My kids sat with heads together on the stairs, eyes intent on a phone screen. Coats and shoes forgotten, they watched some YouTuber perform a mashup of all the hit songs from 2020.
The artist was undoubtedly talented, serving up a catchy three-minute dose of auto-tuned happiness.
By video’s end, I experienced a dawning realisation. I hadn’t recognised the hit songs. Not a single one.
While I waited impatiently for my kids to get ready, I thought about that. Long ago I had been into music.
Radio providing constant background noise in the car, while studying, or working in the shop.
Attending concerts every week at the university bar. One of those iconic venues that domestic acts went out of their way to play while touring the country. Sneaking in while underage. Later, paying at the door.
Piling into a car with a handful of mates. Driving three hours each way to the nearest big city, where we could watch the international acts play. On school nights we would race the dawn to get back in time for class or work. Weekends would often see us dossing on the floor of random group houses after a concert.
Years later I had moved to London.
Dive bars in Camden. Watching up-and-coming acts trial new music and take audience requests.
Shepherds Bush Empire, where I would watch bands play their first or last gig of a tour. The former would usually be an amazing performance, artists bursting with enthusiasm for the adventure ahead. The latter were rarely much good, the show representing the final thing standing between the touring band and Heathrow airport.
Brixton Academy. Earls Court Arena. Hammersmith Apollo. Royal Albert Hall. Wembley. Once storied names on the back of concert tour t-shirts, associated with legendary performances of world-famous acts. Later becoming places I frequented, watching those performances live in person.
Surprising my lady wife with a trip to a small venue in a nowhere town, located halfway around the world, where her all-time favourite band had reformed for a one-off charity gig. Their first performance in a decade.
At some point, life happened and my interest in music fell by the wayside.
The radio replaced by an iTunes library full of existing favourites and known quantities.
Life as a professional meeting attendee brought to an end listening to music at work. Surviving interminable conference calls every day meant the last thing I wanted to do was wear headphones away from the office.
The cacophony of computer games, noisy toys, and television at home was not worth competing with.
Live music became a distant memory as the price of babysitters and concert tickets, or the higher toll of obtaining a leave pass, meant the cost-benefit equation no longer added up.
Over the years a few new additions had made it onto my playlist. But not many.
Somehow I had turned into the modern incarnation of my own father. Childhood memories of him tinkering in his shed, massacring lyrics as he tunelessly sang along to a “golden oldies” AM radio station.
Left behind as times changed and fashions moved on. Not noticing, or more likely simply not caring.
I glanced up at the wall of family photos. An eclectic assortment of awkwardly staged group shots and more natural candid pictures. Births. Graduations. Weddings. Milestones mixed with family holidays.
Some ancient history, featuring faces long gone but for the most part not yet forgotten. Others more recent, happier times of socialising and fun in the sun during those halcyon pre-COVID days.
It occurred to me that the style of clothing and haircuts favoured by my grandparents remained constant throughout. Young and fashionable just after the war. Greying and weathered by the time I got to know them. Aged and wrinkled in the last photos they featured in.
Looking closer, I noticed my now elderly mother had worn her hair the same way for 40+ years. The long flowing locks of her youth a casualty of parenthood, abandoned in favour of a low maintenance bob. Never looking back.
My father had experienced a similar transition. Mutton chops and flares giving way to the sensible haircuts and business suits of an ambitious man on the rise. For the rest of his days, polo shirts and dress trousers were his casual uniform of choice.
I was startled out of my reverie when one of my lady wife’s champagne bottles jumped off the top of a bookcase. Fortunately for her, it hit me before the floor. Less fortunate for me.
The lockdown kitten looked down smugly from its perch behind the bottles. Blue eyes gloating as he contentedly chewed on something black and vaguely familiar.
I grabbed the closest throwable object, my favourite work boot, to hurl at my feline foe. Then thought better of it, surrounded as he was by glass bottles containing liquid escape.
It was only then that I noticed the innersole from my boot was missing. High out of reach, the thieving lockdown kitten grinned as he happily gnawed a hole in it. Bastard!
I looked from the boot to an almost-forgotten photo taken some twenty years ago. Younger me smirked back. Lean. Fit. Confident. Still believing anything was possible. No signs yet of grey hairs or wearing his beer.
That was where the differences stopped. Younger me wore boots identical to the ones that the lockdown kitten was destroying. I couldn’t help but chuckle when I observed the jeans and top I wore in the photo were similar in style to the outfit I currently had on.
It appeared that along with musical tastes, my fashion preferences had also frozen during my early twenties.
After I reassembled my boot, we dawdled along the river for our daily escape from lockdown. The boys bickering about some computer game they had been playing. I tuned out, my mind wandering back to those snapshot perspectives.
Frozen in time
I wondered if our approach to managing money followed a similar pattern? How much of our outlook is framed by the way the world looked in our early twenties, then unconsciously frozen in time?
My grandparent’s generation, experiencing the great depression as children followed by half a decade of war, were conservative and risk-averse. A subsidised mortgage for returned services personnel was the only debt they ever took on. Jobs were for life. Few people attended university.
