Since the pandemic, we've seen two separate economies emerge. They're moving in different directions. One is thriving... while the other is struggling.
We call this the "K-shaped economy." And it was one of the biggest topics in finance and economics last year...
Folks in the higher-income portion of the economy are doing incredibly well. They've seen their wages rise. And more important, their assets have grown. These folks are much better off today than they were five years ago.
Lower-income Americans have experienced the opposite. Their wages haven't grown as fast. They haven't benefited from the stock market boom. And inflation crushed them during the post-pandemic era.
Most people believe the K-shaped economy is an income-disparity problem... They say that some people make a lot while others don't make enough. That's a compelling idea politically – but it doesn't explain what's happening.
In America, we're seeing a K-shaped economy for a single reason...
One group of Americans owns assets... and the other group doesn't.
Now, there's a way to ensure your kids and grandkids belong to the asset-owning portion. And acting on it is the most important thing you can do for them this year...
A New Opportunity to Get Ahead
It's not politics. It's economics. This divide is all about owning assets and having them work for you – or not.
If you're in the asset-owning category, chances are you've done darn well over the past five years. And that's almost regardless of your personal income or employment situation. Asset growth has been so strong that it has dwarfed the pain of inflation.
It's another story for those who don't own assets. For them, it's almost impossible to get ahead.
The simplest way to fix this problem isn't through political jockeying. We just need to move more folks into the asset-owning category.
And now, thanks to one piece of legislation, there's a new opportunity to jump-start asset ownership for members of your family.
It's called the Invest America Act. It became law as part of the One Big Beautiful Bill Act last year – and it went into effect on January 1.
The Invest America Act allows you to open a tax-deferred investment account for anyone under the age of 18.
For the pilot portion of the program, the government will also fund accounts belonging to children born between January 1, 2025 and December 31, 2028 with $1,000.
These accounts are a type of individual retirement account ("IRA"). The difference is that traditional IRAs are mostly off-limits for minors, since you must have income to fund one.
By contrast, these accounts are open to all children. And just about anyone can fund them up to the $5,000 annual limit. They're the perfect way to make your child or grandchild an asset owner right now... and help them join the upper portion of the K-shaped economy.
I'm sharing this because I believe setting up your children and grandchildren for long-term financial success is one of the most important gifts you can give them...
Investing is all about putting your money to work for you. The longer you're able to do that, the better off you'll be. You want compounding to work in your favor... And that means starting early.
How I'll Set My Kids Up for Success
Everyone's situation is different. But here's what I plan to do for my two young daughters, aged 8 and 4...
I'm going to prioritize maxing out each of these accounts ($5,000 a year) for at least the next 10 years. Assuming an 8% annual return, they'll each have about $72,000 saved a decade from now.
That might not sound like much... I'll have contributed $50,000 to each account. The funds will have grown by less than 50%. But compounding will have only begun to work in our favor.
From there, my girls will have roughly 45 years until retirement. And that's where the magic happens...
Over that time, those $72,000 accounts will compound to roughly $2.3 million.
For just $5,000 a year for a decade, I can effectively fund each of my children's retirements. That's incredible.
Again, each situation is different. But if you're reading this, you're likely an investor who wants to make your money work for you. And if you've got children in your life, you probably want to see them in the upper part of the "K."
That means taking advantage of these new accounts is the most important thing you can do for your children and grandchildren in 2026.
While you can open one right now, funding doesn't begin until later this year. In the meantime, figure out your contribution plan... Maybe you can't max out multiple accounts each year, but even small contributions will grow dramatically over decades.
If you can only contribute $2,500 a year for the next decade, the account should grow to nearly $1.2 million. Even investing just $1,000 per year for the next 10 years would mean a final balance of nearly half a million dollars.
The point is, a small investment now will lead to life-changing returns in the future. Invest now so your children will be able to thrive in the future.
This simple step is how you ensure your kids or grandkids are in the upper part of the K. And I urge you to take advantage of it.
Good investing,
Brett Eversole
Further Reading
"You don't need $1 million to start investing the right way," Keith Kaplan says. The stock market isn't just for the ultra-wealthy... It's a great way for the middle class to build their wealth, too. All you need is a small stake and a bit of confidence.
"You must learn to 'know yourself well' in order to become a better investor," Dan Ferris writes. There are two different approaches to investing... And while both have pros and cons, all successful investors know which one is the best way to manage risk.