Regarding the tax "rebate" of 2008:

Regarding the tax "rebate" of 2008:

I am investing in my grandchildren.  My $1200 will be put into a IRA for their retirement.  They are 5 and 3 years old.  In 65 years they will be 68 and 70.

Do the math.  By the way, a journalist once asked Albert Einstein what the most powerful force in the universe is.  He didn't answer atomic energy or the like.  He answered "compound interest". 

The math:  10% per year in mutual funds, times 65 years, equals 490.  (the formula is 1.10 ^ 65) And 490 * 1200 is $588,000 and this amount is in "today's dollars" (adjusted for inflation, as far as one can now project).

That amount, $588,000 is a nice nest egg, and if then invested in 5% Treasury bonds (as one should do when retired), would provide a yearly income of $29,400. 

In other words, this government give-away of $1200 would basically pay for the Social Security payments for my grandchildren when they retire. 

So instead of giving it away, it should be invested by the Feds, and used to eliminate Social Security taxes.  Social Security is now a "pay-as-you-go" scheme, and that is giving us trouble now with the baby boomer generation retiring. 

Baruch Atta


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