Universal Basic Income Would Make It Possible For Poor People To Invest In The Stock Market — And That Would Be Good For Everyone.

Share on facebook
Share on twitter
Share on linkedin

For decades now those who are invested in the stock market have seen unprecedented gains — and that’s a good thing. The creation of the stock market is one of the greatest wealth-creating mechanisms ever devised. But, how is it affecting our society? We pose here the question, “Does more need to be done to create an environment where poor people can also invest in the stock market?”

Certainly, anybody is legally allowed to invest in the stock market. But, just because someone has a legal right does not mean someone has the means to do so. Simply stated, to invest in the stock market one must have two things: 1) discretionary income; and 2) the ability to lose. If you don’t have these two things, you probably aren’t investing any assets into the stock market. But, what is the net effect on society when we allow this to be?

The net effect on society having a segment that is able to invest in the market and a segment that isn’t is the driving force between the division of social classes and asset wealth. As the number of people who do not have the discretionary income and/or ability to lose are not included in the greatest wealth creating machine ever created — only driving greater wealth accumulation to fewer and fewer. But, how much growth is really in the market?

On January 1st, 2011 the NDAQ was at $24.48. At the end of December 2020 it’s at 129.14. A return of +427.5%.

If you had the means to invest $100,000… That investment is now worth $527,500; growing $427,500 (58,965 minimum wage work hours [1,474 min. wage work weeks] [28 min. wage work years])

A simple $100 monthly investment would now be worth around $25,000 — or about 86 full-time minimum wage work weeks.

On January 1st, 2011 the S&P 500 was at $1,327.22. At the end of December 2020 it’s at 3,727.04. A return of +180.8%.

If you had the means to invest $100,000… That investment is now worth $280,800; growing $180,800 (24,938 minimum wage work hours [624 min. wage work weeks] [12 min. wage work years])

On January 1st, 2011 the DJI was at $11,891.93. At the end of December 2020 it’s at 30,335.67. A return of +155.1%.

If you had the means to invest $100,000… That investment is now worth $255,100; growing $155,100 (21,393 minimum wage work hours [535 min. wage work weeks] [10 min. wage work years])

So the question remains: how would universal basic income affect our society, particularly through the lens of the stock market? By all accounts, everybody wins — even the rich.

Poor people, with a universal basic income, inherit a steady source of cash flow and therefore a discretionary income (albeit modest) and the ability to lose an investment without leaving themselves on the street. Perhaps more importantly, it gives them something a raise in minimum wage never can — time. Time cannot be bought. According to several studies maximum productivity is achieved with a 4 day work week; and decision making abilities diminish when people are acting out of a state of despair. If this is true creating an environment that maximizes productivity and minimizes the despair of its citizenry must, according to logic, be good for not just the individuals but also to the society at large.

Rich people always win… and that’s fine. Under a UBI plan, rich people get treated the same as poor people. However, the stock market is very simply a reflection of supply and demand. Currently, a large majority of market equities are held by a few rich people, and about half of our citizenry isn’t even in the game. If — according to financial physics — poor people were to allocate $100/month per person into the stock market, this would  greatly augment the demand side of the equation and, obviously, lead to an increase in the value of equities. They win too.

So who loses? To be quite honest, it’s hard to find someone who loses. The only people that should be against universal basic income (with respect to its effects on the stock market) are narcissistic psychopath that take pleasure in other people’s misery and suffering. But, maybe there’s something we missed.

Thank you for reading this article, we hope it was both fun to read and educational. Let us know what you think in the comments section below. Do you agree that a Universal Basic Income would be good for the markets, poor people, and rich people? Who would lose? Thanks again for your engagement and please, if you liked this article, share it with your friends.

Share:
Share on facebook
Share on twitter
Share on linkedin

If you enjoyed this article we think you’ll like this one too:
18 Stocks To Own In 2021

Sign Up & Save

ENTER TO WIN A FREE CALENDAR & get monthly e-mails with the best deals from us and our partners.