I liked Abundance by Derek Thompson and Ezra Klein because the theme of the book is about doing stuff rather than scarcity.
The big ideas from the book revolve around the fact that there’s too much red tape when it comes to things like housing, energy, healthcare and technology development.
If nothing else, the idea of making it easier to build more housing is something I’m completely on board with.
But there was one area of the book that was lacking — the stock market.
I thought I could help these guys out and give them the Ben Carlson Stock Market Abundance Plan.
Here’s the deal: Roughly 60% of American households own stocks but the top 10% owns 87% of the market. We need more people involved in the stock market.
I have a two-part plan to make this happen.
Just half of all Americans have savings in a retirement plan such as a 401k. We need to fix that.
The Thrift Savings Plan is the defined-contribution retirement plan for federal government employees. It’s the best 401k plan there is.
There are just five individual fund options, all extremely low-cost1 index funds — U.S. large cap, U.S. small cap, international, aggregate bond, and U.S. treasuries. Plus they have targedate funds made up of these fund options.
The funds are managed by BlackRock and State Street.
Why is this plan only available to government employees? It should be open to anyone with a job. Many employees have no access to a 401k.
Part one of my abundance plan is that anyone who earns a paycheck and pays taxes has the ability to access the TSP retirement plan. In fact, you should be auto-enrolled and forced to opt out of the plan if you don’t wish to contribute.
Part two of my plan involves a little more long-term thinking.
I want $10,000 from the government into a Roth IRA account for every child born in America today.
Don’t worry — there are stipulations on this account.
It has to go into the stock market or a targetdate fund. You can’t touch it until age 21. And you can only take the money out at that age to pay for things like student loans, a down payment on a house or to start a business. Otherwise you have to let it ride in the market.
After 21 years at 8% growth, $10k turns into $50k. Over 30 years, $10k turns into $100k. Just think about how helpful that would be to young people trying to get their footing in life.
It would ease the burden on parents. It would allow young people to take more risks. It would make it easier for them to start a life after school.
Would it be expensive? Yeah but it’s an investment in our future. Are there things I haven’t accounted for in my analysis? Sure.
But I don’t want the stock market to be just a place for the upper echelon of society.
The top 1% owns 50% of the stock market. The bottom 50% owns 1% of the stock market.
We should make it easier for more people to save for retirement and invest in the stock market.
That’s my abundance plan.
Michael and I spoke to Derek about the book, how it relates to the current environment, trade wars and more:
Podcast version here:
1The small cap fund costs 5 basis points. All of the other funds are less than 4 basis points.
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