The idea is based on the "Baby Bonds" initiative. The proposal suggests that the federal government provide a one-time $1,000 seed investment for every child born in the U.S. during a specific timeframe (proposed as 2025–2028).
How It Works?
Automatic Enrollment: Every child born to a U.S. citizen would be eligible.
Managed Investment: The money is not given as cash to the parents. Instead, it is placed in a federally managed investment account (often tied to the S&P 500 or similar index funds).
Compound Interest: The goal is to let that $1,000 grow over 18 years through compound interest. By the time the child reaches adulthood, the fund could potentially be worth significantly more.