Mar 25, 2016

The power of compound interest: How to get a good universal basic income with zero pain

The power of compound interest is often enthused by financial planners and other financial experts.

Imagine your parents save $2000 for you when you were born, and the savings get 10% return a year.
By the time you reach 65 years old, your $2000 gift at age 1 day has become $1 million.

Good savings interest plus compounding over long years can turn a small sum into a fortune.

Now imagine the same thing happening at a country level.

Imagine a country puts aside a one-time savings of $2000 into a Special Citizen Dividend Fund now for every citizen it has, and earns 10% interest a year. In 65 years time, the country will have $1 million in the Special Dividend Fund for every citizen. A citizen dividend from the Fund will be huge.

There is absolutely no reason why any country cannot make a small payment now and, in return, get a huge Citizen Dividend Fund half a century later. If you don't think you will live long enough to enjoy the citizen dividend then, think of your children and grandchildren. This is a gift from you to your children and grandchildren.

2 comments:

  1. What a great idea - though governments and misinformed citizens will have to go beyond concepts such as "austerity is the way", "there's no money so let's cut taxes!" and "poor people are just lazy." What I mean is, the main objections to new paradigms such as Citizen Dividend Fund and Universal Basic Income are "moral": deeply ingrained in our culture is the idea that you shouldn't "get something for nothing." I don't know what it would take to change this mindset.

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  2. Thank you for your comment. It takes time. The good news is many people around the world are talking about a universal basic income or citizen dividend. There are also many cases where people get a citizen dividend.

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