How about an American Stakeholders Account?

[doc03]

I got this from James Carville's book "Had Enough". The US government gives every child born $6000. This would grow to more than $20000 at age 18 and $45000 at age 30 assuming a 7% growth rate. The program would cost $24 billion a year, the money could be used for education, first home or retirement. I was thinking you could even let the
parents deposit part of their earned income or child tax credits to the account and it would be better yet. This would be one way we could help the next generation and the country. After all at the present rate there will be no SS for them and they will probably want to send us baby boomers to death camps after they find the mess we have left them.

[muriel_volestrangler]

1. You're optimistic on growth

You need to consider the growth rate relative to inflation (really, inflation of what you want to use the fund for - in general, education and housing costs go up faster than the 'general' rate of inflation). Good investment might achieve this - but would not be guaranteed. For a safe investment, you should reckon on roughly the rate that government bonds return - maybe a little more, because you might risk a little on the stock market, on the grounds that over several years the ups and downs can be evened out a little.

Effectively the government would need to borrow now to fund this. Doing this to invest in government bonds is pointless and circular. Doing it to invest in the stock market is dangerous - it's pumping money in to artificially inflate it. If the money were given to some new project that would actually have a real return there might be a purpose to it - if you can think of something that the government will run better than the commercial sector.

[doc03]

2. It sounds like a better idea than sinking hundreds of billions into Iraq

It would be similar to an IRA or 401K where you could invest into whatever you would feel safe with. I think the 7% figure is the average increase in the stock market over time. This comes from James Carville's book. The idea is credited to Ray Boshara from the New American Foundation as described in the Atlantic Monthly in January 2003. I am certainly no finantial expert but it sounds like it would sure help a lot of low income people get a head start in life.