America’s $13 Trillion Blunder: A Costly Investment Misstep
Alright, let’s talk about something huge—trillions-of-dollars huge. Imagine missing out on a $13 trillion payday just because of outdated financial habits. Sounds ridiculous, right? Well, that’s exactly what’s happening in the United States, and it’s got financial experts shaking their heads.
David Friedberg, an American entrepreneur, recently pointed out that the U.S. has been making a massive financial blunder for over six decades. The country, home to the world’s largest and most powerful economy, has been dumping trillions into low-yielding government bonds instead of higher-return investments like stocks. The result? A lost opportunity worth an eye-watering $13 trillion.
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The culprit here is America’s Social Security system, which controls about $2.5 trillion in assets. This fund, known as the Old Age and Survivors Insurance Trust Fund (OASI), has been stuck in the same investment strategy since 1941—putting all its money into U.S. Treasury bonds, earning a modest 4.8% return. Meanwhile, the S&P 500, one of the world’s best-performing stock indexes, has been compounding returns at around 10.5% per year. If that money had been invested in the S&P 500 instead of government bonds, the U.S. retirement fund would be sitting on a staggering $15.1 trillion today. That’s enough to make every American a major shareholder in the country’s biggest companies.
Now, before you think this is just theoretical, let’s look at Australia. Unlike the U.S., Australia’s superannuation funds have been aggressively investing in a diverse portfolio, including stocks, foreign assets, and high-return ventures. Today, Australia’s super fund pool has grown to an impressive $4.1 trillion. In fact, Australian funds own more American stocks than the U.S. Social Security fund does. That’s right—Australia has done what the U.S. hasn’t, and they’re reaping the rewards.
Even the Australian government’s Future Fund, which is supposed to be conservative, made a 12.2% return last year by investing heavily in global equities. Compare that to the U.S. strategy of playing it safe with bonds, and it’s clear why Australians are having the last laugh.
So why hasn’t the U.S. changed course? Well, history plays a role. The Social Security system was established after the stock market crash of the 1920s, making caution a top priority. But times have changed, and sticking to an outdated strategy is costing Americans dearly.
The big question now is—will the U.S. keep making the same mistake, or will it finally follow Australia’s lead? Because if there’s one thing worse than being too cautious, it’s realizing too late that you’ve left $13 trillion on the table.
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