Investing was perceived as risky. The preserve of the rich and the foolish. Barriers to entry were high. Fees were even higher. The most exotic financial product a mere mortal might have entertained were a simple annuity sold by a life insurance broker, or a term deposit held at their local bank.
Retirement was what happened to people no longer physically able to work, shortly before they died. Funded via savings, a means-tested state pension, and the generosity of family.
My parent’s generation, experiencing interest rates in the mid-teens and inflation nearly as high, had a different perspective on debt. Owner-occupier mortgages were offered on a 2.5x earnings multiple, but the value of money was perceived as halving roughly every seven years. Better to be an investor than a saver. Credit cards were used, but paid off in full to take advantage of the 55 day interest-free period between billing cycles.
Jobs were for life, though that was about to change. University was free. Graduate numbers soared. As did the pay gap between thinkers and doers.
Actively managed investment trusts and managed funds charging high fees were commonplace. Later, the general public would gain exposure to individual stocks via the 1980s privatisation trend. Becoming a landlord was perceived as a proven route to wealth. “Safe as houses”, and all the expenses were tax-deductible.
Only a third of workers had access to a defined contribution occupational pension, the rest still relied upon a combination of savings, the state pension, and family. Pension holders had little say in how their funds were invested. A few defined benefits pension schemes did exist, but even back then they were perceived as operating an unsustainable investment model.
Retirement was something looked forward to. House paid off. Kids raised and gone. Time to live the good life, free from responsibility and obligation. Never imagining their offspring may fail to launch, or that retirement might actually consist of working full-time as the unpaid carer of their grandchildren.
My generation experienced comparatively low unemployment and interest rate levels. The beginnings of the internet, with the dotcom boom and subsequent bust. House prices surged, busted, surged again. Mortgages at 4x multiples of the primary household income earner, and insane loan to value ratios. Landlording remained a viable route to wealth, still incentivised via the tax system.
Consumer credit was everywhere, with many succumbing to the siren song of “buy now pay later”. University graduates often started their careers financially underwater, as tuition fees were reintroduced to reduce the volume of graduates entering the workforce.
Stock market investing was affordable. Active funds were managed by rockstars. “Beating the street” via stock picking and timing the market was the order of the day. Low-cost passive index tracker funds existed, but were not yet widely available. Pension contributions were mandatory in some parts of the world, encouraged in others. Fees remained high and choices limited. Out of sight, out of mind.
The policy focus for state pensions shifted away from the narrative of a well-earned reward after a lifetime of paying taxes, towards providing a social security safety net for those who had failed to adequately provide for their own financial future.
How might my sons’ perspective be framed today, if viewed through a similar lens?
Living through a major economic dislocation, as Brexit and COVID tag team to create uncertainty and disruption. Merely a decade after the last “worst economic downturn since the great depression”. Observing vast wealth created in between, during the largest bull market in history.
Mortgages at 4-6x household earnings. Property prices at 10x or more that amount, requiring a deposit beyond the reach of many without some major help from the bank of Mum and Dad. A level of debt that would prove ruinous to service at the interest rates experienced by any of the previous generations.
Tax and social policy have brought to an end (for now) the domestic residential landlord gravy train. In many parts of the country, the numbers simply no longer work. Investors now need to seek opportunities in other asset classes, or overseas.
Tuition fees drop graduates into an ever more globally competitive job market, with debt levels more commonly associated with mortgages in days gone by. True, those debts are low interest and on generous terms, but debts they remain. Once a rare achievement, today degrees are table stakes for a comfortable white-collar life working indoors without the need for heavy lifting.
Investing in stocks has become both free and ubiquitous. Self-managed pension funds are popular, allowing pension holders to invest for their financial futures however they desire. Passive index trackers have become essentially free, as on many different fronts the investor has become the product. Many occupational pension providers continue to restrict choice to expensive and underperforming actively managed funds.
The state pension remains. For now. Whether that will still hold true in 50+ years time, when my kids are approaching what we today consider pension age, is anyone’s guess!
By the time we arrived back home, I had concluded that my kids would be just fine despite all the uncertainty. Certainty only exists in hindsight.
They would figure things out, just as their ancestors before them had done.
If the photos on the wall were anything to go by, then despite our dated fashion sense and dubious musical preferences, we had all successfully lead lives that were often happy and content.
Now conscious that I too had been frozen in time, I decided I should review my preconceived ideas. If my perceptions of Avicii, George Ezra, and Imagine Dragons being “new” acts no longer holds true, will I discover similarly dated beliefs embedded within my financial approach?
- Georgetown University Law Center (2010), ‘A Timeline of the Evolution of Retirement in the United States‘
- Investopedia (2021), ‘Stocks Then And Now: The 1950s And 1970s‘
- Nielson, L. and Harris, B. (2010), ‘Chronology of superannuation and retirement income in Australia‘, Parliament of Australia
- Ravikumar, B. (2018), ‘How Has Stock Ownership Trended in the Past Few Decades?’, Federal Reserve Bank of St. Louis
- Land Registry (2021), ‘House Price Statistics‘
- Office of National Statistics (2021), ‘Unemployment rate (aged 16 and over, seasonally adjusted)‘
- Yahoo! Finance (2021), ‘S&P500‘