‘Time billionaires’ are hungry for risk — will it be their undoing?

{"text":[[{"start":6.48,"text":"Are you a time billionaire? To make the grade, your life expectancy must total at least 1bn seconds. At around the age of 50, the average Briton is relinquishing that status. The typical 16-year-old, in contrast, has a fat wad of over 2bn seconds still to expend."}],[{"start":23.16,"text":"We owe the idea of time billionaires to Graham Duncan, co-founder of East Rock Capital, a US investment business. His coinage was a riposte to the media’s obsession with dollar billionaires. He wanted to “shift the frame for young people”, he says."}],[{"start":37.32,"text":"I get it. Time is a valuable asset with which the young are generously endowed. But it wins them little validation in a world obsessed with material assets, particularly money. Instead, youth is often defined by censorious oldies as a series of deficits: of motivation, qualifications, experience and cash."}],[{"start":56.4,"text":"Better, Duncan figured, to view the young as possessing huge opportunity budgets. With this in mind, I have drawn a chart accounting for life expectancy in seconds, a more generous multiplier than years."}],[{"start":null,"text":"

"}],[{"start":67.88,"text":"If you plotted the net assets of the average Briton on top of this, it would mostly curve upwards as life expectancy decreased. Wealth is one of the things we can swap time for as we age, albeit that most of us start with billions of seconds and few of us finish with billions of pounds."}],[{"start":83.2,"text":"Starting early has much to recommend it, even if investments are perforce small. The first reason is that stock market returns are bumpy on an annual basis but produce steady, inflation-beating gains over extended periods."}],[{"start":96.16,"text":"The second reason is that returns snowball the longer you leave them to earn further returns. After 10 years, compounded returns piling up at a conservative 5 per cent a year account for only two-fifths of an investment. After 20 years, they make up almost two-thirds of the increased total. After 30 years, they represent three-quarters of the much larger fund."}],[{"start":116.76,"text":"Last month, Luke Templeman and Galina Pozdnyakova of Deutsche Bank Research Institute took a smart look at how younger investors view their extended opportunity for making money. The title of their report — “Time billionaires want more risk” — referenced Duncan’s framing device."}],[{"start":131.34,"text":"A proprietary Deutsche survey showed that investors below the age of 35 are hungry for higher returns. Risk appetite diminishes with age. It is also lower among Britons than Americans."}],[{"start":null,"text":""}],[{"start":144.08,"text":"Generalising wildly, I would suggest that Americans expect the future to deliver opportunities, while Britons like me fear it constitutes a threat to their wellbeing. As for risk-seeking by younger investors, it is logical, broadly speaking, given the capacity of multi-decade investment to damp volatility and exploit compounding."}],[{"start":164.28,"text":"The authors asked whether artificial intelligence is amplifying this natural tendency. Investors are inevitably turning to AI for help with asset allocation, fund selection and scenario modelling. “Even if the output is imperfect, the interaction can create a sense of fluency,” the report notes. “People are more likely to take action when a complex problem appears legible.”"}],[{"start":185.22,"text":"The problem with investment advice from chatbots is that “you get very different results depending on the tone you use”, Templeman says."}],[{"start":192.46,"text":"I verified this using Copilot, which more usually features in my working life in the role of a well-meaning but mildly stoned research assistant. When cross-checked, a sizeable minority of the data it finds for me turns out to be irrelevant or fictional. The chatbot is then apologetic in a “Gee, gosh, shucks” manner."}],[{"start":211.64,"text":"Copilot happily endorsed my plan to invest a quarter of my life savings in bitcoin as “within the bounds of a rational, high-risk strategy”. It had only taken a couple of bullying prompts from me to reverse the chatbot out of initial finger-wagging disapproval."}],[{"start":226.72,"text":"That left me with doubts concerning the enthusiasm of younger investors for AI-managed investment, so does the tendency of chatbots to go rogue."}],[{"start":235.56,"text":"Admittedly, Deutsche Bank asked survey subjects whether they were likely to enlist a “generative AI-managed solution” to manage their investments. To me, this implies guide rails imposed by human-machine minders. With such bracketing, around 80 per cent of Americans and 60 per cent of Britons under the age of 35 said they were “very likely” or “somewhat likely” to entrust their nest eggs to AI."}],[{"start":null,"text":""}],[{"start":258.54,"text":"Of course, some would not bother to pay for a specialised AI-managed solution with inbuilt fail-safes. They would enlist whichever generic AI agent came most conveniently to hand. Their instructions would be vague and riddled with all the cognitive biases we private investors are prey to."}],[{"start":277.32,"text":"AI is just a tool, so its safety depends on the common sense and training of the user. A skilled craftsperson deploys an electric saw to make nice furniture. A bungler uses it to cut their fingers off. The problem, as it applies to AI, is something financial regulators are already wrestling with."}],[{"start":295.84,"text":"As for time billionaires, I am aware the concept may unsettle older readers who, like me, are operating on time budgets now measured in mere millions of seconds."}],[{"start":305.68,"text":"We can take some comfort from another concept originated by Graham Duncan: the division of time into “narrow” and “wide” categories."}],[{"start":313.58,"text":"The first is liable to involve irksome duties. The second is spent in life-enhancing activity. Active retirement allows us to maximise wide time and minimise the narrow kind. That is some compensation for losing time billionaire status."}],[{"start":328.52,"text":"Jonathan Guthrie is a journalist, adviser and author of ‘The Truth About Investing’. jonathanbuchananguthrie@gmail.com"}],[{"start":340.2,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786523140_2425.mp3"}