By Philip Mcalister
The investor in the new millennium will be a much different creature to one in the 20th century.
A plastic card has replaced the old Post Office Savings Book, and instead of standing in a queue waiting for a bank teller people will log into their bank through the internet.
Instead of having a portfolio loaded with large local stocks such as Fletcher Challenge, Carter Holt Harvey and Brierley Investments, it will include the likes of Microsoft, Cisco, Coca-Cola, National Australia Bank and Sony. And to buy these shares you won't need to call your broker and pay steep fees - you will do it cheaply online.
Driving these changes are ageing of the population and technology. For many people, old people and computers are diametrically opposed. It just does not compute yet they are linked.
Around the world the demographics are changing. People are living longer and the proportion of elderly people to young is increasing.
This puts pressure on state-funded pension schemes and means people have to make sure that they provide for their retirement years which will be longer, and more active, than their parents.
Because people are living longer through more healthy lifestyles they need to make sure that they have enough money in the bank at retirement to provide for those years.
This equation is made more difficult with disposable income levels being eroded by increasing costs, particularly in education and health, therefore returns need to be higher.
Also, the responsibility for saving is shifting. Not that long ago the Government and employers were seen as responsible for looking after our economic welfare. Now the burden falls more heavily on the individual.
Enter technology on two fronts. Technology is changing the how and where of investment.
It has lowered the costs of transactions and removed barriers, so someone in New Zealand can buy and trade shares on global stock markets from the comfort of their own homes at reasonable rates.
That is making us more global in our perspective and creating opportunities to invest directly.
Also, it is changing investment trends. Investors have shifted their attention from commodity stocks to dot com stocks.
No longer do investors, particularly in New Zealand, want to buy the likes of Fletcher shares which are so cyclical and where doing well is a matter of picking the time when prices for logs or pulp are going to rise. Now they are more interested in computer chips than woodchips.
It is easy to understand why tech is king when you look at various indices around the world. Investors globally have been fixated on the Nasdaq index of technology stocks in the United States, which has risen and risen over years.
However, local offerings have done well too. Sharebrokers DF Mainland has an index representing the small technology sector in New Zealand. Likewise, JB Were has created an index of 30 leading Australian technology stocks.
While these indices are well-kept secrets, both have outperformed the Nasdaq recently.
In the year so far, the Nasdaq has done 65.1 per cent while the Australian and New Zealand indices have done 112 per cent and 205 per cent respectively.
Compare this serious wealth creation with two events on Thursday.
Fletcher Challenge announced it was ending its letter stocks as they had not unleashed the shareholder value in the company's businesses. This is the same reason they were set up.
On the same day, barely known listed timber processor Paynter Timber announced it was selling its timber assets and going into technology.
Paynter Timber would become E-Force, a consumer focused information portal on the internet.
But it is not just technology stocks which are the likely winners in the 21st century. Other top sectors will be those which provide services and products to the burgeoning oldies.
This includes the likes of healthcare, pharmaceuticals, financial services, leisure and travel.
AMP Asset Management investment strategist Paul Dyer says these trends are not suddenly happening - they are an extrapolation of current trends.
While investors need to modify their portfolios to keep up with the trends some things still stay the same. Investors who follow the tried and true rules for wealth creation will prosper.
For capital growth an investor has to focus on shares and property. For liquidity and income it is bonds and cash.
Investors can actively pick the stocks and properties they think will achieve their goals. For those who neither have the inclination or the capital to follow that route the choice is managed funds.
Money: Invest.com in the new millennium
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