$500 for every child

[Kenny]

http://www.washingtonpost.com/wp-dyn...081901520.html

Living with his parents and older brother in a trailer park near Pontiac, Mich., he is part of an experiment called the SEED Initiative that is opening investment accounts for children, in an effort to ensure them a college education -- and teach their families the habit of putting aside money for the future.

...

Involving several hundred children in a dozen communities around the country, SEED (Saving for Education, Entrepreneurship, and Downpayment) -- a four-year experiment being conducted by local social service agencies, studied by researchers and paid for by several nonprofit foundations -- is a modest version of the ultimate goal.

Legislation has been introduced in Congress that calls for the government to open a KIDS Account of at least $500 for every baby born in the United States. And President Bush's first Treasury secretary, Paul H. O'Neill, has been giving speeches around the country, promoting an even bolder plan he has devised for children's accounts that he says would guarantee every American at least $1 million by age 65, eventually eliminating the need for Social Security.

An interesting idea, if it happened personal finance would need to be a required school subject from early on (it probably should be any way, but that is a different subject).

[Kenny]

Paul H. O'Neill, has been giving speeches around the country, promoting an even bolder plan he has devised for children's accounts that he says would guarantee every American at least $1 million by age 65

I having difficulty with this one. A one time $5,000 deposit at birth would need to earn average 8%/year to get to $1,000,000 by 65. I would like to know what his plan is that guarantee's it.

[krank]

and it's 8.5% and btw assuming average inflation of 2.5% per year this results in a whopping 200,000 in today's money at age 65, which assuming a 6% return in retirement gives us a whopping 1,200/month for 20 years in todays $s. If you assume a 6% return for the entire period and 2.5% inflation then we get a staggering $255/month. Great plan

[Guerilla poster]

Won't this just drive up the cost of a college education by increasing demand?

[Tim><]

Originally Posted by Guerilla poster

Won't this just drive up the cost of a college education by increasing demand?

Fewer successful applicants for financial aid should more than offset this.

[Tim><]

Originally Posted by Kenny

I having difficulty with this one. A one time $5,000 deposit at birth would need to earn average 8%/year to get to $1,000,000 by 65. I would like to know what his plan is that guarantee's it.

He must be investing in the Social Security trust fund.

[Libertarian Man]

Originally Posted by krank

and it's 8.5% and btw assuming average inflation of 2.5% per year this results in a whopping 200,000 in today's money at age 65, which assuming a 6% return in retirement gives us a whopping 1,200/month for 20 years in todays $s. If you assume a 6% return for the entire period and 2.5% inflation then we get a staggering $255/month. Great plan

I think that they're assuming that the person will be forced by the statist evildoers to contribute some of his own money to this retirement fund.

[krank]

Originally Posted by Libertarian Man

I think that they're assuming that the person will be forced by the statist evildoers to contribute some of his own money to this retirement fund.

probably

[Tim><]

Originally Posted by krank

and it's 8.5% and btw assuming average inflation of 2.5% per year this results in a whopping 200,000 in today's money at age 65, which assuming a 6% return in retirement gives us a whopping 1,200/month for 20 years in todays $s. If you assume a 6% return for the entire period and 2.5% inflation then we get a staggering $255/month. Great plan

2.5% seems extremely low.

[HangerAngler]

If every person in the country saved at a higher level, then there would be increased supply of funds for investment, resulting in lower yields, right?