Several politicians have proposed giving each child born in the country a bond that matures after a certain period of time - a baby bond. The idea is to foster savings and start everyone off in the right direction. Thomas Kostigen from Marketwatch recently wrote an article against the idea, saying:
"Handing over a pile of money, in my mind anyway, is the last thing younger people need these days. Numerous studies have found there is a general sense of entitlement with the youth of today."
But the reality is that this type of wealth transfer may make the most sense for a number of reasons:
- The baby boomers are gobbling up all of the entitlements in this country. Someone born today stands about as much chance of collecting social security as they do winning the lottery. Why not give them a little something.
- Increase the age at which the money can be widthdrawn to 25 and you get rid of issues of youth and irresponsibility. How many of us could have used a nice chunk of change to start a business, get an advanced degree, etc?
- The money will force young people to check statements and will give them a sense of worth and responsbility.
- It's an equitable way of helping everyone.
The money isn't going to prevent anyone from working. I mean it's not going to be enough to retire on. Sure some people will blow it. But you'll be surprised. The vast majority will put it to good uses.
Related Articles:
Daily Bonds Market Commentary by Sam Cass - Jul 17, 2007
Why Bank Stocks May Be A Better Than Bonds Right Now by Sam Cass - Jul 24, 2007
Bull or Bear Market - Asset Allocation is Important by nidhi - Aug 14, 2007.
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