In 20 Years Time…

…I have no idea what will happen.

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I’ve been thinking about opening a NISA account for my granddaughter. Seems like a no-brainer really: 800,000 yen a year can be paid in and she won’t owe taxes on dividends or capital gains. She’ll get control of the account when she’s 20, by which time it should be throwing off enough passive income to support her or supplement her income.

Or so I believe, based on extrapolating current reality out twenty years. If nothing changes, 800,000 yen a year for sixteen years with compound interest is likely to be worth between 15 and 20 million yen. She’ll probably be able to receive around 50,000 yen a month in dividends alone at that point. Pretty cool, especially as the principal should keep growing.

The thing is, my perception of technological trends (automation, artificial intelligence, distributed manufacturing, genetics, etc.) leads me to believe that 2032 is going to be very different from today. It is quite possible that the same rules won’t apply.

Will we have a basic national income here in Japan? Will the tax system be the same? How about stock ownership?

On the other hand, if I think back 20 years, 1996 wasn’t so different from today. Okay, we have smartphones now, but I can’t think of any other major differences in daily life. Maybe 2032 isn’t going to be so different after all.

Either way, I still think a Junior NISA account for my granddaughter seems like a good idea.

How about you? Are you going to open Junior NISA accounts for your children? Do you think the world will be greatly changed in twenty years’ time?

2 Responses

  1. The monthly payout of 50000 yen for your granddaughter in dividends sounds like a ‘sure’ thing from the way you’ve written it here… how are you going to achieve this?

  2. Hi Michael
    It’s a very simplistic calculation with lots of assumptions. First, I plugged the numbers into this calculator: http://www.moneychimp.com/calculator/compound_interest_calculator.htm
    (800,000 a year, 4% growth, 16 years to grow)
    That gives an ending figure of just over 18 million yen. 4% is less than the historical average growth for stocks.
    Assuming dividends of 3% or so, she would get just over 45,000 yen a month in dividends.
    Although rogue AI might have wiped out humanity by then, thus rendering my rough calculations useless 😉