In Norway, Everyone Is A (Paper) Millionaire
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With most governments struggling to balance their budgets by taking money from residents through higher taxes, it is refreshing to hear about one that is doing just the opposite. On Tuesday, January 9th, the world woke up to the news that every Norwegian, right down to the newest born, was worth a million Kroner or about $164,000 USD - at least on paper. This was not a cruel joke on the residents but a reality that has come about thanks to the financial savvy of the country's government.
The path to this amazing prosperity began in 1969 when oil was discovered in the North Sea, off the coast of Norway. This helped transform the Nordic country into the world's seventh biggest oil exporter and second largest natural gas exporter. But instead of squandering away the hefty taxes (78%) collected from oil refiners, in 1990, the government decided to tuck away the surplus wealth into a sovereign fund. Called Government Pension Fund - Global, it was established to secure the future of all its residents.
Thanks to astute investments, soaring oil prices and the fact that annual withdrawals from the fund are restricted to 4% of the fund's total asset value, it has now ballooned to a massive 5.22 trillion kroner or $828.66 billion. Divide that wealth amongst the approximately 5,096,300 Norwegians and everyone is suddenly a millionaire!
This is the first time the diversified fund which owns about 1% of the world's stocks, as well as bonds and real estate from London all the way to Boston, has reached this milestone. However, the people of Norway are not clamoring to get their hands on the wealth. They are perfectly content to be paper millionaires and let the funds grow, so that the future of their children and grandchildren can be secure.
Abu Dhabi in the UAE has a similar fund that is believed to be worth $627 billion. However, given that the true number has never really been revealed, the number could be a lot higher. The US State of Alaska has also accumulated $47 billion for its residents, who are already benefiting from it via an annual dividend distribution.
Resources: dailymail.co.uk,news.yahoo.com
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115 Comments
- TheBrainiacabout 6 yearsNevermind, this article is super old. Forget everything I said. Lol
- TheBrainiacabout 6 yearsGuys, if every citizen in Norway was rich. Then money would lose it's value. They are playing a risky game. Let's be glad things are the way they are.
- student1almost 8 yearsanswer for question 1: the government decided to put the taxes for the citizens in their bank account.
- sushi321over 8 yearswow
- Bobover 8 yearsI want it
- Lizzy .38over 8 yearslibby is a good
- libbyover 8 yearsl love my mum and curt
- nikukyualmost 10 yearsThat's so awesome but if everyone was rich the money would lose its value. Or maybe not. I'm not really sure...
- genius1326over 9 yearsYou are correct. That was what happened to Germany after WWII.
- nikukyualmost 10 yearsI'm not even good at monopoly :(
- dumbhumbugmum45over 10 yearsI have a friend that lives in Norway hes rich I want some of his money so he gave me 50k!