the gap is slowly narrowing. My friend is selling his electric bicycles in the mature markets of Europe, which makes sense now, as that is
where the ageing wealthy population resides. However, towards 2050 more wealth will be in upcoming markets, where there will be more elderly people and the majority will be female.

Seizing mega trends; switching from power tools to electric powered bicycles, from Do It Yourself to enabling products and services, is proving to be a safe bet and a sound growth strategy.