The next generation’s own approach to finance - Jim Duffy comment

The baby boomers are probably luckier, where wealth generation and timing are concerned, than any other group in the last 200 years.
The problem lies in the whole notion of property ownership as a route to wealth, says Duffy. Picture: Jon Savage.The problem lies in the whole notion of property ownership as a route to wealth, says Duffy. Picture: Jon Savage.
The problem lies in the whole notion of property ownership as a route to wealth, says Duffy. Picture: Jon Savage.

The stars have aligned in so many ways to help them create and sustain wealth. But this particular bubble is about to come to a grinding halt as what has actually been created is in a dangerous place. And the Gen Y and Z-ers know it.

If we take a step back and look at it all for a second, we can see how the whole financial and economic system has been set up to create the perception of wealth, while making some hugely rich. Let’s take the housing market for a starting position.

Hide Ad
Hide Ad

House prices at present in the likes of Dundee, Edinburgh, East Dulwich and Peckham are at all-time highs. Two Scottish cities and two south London districts tell a story of just how well the baby boomer generation have had it. Only this week, a young family member of mine went to view two-bedroom Victorian ground-floor conversions in these two London suburbs.

Read More
Crucial need to map out a safe path for Scotland - Jim Duffy comment

He experienced queues of buyers lined up to put offers in. And the offers? £600,000. Yes, 600 grand for a two-bedroom garden flat you could hardly swing a cat in. And the same is happening in Edinburgh. A decent flat in the likes Haymarket or Chester Street is selling at top dollar with a string of offers hitting the estate agents’ inbox as soon as the closing date is confirmed. All good, eh? Well, not so much.

In fact, what it means is the young’uns are having to mortgage themselves to the hilt just to get on the property ladder. Cheap mortgages with discounted periods allow them to afford bigger offers. But the result is they are paying a hefty price for properties that sold for a tenth of their current values 20 years ago.

This puts a strain on them, there is no doubt. Those at the top of the ladder and moving up who bought as the property boom started in the 1970s and ‘80s have made a mint and, in doing so, have created a monster.

Property ownership

Banks, lenders, insurers, estate agents and the whole machine of property ownership and moving up the ladder are only doing what human nature in a capitalist society would do. It’s not their fault. The problem lies in the whole notion of property ownership as a route to wealth and security.

But alas, the kids today in Scottish secondary schools will need that wealth passed down as they will never be able to put down the massive deposits required to get that first flat. The system has therefore broken down.

Next up is stocks and shares. The stock markets are now fairly mature. The Dow Jones, Nasdaq and FTSE 100 are booming away in the safety and comfort of central banks printing money to fuel and pump-prime share prices. All-time highs for the Nasdaq. Alphabet, Amazon and Apple are hundreds of dollars per share.

We are no longer talking about billionaire owners of these companies, but trillionaires. It’s topped out and trying to find value is really tough. So, how do we think the young’uns feel about this? Will they start a standing order every month to pound cost average buy Amazon shares? Nope… It’s too rich for them now, so they are focused elsewhere.

Hide Ad
Hide Ad

No longer interested in over-inflated stock prices, they are seeking their wealth from the new crypto markets that are still emerging, but truly gaining global traction. These markets are now their version of the old stock markets that rely on central banks to keep them afloat. Afloat to make sure baby boomers still feel wealthy and the whole financial experiment has worked.

I feel there is change in the wind. The perfect storm of over-inflated stocks, with a hyper-inflated housing market has probably reached its limit of growth as the barriers to entry are too high now to create meaningful wealth in the medium term.

The teenagers, 20 and 30-somethings know this. They perceive we have had the good times. And their version of wealth creation will be very much different to that of the baby boomers. It has to be, as the current system is again leveraged and not truly supporting itself.

Jim Duffy MBE, Create Special

A message from the Editor:

Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.

The dramatic events of 2020 are having a major impact on many of our advertisers - and consequently the revenue we receive. We are now more reliant than ever on you taking out a digital subscription to support our journalism.

Subscribe to and enjoy unlimited access to Scottish news and information online and on our app. Visit now to sign up.

By supporting us, we are able to support you in providing trusted, fact-checked content for this website.

Joy Yates

Editorial Director



Want to join the conversation? Please or to comment on this article.