Create a pensionfund for your newborn

Children
1

The other day I’ve read an article about a suggestion from an invest manager in US to get a birth right for each individual born in US in this case of having a fund open in a low cost Index fund of 6.7K$ (not remembering the right figure).

He foretasted that at the time of pension you will be millionaire and therefore (you do not really need to have a financial social system to support your old generation over the life time.

I was thinking to do it for my kids . What do you think? → not really thinking in pension time but as an investment and teaching finance to them. They could maximize or withdraw for some events in their life whenever will be old enough.

Is it make sense to invest frequently or just setup and forget?

3 Likes
2

Why not? 5k to start with, and then all the Kindergeld if you don’t need it.

Might also be an opportunity to teach your kid when it gets older. E.g. my parents only crated a savings account for me… which was about 20k at the end. Maybe it would have been smart to invest some of that money.

4

My parents did this. I never asked about /got told about performance but they gave me the cash instead of the fund and then gave me part of my sisters money because hers performed better.

But this was a mutual fund, so high TER.

5

This is worth thinking about: how to make it so that it doesn’t alter siblings’ relationships if we have several children and the money we invest for them performs differently?

I really love the idea but hadn’t thought about this particular factor. I’d probably keep money on the side to make them even and use the opportunity to talk about sequence of returns and other topics.

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6

So, turning 6.7K into 1M in 65 years? Does the calculation take inflation into account?..

7

No without. 65years@8%

He is the infamous Bill Ackman, here the Forbes story
In fact he is not quite that bad, there are some interesting youtube videos of him.

@Broth I like the idea, I was thinking in doing the same for my kids

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8

Ackman’s idea is really cool. The US government would invest $26B (actually for free) each year and everybody is millionaire at 65. It’s magic! :smiley:

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9

Then only let them withdraw it at a certain monthly limit. Otherwise they‘ll blow it or maybe by then US americans can actually spend mindfully and without debt?

10

I think the real catch in this plan is that everybody will be a millionaire in 65 years - even without the plan :slight_smile: !

11

for me it is not a matter of be millionaire. Main reason is to simplify social finance and cost for the state.
with a million if you withdraw 3.5 % (35000) you have a basic needs cover in the majority of the countries.

12

Of course you withdraw the monthly respective amount fof your 3.5% or 4% of your total amount.
1.000.000 → 35.000 for the year → 2916 monthly

13

Only problem with the whole thing is, is that 8% is a really unrealistic return assumption.

Real average return of global equities is 5.2%. That means a factor of around 27 on the initial investment. So you can expect around 180k with a 6.7k investment.

14

The question is the tool, I do not wan tot use for the fees IB, may degiro make more sense here.

15

I strongly believe that it is still cheaper for the state invest this amount on birth that pay the whole staff.

16

Probably you mean “the whole stuff”.

Anyway: not only it’s cheaper, it’s free! The Fed buys 80 billion US debt per month.

17

Good news, that’s what QE is doing :slight_smile:

18

Yes, this is one of the best ideas to solve retirement issues

19

And then before we know it the state becomes the majority shareholder of all traded companies :grin:

20

When you look at the cantons’ finances, you see that they are way richer that they claim, thanks to their investments. Think about the cantonal banks, energy companies, Grand St-Bernard tunnel, Salines suisses, Sel Fin Invest etc.

21

I already opened a thread about this. I think the amount was 12k not 6k. Also I was wondering how to build this as a startup. You don’t need much infrastucture, since you just have to put the money in the system and that’s it.

VIAC and company should build that. Maybe with the help of the confederation that will make it tax free or something.

1 Like