One of the best ways to get rich involves three simple steps. First, identify a trend that could create huge market opportunities. Second, buy the stocks of the leaders in this trend. Third, hold the stocks long enough to profit.
There are actually quite a few trends that you could choose from. Artificial intelligence (AI), cannabis, digital payments, gaming, and virtual reality are some examples. But there's one unstoppable trend that I think is most likely to make you rich over the next decade.
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Time is on your side
The unstoppable trend to which I'm referring is aging. You've no doubt heard about the huge numbers of baby boomers reaching retirement age. The last of the nearly 72 million baby boomers in the U.S. will turn 65 in 2030. The U.S. Census Bureau projects that older adults will outnumber children under age 18 by 2034. That's never happened before in American history.
This isn't just a U.S. phenomenon. In Europe, one out of every five people is already at least 65 years old. The number of seniors is expected to rise dramatically over the coming decades.
Throughout Asia, the number of individuals aged 65 and older is projected to grow significantly. In particular, South Korea and Singapore should see a sharp increase in senior citizen populations by 2030. The percentage of seniors in China, the world's most heavily populated country, is anticipated to rise from 11.7% in 2020 to 15.9% by the end of the decade.
For investors, time literally is on your side. The global aging trend will create massive market opportunities.
How to potentially profit
The most obvious way to profit from aging populations across the world is to focus on healthcare. As individuals age, it will drive demand for a multitude of healthcare services.
For example, one out of every 10 surgical procedures is performed on a person aged 65 or older. As the senior population grows, this ratio will likely increase. Unfortunately, the potential for risks during surgical procedures also rises with age.
The ongoing trend toward aging should benefit Intuitive Surgical (NASDAQ:ISRG). The company pioneered the robotic surgical systems market. Intuitive's goal is to use robots to help standardize procedures and reduce complications. Its da Vinci system is commonly used for prostatectomies due to prostate cancer. The average age for the diagnosis of prostate cancer in men is 66.
Intuitive Surgical's opportunities aren't just limited to the procedures where its systems are currently used, though. The company has really only scratched the surface of robotic-assisted surgery. Intuitive continues to invest heavily in research and development to push the boundaries of how robots can be used in surgical procedures.
Of course, the need for more healthcare services will also swell the ranks of the Medicare system in the U.S. That presents a big opportunity for UnitedHealth Group (NYSE:UNH). It's the biggest health insurer in the country, with more than 14 million members in its Medicare Advantage, Medicare Supplement, and Medicare Part D prescription drug plans.
While aging is an unstoppable trend right now, you could also invest in two companies that are trying to hold back the aging process. Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Calico subsidiary has the ambitious goal of extending the human life span. Calico teamed up with AbbVie (NYSE:ABBV) to develop therapies that could help achieve that goal.
It's too soon to know if Calico and AbbVie will be successful. However, any significant progress could make both Alphabet and AbbVie even bigger winners than they're already on track to become over the next 10 years.
A smart strategy
Investing in these healthcare stocks (and tech stock in Alphabet's case) was a smart approach over the last decade. AbbVie and Intuitive Surgical delivered total returns of greater than 300%. Alphabet stock quintupled during the period, although its healthcare initiatives weren't a material factor in that performance. UnitedHealth Group provided a total return of more than 600%. Each of these stocks handily outperformed the S&P 500 index.
I think that Intuitive Surgical and UnitedHealth Group will be especially big winners over the next several years. However, there are plenty of other stocks of biotechs, pharmaceutical companies, and medical device makers that should benefit from aging trends and also be highly successful. Buying and holding these stocks over the long run is one of the most straightforward ways of getting rich over the next decade and beyond.
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December 24, 2020 at 06:01PM
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The 1 Unstoppable Trend Most Likely to Make You Rich Over the Next Decade - The Motley Fool
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