I’m not as certain, my guess is that most 18yo won’t be that interested in what happened to the account in the previous 18 years, so they’ll just see the lump sum they can access.
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Not so sure. That is the beauty of it, it is a personal account. You can check all the times how much you got. And everybody likes his own money. Or at least most people.
Wow, I can buy a nice car or even a house if I don’t want to live with my parents any longer. Oh, no, a bear market did eat all that away! Wow, I’m back in the game. Won, now it is a Porsche and a nice house with a pool! And so on…
Well I doubt that the 18 yr old see more than 4-5K nominal (about 3K real) in their account if 1K was added when they were born.
So let’s be serious, they can buy a toy Porsche , a club membership with a pool or afford 3 month rent.
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Not sure 14yo are interested in accounts they don’t have access to 
but maybe I’m wrong. They might start checking it when they’re close to 18yo but then maybe they won’t like the volatility (if e.g. it’s down 10% or 20% from when they first checked, they might not be very interested in investing further in stock )
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5k. maybe that’ll buy a dominos pizza 
Or a couple of weeks of university.
Which makes a huge difference between the people born in a rich household, who can use the yearly 5k deductible and start their adult life with a projected significant portfolio, and those born in poorer ones, who can’t/won’t do so and start with just a few assets.
The difference with later tax deductible contributions, ala 3a, is that they are more affected by the person’s personal income and success in life, that can balance legacy wealth, while those pre 18 contributions are mostly solely related to legacy wealth.
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Are you guys aware that the VALUE of an entire countries Stock market was a matter of Stock Market Listing Ratio and Economic Growth. If more money is invested into the Stock market, this will certainly drive up the Price but not so much the value. Yes - more money in stocks means better refinancing conditions for listed shares, meaning a push from private to oublic equity… in combination with more zombie companies that dilute Stock market returns.
What does this mean? Additional money put in the Stock market pretty much equates to higher P/E Ratios and higher draw-down potential.
Implementing this will over the mid term not create more wealth… it will just introduce another way of indirectly re-distributing wealth; which would likely be towards the rich.
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If you didn’t materialize/sell it, you didn’t lose anything. 
If you lived in a bought house that you paid 1M for,
And went through a few years of housing crysis where its market value would be 500k,
Then recovered back to 1.5M,
But you kept living in it -
Would you still be speaking of it as if you “lost money with it”?
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Exactly, the wealth gap will remain just as big, or get even bigger;
And if everyone has more purchasing power, stuff will simply get more expensive to match it;
So nominally, no difference in the grand scheme of things. 
(Just the USD printer spending a bit more electricity)
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Of course I would. Book losses are losses! With the current mortgage situation in Switzerland most people would have lost their homes in the situation you describe. They probably still would pay off the debt while living under a bridge.
Stocks are even worse. Brokers normally don’t allow for that much leverage as with real estate as collateral, but the problem there lies in the psychology of the investors. They panic and sell. Always in the worst possible moment. I did survive only because I trusted my mechanical strategies and they told me to buy (on credit) when everybody was selling.
In both scenarios the losses are very real. They are real, even if they are “only” book losses.
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It is not that much compared to the market cap of the SP500. I think it is a maximum of 324 billion if each and every parent pays in during 18 years. Compared to the >52’000 billions of market cap the SP500 has that is like 0.6%.
The weight of index ETF is probably higher. And therefor they cause more of the problems you describe (zombies, cheaters, companies that go public just to get your money, high debt ratios, much too high valuations and so on). People buy companies with index ETF that they probably would not touch ever, not with gloves, if they would check them out.
Well, I disagree.
For me, only materialized losses are “real”.
Like the “book value” only starts being relevant once you put the thing on the market, and get the “real value” of it.
I explicitly said a bought (paid for) house, not mortgaged.
Again, if you don’t act/sell/materialize, you lost nothing.
Psychology around it is another topic.
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Agree to disagree.
For me it is actually the single situation where I make most money, but only because I use credit and buy when everybody is selling. But until then it hurts a lot to see many years of hard work just disappearing into thin air. If it doesn’t lucky for you… but you are an exception.
Rich people likely won’t add extra contributions, there’s much better option (eg 529 accounts are tax advantaged).
What if you sold it and crystallized the loss - would you say you lost something then?
Then what if you immediately bought it back again at that lower basis? Would you still say that you lost 50% or did you now make a 100% gain to cancel out that loss?
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Do you mentally split # shares vs amount of cash?
I think this is true but it’s not how most investors invest. Most people care about their Net worth. If it was 1 million two months back and it’s 0.5 million now, it is what matters to the investors.
Ideally what should matter to the investor is Cashflow
- what’s the cash flow from my assets
- Either the cash flow gets to me via dividends/interests/buy back
- Or cash flow gets invested in company to increase its future Cashflow
But I don’t think people look at their stock portfolio in same way as they look at their home. They should though. Buy an asset and enjoy the cash flow.
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