BIG DISCLAIMER: This post is sponsored by Allianz Global Investors. Do not proceed if you are allergic to sponsored content.
In the past few years, you might have heard an awful lot of politicians, commentators and recently YouTubers talking about a fourth industrial revolution.
It’s a potentially vague term, but in a nutshell, this is what it means:
- There will be a massive leap in scale and technology.
- This will be the fourth time in human history this happens.
- Many things will change.
Wait, fourth time? When were the first three times?
If you’re like us, you’d probably know of at least one industrial revolution:
The first one was in the late 1700s. This is the one where people managed to harness steam to drive engines.
Turns out there are two lesser-known ones.
The second revolution was when they discovered electricity, telephones, autos and mass production. Around 1870.
The third one was the invention of digitisation and computers. Around the 1950s. You’ve probably heard the term ‘digital revolution’ being thrown around a few times when you were a kid. Yup. That’s the one.
As for the fourth, it is believed we are already in the early phase of the fourth industrial revolution, with the underlying technologies already beginning to make their impact felt.
These include 5G, artificial intelligence, Big Data, robotics, Internet of Things and virtual reality (i.e the Metaverse).
So it’s new technology? Why is it a big deal?
As people living in a wealthy, developed nation, the majority of Singaporeans take for granted that we will fall on the winning side.
The big deal here is that everyone’s economic fortunes have the potential to change drastically, for better or worse.
In political revolutions – such as the French Revolution – change often took place quickly and violently, with dramatic results. The same applies to industrial revolutions.
But make no mistake. The reality is that every industrial revolution sees a shift that has big winners and big losers. Progress is not always equally distributed.
Think of the vast gaps of wealth between Jeff Bezos and Amazon’s median employee. Or the fortunes of John D. Rockefeller and the rank-and-file labourer who worked in squalid conditions.
Who stands to lose the most?
In an industrial revolution, new technologies are adopted en masse, and old technologies abandoned en masse. Folks whose jobs rely heavily on the old way of doing things will have their incomes disrupted.
Take for example, the Power Loom
During the first industrial revolution, the power loom came into existence. For the uninformed, this is a device that is used to weave cloth and tapestry.
This power loom enabled clothing to be made cheaply and quickly. This meant that clothes became relatively affordable. Jobs were created for workers who got hired into this new industry.
However, the power loom also displaced artisans. Craftsmen whose skills took years to hone suddenly found themselves being replaced by machines operated by workers with just a few months of training.
Similarly, in this fourth industrial revolution:
Likewise, driverless cars may displace drivers.
3D or 4D printing may are already starting to displace certain manufacturing jobs.
Artificial Intelligence may is already starting to displace some white-collar workers.
Technology makes the winners of the industrial revolution win big. And the losers lose even bigger.
What does it mean for you?
There are two ways people make money: Labour and capital.
The former involves exchanging hours for money. Working for money.
The latter is about putting your money to work for you. Investments.
Labour
Upskilling will be the norm. Expiry dates or not, qualifications are already de facto expired a couple of years after you graduate. Same with any software you learn on the job. We know it’s tough but this is the world we live in now.
Even if your industry doesn’t seem to be going through a tech reshuffle, observe which roles are being offshored to reduce cost. These jobs are prime candidates for disruption; it is possible your company is using cheap labour as an interim solution for an expensive, untested tech solution.
Prepare for at least one career change. Entire industries can collapse during an industrial revolution. Individual job roles are not safe. Our advice? When the time comes to make the jump, you don’t wanna overburden yourself with an inflated lifestyle. Hold enough cash to stay afloat.
Capital
We’ve only one piece of advice here for you: invest optimistically but also cautiously.
This is a sponsored post for funds related to the fourth industrial revolution, but it’s important that we remember our investment fundamentals – to invest broadly and to have a diversified portfolio.
Yes, it’s tempting to put all your money into a shiny new tech thing that promises to change the world. But these things do have their risks. 2021’s wild crypto adventure should have taught you that already.
The idea is to consider adding some potentially disruptive tech into your core portfolio.
If this sounds familiar to you, it’s because we’ve talked about it before. It’s the good ol’ core-satellite approach.
Like it or not, change is coming
If the idea of a fourth industrial revolution sounds scary, that’s because it is.
Periods of rapid change are often unstable, uncertain and without sufficient resources, unpleasant. There is no denying that.
The good news is that compared to many other countries, most Singaporeans are in a better position to ride the waves of change.
Many – but not all – of us enjoy a long list of privileges that we take for granted. Fast internet speeds. A strong currency. An investor-friendly environment. SkillsFuture credits.
But what is also true is that comfort breeds complacency.
Even if all the tools and resources for the future were neatly laid out in front of them, there will be some of us who’ll refuse to change.
That’s a pity, because survival doesn’t necessarily go to the strongest, smartest swiftest, fittest or even the richest.
Instead, when long-term periods of uncertainty are involved, adaptability matters. A lot.
To paraphrase a wise man: Life is an endless process of attrition. You change, or you die.
Stay woke, salaryman.
A message from our sponsor, Allianz Global Investors
The rise of the fourth industrial revolution impacts our lives in every aspect, from how our jobs may be redesigned, to where we’re putting our money in.
If you’re looking to invest to ride the wave of the fourth industrial revolution, consider complementing your existing core portfolio with Allianz Global Investors’ new thematic funds:
- Allianz Thematica looks at long-term capital growth with a focus on emerging technologies, such as next-generation energy, digital life and clean water and land investments
- Allianz Global Intelligent Cities Income looks at businesses with a stake in the evolution of smart cities and communities
- Allianz Global Artificial Intelligence looks at businesses that focus on AI, and its fund includes familiar names like Tesla^and Meta^
- Allianz Cyber Security looks at businesses related to cybersecurity, including Microsoft^ and Palo Alto^
To find out more about investing with Allianz Global Investors, visit here.
