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The U.S. population is getting grayer. Learning how to profit from an aging demographic can be a minor form of consolation set against time’s merciless tick-tock.

Playing population trends is a foundation for many investable themes — for example, the population boom in the developing world and the rise of its consumer class. The so-called gray wave in the U.S. will continue to grow, too. Currently, 13 percent of the U.S. population is 65 or older, according to U.S. Census data. By 2030, that number will rise to 18 percent of the nation as 10,000 baby boomers retire every day up until then. They’ll need new knee replacements, along with an array of new and old drugs as they age.

Investors will benefit from this graying of America, and exchange-traded funds are a diversified way to target the trends associated with an aging demographic.

Neena Mishra, director of ETF research at Zacks Investment Research, pointed to pharmaceutical ETFs. They’re slated to prosper as demand for drugs grows in the U.S., as well as in emerging markets.

One reason Mishra likes pharmaceutical ETFs is because they have a more stable profile than biotech ETFs, while offering growth potential.

Mishra recommends the PowerShares Dynamic Pharmaceuticals Portfolio ETF (PJP), the largest in the group, with $1.13 billion in assets. Big U.S. drug companies, including Johnson & Johnson (JNJ), Merck (MRK) and Eli Lilly (LLY), are among the top holdings, but there are also some biotech firms, including Biogen Idec (BIIB) and Amgen (AMGN).

“This ETF isn’t plain vanilla,” Mishra said. “It selects and weighs companies based on targeted criteria, like earnings.” The strategy has worked well, she said, noting that the ETF is up 12 percent so far this year and 40 percent in the past one-year period.

SPDR S&P Pharmaceuticals ETF (XPH) is another Mishra pick. It has a mix of big, medium and small pharma companies. Its top holdings include Questcor Pharmaceuticals (QCOR), Allergan (AGN) and Akorn (AKRX). “Most of the holdings are known companies, though,” Mishra said. This ETF also has a lower expense ratio than the PowerShares ETF — 0.35 percent vs. 0.63 percent for Powershares Dynamic Pharmaceuticals. And it has performed slightly better this year, up 15 percent.

Morningstar (MORN) fund analyst Robert Goldsborough said diversified health care ETFs are a more diversified way to gain exposure to drug companies. The Health Care SPDR (XLV), which has near $10 billion in assets, has drug companies Johnson & Johnson, Pfizer (PFE) and Merck among its top holdings, along with insurance plan providers, like UnitedHealth (UNH). Goldsborough also highlighted the Vanguard Health Care ETF (VHT), which also has big drug company holdings.

How many people will need knee replacements in the next 10 years alone? The explosion is huge.

These funds are inexpensive and cover every part of the health care sector, too, including biotech, he said. XLV has an expense ratio of 0.16 percent; Vanguard’s VHT has an expense ratio of 0.14 percent. Returns for these ETFs aren’t as strong as for the more concentrated bets — not surprising, given the greater diversification across health care stocks. XLV is up 9 percent year-to-date and 24 percent in the past year, while VHT has slightly outperformed its peers in the past year with a return of 26 percent — at a slightly lower management fee.

For a more concentrated health care bet, Goldsborough likes biotech ETFs.

“There’s lots of growth and mergers and acquisitions in this niche,” he said. IShares Nasdaq Biotechnology Index ETF (IBB), which has more than $5 billion in assets, is worth considering, he said. It owns big biotech stocks, including Amgen and Biogen Idec, but “smaller upstarts sit shoulder-to-shoulder with big companies in this ETF,” Goldborough explained.

SPDR S&P Biotech ETF (XBI) is a similar ETF.

IBB has an expense ratio of 0.48 percent; the SPDR biotech ETF has an expense ratio of 0.35 percent. IBB is up 10 percent year-to-date and 42 percent over the past year, matching returns of the pharmaceutical ETFs. XBI has been the winner in recent history, up near 18 percent this year and 44 percent in 2013 — at its lower expense ratio of 35 basis points.

Biotechnology stocks have been hit hard in the past three months, “but there’s a bright future for biotech, since the world needs innovative therapies,” Goldsborough said, adding that he sees the biotech setback as only temporary.

Banking On Knee Replacements

To avoid the high-profile, high-risk biotech sector, Gary Gordon, president of Ladera Ranch, California-based Pacific Park Financial, recommends lesser-known, cheaper sectors, like medical devices. The only downside: There is just one ETF offering — the iShares US Medical Devices ETF (IHI) — which holds medical device companies, including Medtronic (MDT), but also has big pharma company Abbott Laboratories (ABT) among its top holdings.

The reason for owning this ETF is clear, as far as Gordon is concerned. “How many people will need knee replacements in the next 10 years alone?” Gordon said. “The explosion is huge.”

IHI has an expense ratio of 0.46 percent. Year-to-date it is up 10 percent and close to 29 percent over the past one year — though that could be considered pricey for an ETF that has an expense ratio three times that of the broadly based health care ETFs with a similar recent performance profile.

Gordon also likes bond ETFs as people age and pursue yields. One pick is SPDR Nuveen Barclays Capital Municipal Bond ETF (TFI), where bonds are held to maturity. “That tactic takes away the risk of bond price collapses,” he said. Its expense ratio is 0.23 percent. This ETF has doubled the 2 percent return of the iShares Barclays Aggregate Bond Fund (AGG) so far in 2014.

Lastly, consumer discretionary ETFs are worth looking into, said Mohit Bajaj, director of ETF and portfolio trading services at New York City-based WallachBeth Capital.

“As people age, they have more disposable income,” Bajaj said. PowerShares Dynamic Leisure & Entertainment (PEJ) holds big hotels, restaurants and travel company stocks. Bajaj also likes Market Vectors Gaming (BJK), which holds big gaming stocks, along with hotels. “It’s the main gaming ETF out there,” he said.

PEJ has been the less volatile of the two consumer ETF plays — flat this year and up near-20 percent over the past one year — while BJK is down 9 percent this year, though it has returned 17 percent over the past one-year period. Net expense ratios are similar: 0.63 for PEJ and 0.65 percent for BJK. Las Vegas Sands (LVS) — BJK’s top holding — is the only gaming company among PEJ’s top 10 stocks.

Even though aging is a sure thing, investing in the gray wave is uncertain and faces a short-term headwind that all stocks are contending with. “With the stock market at all-time highs, you can’t just plug into a theme and everything’s fine,” Gordon said, though he does believe that over the longer run, some ETFs will benefit.

Remember what your parents told you to do when you were bored? That’s right: Go outside and play. Not only is this an important lesson for kids –- finding ways to have fun using only your imagination –- it’s free. It’s easy today to get caught in the trap of spending money to entertain our families, whether it’s buying an smartphone app, spending money at the mall or the movies or buying new toys. These are fun treats every once in a while, but keep it to a minimum and remind your family of the great outdoors.

1. Play outside

Libraries are fighting to stay relevant in today’s technology-centric society, so why not help them out while you save money on books and entertainment? Library cards are still free, and your taxes pay for these resources. Borrow books as well as DVDs of movies and television shows and cut back on your digital purchases and on-demand subscriptions.

2. Use your library

Before you protest, this is definitely a major lifestyle change if you already use a smartphone regularly, but worth considering if you want to save a lot of money each month. Opting for a phone without Internet access –- or even a pay-as-you-go phone, if you rarely need to use it –- will cut costs; it might offer the added benefit of unplugging from constant connectivity.

3. Skip the smartphone

Carpooling became popular during a countrywide effort to save gas in the 1970s, and today there are signs of resurgence with technology that allows commuters in the same area to easily find each other. If you don’t have the option of public transportation, search in your own community for carpooling groups or talk to your coworkers to figure out a schedule.

4. Carpool

Commit to skip the expensive salad bar or lunch spot across the street and pack a bag lunch at least three or four days a week. This can add up to a lot of money saved over time. 

5. Pack a bag lunch

While you don’t need to use a pencil and paper to write down every purchase as was done years ago, the routine of tracking everything you buy can be an important habit for more careful spending. If you’d prefer to stay digital with this tactic, use Excel, Google (GOOG) Docs or an online tool that collects your daily transactions and sorts them for you.

6. Write down or track everything you spend

This concept is no stranger to those who lived during economically challenging times years ago; if you didn’t make enough money, you simply found another job to boost your income. Today, while job availability, familial roles and time commitments differ greatly from back then, you can still look for additional income opportunities. Freelancing is one option for those that need to spend time at home with family; you can also find seasonal opportunities in retail.

7. If you need more money, get a second job

Take a tip from earlier generations and make your contributions to savings accounts the same, rather than adding more or less depending on other unexpected expenses. This might mean rethinking the amount you put away each month; even if you lower it, more regularity over time can have a bigger impact.
8. Prioritize your saving

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