The Gift that Keeps on Giving

Episode Transcript

Speaker 1 (00:00):
It's the Christmas shopping season, But somehow a forty year
old memory unrelated to Christmas popped into my head. The
other day. It was a staff meeting at my first
full time radio job. Company president flew in to introduce
this new government program called a four oh one K.
The company takes a percentage of your wages, matches it,
and places it in an account managed by a stockbroker,

(00:23):
growing tax free. The president of the company said, give talent.
It hurts well. In those days, the paychecks weren't big,
but somehow I had enough sense to give till it hurt.
My retirement whenever that comes will be a lot more
enjoyable thanks to that pain, and every year since, which
brings me to Christmas shopping season twenty twenty five. What

(00:45):
to get them? They have everything? What has value? Ideally,
you want to give a gift that'll gin up a smile? Well,
what gift does that? As a first time grandfather, I'm
reminded of this too. Giving some time misses the mark.
We think they'll like this gift because we like it,
But that doesn't work at Christmas time, which is the

(01:07):
season of giving, especially if the recipient is a newborn
My grandson is just over two months old. He's an
adorable baby. What else would I say? But has no
idea how much stuff he's gonna get this year. Some
of the stuff will be practical, which his parents will appreciate,
but most of it is just baby stuff. So success

(01:28):
is measured by how excited I'll be when the gift
is open. Let's try something else. Thanks to the President.
I've got a good idea. You know it, and you
know you'd like it, because even about Trump disliker Warren
Buffett likes it. It's called the Trump Savings Account. How
good is this? The President formally introduced a program last

(01:50):
week that would deposit one thousand tax dollars into the
individual accounts of every child born in this country between
January first of this year and December thirty first, twenty
twenty eight. Starting this July, anybody in the country under
eighteen is eligible to start a Trump account on their
own and put their own money in it, tax deferred.

(02:11):
It is a government sponsored iria, but unlike Social Security,
which will be out of money in six years, the
government will play the stock market, which over time has
been a very wise choice. For the last seventy years,
the S and P five hundred list of stocks has
delivered an average return of more than ten percent. Some

(02:33):
years it was twenty percent, some years it was zero percent.
But seventy years of ten percent. That's pretty good. That
one thousand dollars invested in two thousand and five is
now worth five thousand dollars tax deferred, meaning you only
pay tax when you take it out. But it gets better.
Start now, and by eighteen the trump accounts can be

(02:54):
used for college expenses or rolled into an IRA for
the kid. Keep that in it for another forty five
years and it's worth thirty thousand. But consider this magic.
Start with the one thousand, add one hundred dollars a
month until he's eighteen. At a ten percent annual return,

(03:14):
his account on high school graduation day will be one
hundred and twenty five thousand dollars, which pays for a
lot of college. But let's say he doesn't want to
go to college, just a trade school or keep that
high school diploma. If he leaves that one hundred and
twenty five k alone adds nothing to it, by age
sixty five, he'll have over eleven million dollars. That's pretty big. Snowball.

(03:40):
Huh big news. Last week, Michael Dell, who got rich
in computers, pledged a six point twenty five billion of
his own money into these Trump accounts for twenty five
million American kids under age ten living in zip codes
where the median household income is below one hundred fifty
thousand dollars. He'll start each one of those accounts with

(04:00):
two hundred and fifty dollars. Hell of us start to life?
Too bad? So few of us do it. The Federal
Reserve Bank did a customer survey found that six and
ten Americans are not in the market. No ira four
oh one K five twenty nine college savings plan, nothing,
biggest reasons I don't have the money and they say
they don't know anything about it. Can't do one hundred

(04:23):
dollars a month? Check your cable bill? How much you
spending on Netflix, HBO, Max Paramount plus Roku? How about
the phone? How many drive through a coffee three times
a month? Well, or I should say a month, three
a week and you're at one hundred bucks. Just think.
This really is the gift that keeps on giving and
makes both the giver and the receiver ecstatically happy.