Dear Friends,
It seems to me, one of the biggest differences between a rich person and a poor person, is their knowledge of investing. If a poor person comes into a few hundred bucks, he or she has no idea how to leverage that into more money, so they spend it on frivolities. A new handbag, TV or part for the car, and the rest is spent on having a good time. That can be considered an investment in the good will of their friends. Then the money is gone and the grind goes on. The wealthy person knows how and where to invest the money to turn it into continuing profit. That skill in and of itself is the driver of wealth or poverty. The problem is knowledge… and a financial product that suits the poor. I propose a financial product, that the poor not only would understand, but would love to invest in.
Most people on the lower end of the social stratum are held there by circumstances, lack of opportunity and ignorance. Many are just plain lazy. There are few ladders available to them anyway. Anything that purports to be a ladder is often an anchor. Because a poor person cannot be enriched out of poverty. Why do you think so many people who win the lottery and become overnight millionaires are dead, drug addicted or poor again, inside a year? The lottery is not a ladder but a catapult. Give the average person a ladder and they will climb. It is in our monkey like nature. The monkeys at the top of the tree might not like it, but oh well, suck it up Bonzo. A simple to understand financial product that suits the needs of the poor and working class would quickly become that ladder people need.
Robert Kiyosaki says, the difference is, the poor buy liabilities while the rich buy assets. How many people put hours of labor and money into fixing an old car, only to have to fix it again, next week? If a working person tells you they are going to quit smoking, how many of them then add, “and I’ll be investing the money I am saving in…?” Why? Because there is no financial instrument that suits the poor. None that meets their need for immediate return. Someone struggling to pay the bills today doesn’t need a million in three decades, they need money now. An investment for a poor person, or a working person, needs to show immediate returns to be of any value to them whatsoever. Therefore, a product designed specifically as a ladder for the poor, must have an immediate return.
A sufficiently good (and simple) product would sell itself wouldn’t it? Just tell a poor person about it and they will be interested in trying it, rather than buying a ball of cocaine, next time they come into a few hundred bucks. Once it works for them, they will tell their friends, (who will already be jealous) and the demand will increase exponentially. By word of mouth not expensive ad campaigns with dubious results. A wise financial firm would understand the deep value of tapping into the vast under served wealth of the poor. Helping grow that pool of wealth would not only provide a ladder for the poor, but enrich the firm that had the foresight to offer such a product, terrific wealth for the shareholders, employees and executives. That product is Capitalist Social Security.
Capitalist social security would be a financial instrument that invests only in the safest dividend paying companies and bonds, across industries and nations, an open ended ETF like product, paying a monthly dividend. Nothing shocking eh? The secret sauce is, the dividend will be half of the total dividend per share, the other half always direct reinvested, else all of it reinvested to grow their portion of the fund faster, at the choice of the shareholder. The second catch is, the principle can never be taken out, and is protected from parasites, like JG Wentworth. The perpetually growing dividend paid, for the life of the investor, their heirs, then theirs, and so on. The monthly return on a hundred bucks would be a few dimes, the first month. Added to, in a few decades, it could be the basis for retirement. Most will choose to get an increasing dividend right away… and soon they will grow to like passive income.
Sincerely,
John Pepin
