The Great Wealth Transfer of the 21st Century

As a Millennial, I’ve watched first hand as friends from high school and college have had to put off important life decisions, such as buying a home or starting a family. What we hear from older generations is that all you have to do is “get a real job” or “stop spending all your money on new cell phones and gadgets.” Every time, I cringe a little inside.

This isn’t an article to scream “Ok, Boomer” or create some generational civil war. However, it is a realistic look at three core issues that have stopped many Millennial and younger generations from starting to build generational wealth; along with three reasons why now is THE OPPORTUNITY to build something that’s life-changing for you and your family.

Obstacles for Building Wealth

Let’s just break down one simple fact: Millennials, as a generation, haven’t had the easiest time building wealth when it compares to generations beforehand. This article from Bloomberg describes how the oldest Millennials, who turned the big 4-0 this year (I’m literally only a few months behind them) have only acquired about 80% of the wealth that Boomer’s had gathered at the same age.

Let’s talk about some of the biggest issues, shall we?

Inflation

The great scourge of saving is inflation. For this article, we’re going to only use the Consumer Price Index, or CPI. If you don’t know what CPI is, check out this article from Investopedia, but in short it’s a weighted average of a basket of goods that consumers use on a day-to-day basis. 

Now, let’s be fair here, CPI isn’t true inflation. It’s only inflation on certain consumable goods. However, since it’s really difficult to peg real inflation numbers, let's just use the government's numbers as fact for this argument.

The reason I say let’s use CPI is because the Federal Reserve Bank of Minneapolis has this fun calculator that you can play with to find out how much a dollar used to buy vs what the cost is now.  Let’s play with it!

The oldest Millennials graduated high school and started entering the workforce in 1999-2000. Depending on which year you use, a dollar then would buy the equivalent of what a 1.63$-1.58$ would buy today. 

That means that 100$ you got as a graduation present is worth about 37-42$ right now if you put it in the bank. This doesn’t even fully account for the money printing that’s happening in 2020 and 2021 in response to the Covid pandemic, since inflation is a lagging indicator.

Poorly Structured Investment Products and Regulation

Eight years after graduation, Millennials had to deal with one of the worst economical events since The Great Depression. This was caused ultimately by an overleveraged housing market for subprime mortgages, creating an easy environment for people to have access to cheap cash without being fully qualified to repay. These were packaged and sold as derivatives, which were very lucrative to the banks… until the underlying notes started to default. 

You can learn more about 'The Great Recession' here.

As a Millennial during this time, I can tell you that major financial milestones that most generations did around age 26 (namely buying a house and/or starting a family) became increasingly more difficult as jobs were scarce and regulation necessary to aid in recovery stifled availability of credit.

While the crisis officially ended in 2009, it took years to financially recover from previous pre-recession highs in Real GDP growth, unemployment levels, and even the stock market. 

Debt

Consumer debt has plagued generations post Boomers. According to the Educational Data Initiative, Gen X and Millennials carry 1.1 Trillion of the 1.57 Trillion dollars of total student loan debt.

It’s not only the amount of debt that limits a person's ability to invest and grow wealth. It’s the difficulty in which it takes to discharge student loans in Chapter 13 or 7 Bankruptcy. It requires proving that you would be put in “undue hardship.” There is no set standard in bankruptcy court and it’s up to the court’s discretion to discharge student loans.

What’s even worse is that if you have a cosigner, like a spouse or a parent, loans then go to your cosigner to settle. 

Why Is Cryptocurrency the Best Opportunity to Participate in Wealth Transfer

It’s not all doom and gloom for building wealth for earlier generations. In previous generations, especially Baby Boomers, all you needed to do was buy a home and own some stocks. Cryptocurrency is OUR OPPORTUNITY to build generational wealth that seemed unattainable for most of our lives. Let’s explore some of the reasons why we’re about to see the greatest wealth transfer ever, and how it will shape the new world economy.

Boomers 

Boomers and the Silent Generation are retiring and expiring (see what I did there…) These generations have the greatest accumulation of wealth in society. This leaves the largest wealth to transfer in Gen X, Millennials, Gen Y, and Gen Z.

Wondering how much this is? I was too… so I looked it up. According to CNBC, Boomers control approximately 53% of the wealth in the US. What’s even more shocking is that Millennials only control 4.6%. This equates to 68 Trillion dollars in value that’s ready for redistribution.

New Financial Assets

If you’re reading this article, there’s a solid chance you already know about digital assets such as Bitcoin, Ethereum, and Cardano. Not looking at cryptocurrency projects from a philosophical standpoint, and just looking at them as an asset class, YOU have an opportunity to start to accumulate when they are at their lowest costs and highest volatility.

What does this mean for you?

Let’s look at Tesla for a moment, as an example. In 2012, Tesla was trading for approximately $5.38 per share. It was revolutionary in the design and capability of the electric car industry. 9 years later, it trades around $1,000 per share.

Amara’s Law, attributed to the famed researcher Roy Amara, notes the following:

  “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

Cryptocurrency, as a technology, has only started to awaken and we’re not entirely sure what it’s fully capable of doing yet. However, even with its relatively rudimentary use cases now, cryptocurrency has revolutionized property ownership and instant settlement. What happens when you extrapolate that over time. Raoul Pal likes to call this the “Exponential Age.”

Small Guys and Early Entry into Markets

What makes cryptocurrency so unique to most investments is that you can get in before large, institutional investors. While these investors are vital to the continued success of our market, they have deeper regulatory constraints on what they can invest in.

This provides YOU the opportunity to buy assets BEFORE big banks and corporations, in most instances, can allocate money into the space. Obviously, this is starting to change as governments are starting to set rules on how cryptocurrencies are treated as assets; but ultimately this is a major concern on why we aren’t seeing massive adoption yet.

How MELD Helps You Succeed

MELD does something amazing, if this is your first time checking us out. To use an earlier example, imagine being around in 2012 and buying a lot of Tesla stock. Most retail investors wouldn’t have a large portfolio and may find it harder to line up credit to pay expenses and leverage assets to get access to funds. In most cases, the easiest way to access gains from stocks is to sell them.

MELD allows you to hold onto your assets while getting access to liquid funds in a relatively painless and easy system. What makes MELD even more unique is that you hold onto your private wallet keys using smart contract capabilities.

Now, you might be asking yourself, why should I take a loan against assets? Isn’t debt bad?
Believe it or not, we have an amazing article about why you would borrow and what are the benefits of borrowing against your crypto vs selling it here.

Conclusion

Look, none of this is financial advice. Everyone has their own goals and risk tolerance. What you do need to know is that the deck is stacked against you in the current financial system. While there is about to be a major wealth transfer, you need to be prepared to capitalize on it so that it doesn’t simply erode away due to things that are totally within your control.

Won’t you come grow with us?