Most investors are familiar with dividends, but few are familiar with a little thing called a “demographic dividend.” In some ways, though, it can mean just as big — if not bigger — of a payout for investors long-term.
The Population Reference Bureau describes the demographic dividend as the “accelerated economic growth that may result from a decline in a country’s mortality and fertility.”
While many think a large youth population and overall growth are indicators of strong potential, the opposite is actually true. As birth rates fall, a smaller slice of the population is dependent … and having fewer people to support can accelerate economic growth.
The key, though, is timing. Even a large working population will eventually age, again increasing the dependent population, as is happening with baby boomers here in the U.S.
Luckily, there are plenty of countries that still are in the dependency downtrend necessary for growth, meaning they should hit the sweet spot in the next couple decades. And you can invest in that growth via exchange-traded funds. Take a look: