The new plan to create a stock market portfolio for every child in America | Hacker News Reader

The new plan to create a stock market portfolio for every child in America

cnbc.com

15 pointssmaili19 comments

Doesn't it increase inequality if the children of highly paid tech employees also get double the amount in their investment account compared to those born from poor parents?

That feels like it's not aligned with the original idea of giving all children an investment account.

If you want a classless society, that's literally the definition of communism according to Karl Marx.

This is capitalism.

I didn't express a preference in either direction. Just noted that this program is presented as a way to increase equality and give all children equal opportunities, while their actions seem to do the opposite.

So the folks who own all the stocks want the government to bid up their assets?

Yes, just like with the 401k. Get pretty much every working individual in America heavily invested in stock assets by default. During even a reasonable market it’s a win win win for everyone involved. Companies make more money, people get high returns on their money, employment is higher and the government doesn’t have to guarantee anyone’s pension. The downside is an extended bear market can collapse the entire system.

It's definitely a win for the financial industry. They make way more in fees than they ever did from the pension funds. I would love to see the evidence for the statements "(non-financial) companies make more money", "people (broadly) get high returns on their money", and "employment is higher".

Nah, if I've learned anything, it's that the money printers will turn on at the first sight of major trouble and everyone (some, more than others) will pay with inflation.

This is another ponzi system like social security, that only works with an evergrowing population. These are not sustainable long term.

Also real estate with zoning laws and subsidized fixed rate 30 year mortgages in addition to social security and the stock market

There's nothing inherently unsustainable about social security. If FICA tax revenues don't keep up with benefits, benefits can be cut to make up for the shortfall. If you haven't noticed, due to our still-falling life expectancy, we keep having to move armageddon day back. I think there are many in high places that worry insolvency may never come.

It is unsustainable in its current form. Of course you can cut benefits, raise taxes, raise age, etc to extend it for however long it makes sense. But it was designed for an evergrowing number of taxpayers, who'd support those before them due to strength in numbers. But as the tax burden grows, more and more people are going to be against it. I don't expect the majority of Gen Z will ever see a penny of it. I'm not sure I will, either.

If Gen Z never sees a penny from Social Security, it will be because of the loss of political will to protect Social Security as we know it. Which would only happen if this continuing misinformation campaign convinces the younger generations that they will never get anything from the program.

Social security can literally go on for centuries, just fine, as long as there is political will to keep it going.

this obsession with using the market like a savings account really is a ineptly vetted plan and pure americanism

You can always count on America to do the right thing after exhausting every other option.

Do you know of a better setup? I’m naïve on this front

Details matter. A lot.

Do you get to choose the portfolio provider? Can you move the account to a different provider? What obligations do the providers have regarding marketing, 3rd party access, etc? What types of investments are available? What funds are available? How much are their fees?

Anyone that has done the math has found that a lot of 529 plans have such bad choices and high fees that you are actually better off in a non-tax-advantaged Vanguard Total Market fund (note that Vanguard offers a good 529 plan).

I'm seeing two completely different ideas in this article. "A stock portfolio for every child in the US" and "funding stock market portfolios for children of employees of Microsoft/Uber/Dell/Zillow". Are we talking about doing both?

It's an interesting idea, but it seems less likely to work and more likely to be a ponzi scheme or other type of scam than something like welfare reform, declaring basic food and housing a human right, then backing that with some reasonable policies. Most people might have to sell theirs to goto college or buy a car to drive to their first job I imagine. It's shivering with "K-shaped recovery" vibes.

At least, I'm confused about what problem it's attempting to solve here. Maybe it's not intended to solve a problem.

Capitalism's equivalent of a crack dealer giving the first taste for free.

That said, sounds interesting. Gives kids a huge headstart for time in the market, builds financial literacy, provides broad inflows into the market pumping asset prices. Gives the next generation skin in the game.

If we accept the premise that market participation is a good thing, then this does seem to be, on balance, beneficial.

Sounds like a plan to offset the massive withdrawals Boomers (or their heirs) are about to do (just like the opt out vs current opt in 401K), with the added bonus of the managers taking a nice 1%-2% off the top.

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