Why Capital Markets Are a Key to Prosperity and Financial Freedom

Larry Fink, the founder, chairman, and CEO of BlackRock, writes about the importance of capital markets in his annual letter to investors. According to Fink, capital markets have fueled growth and generated wealth for millions of people. He shares the story of his parents, who were able to retire comfortably despite not earning a high income, thanks to their investments in the capital markets. Fink emphasizes the importance of capital markets in providing people with financial security and retirement savings. He also highlights the role of capital markets in enabling countries to achieve prosperity and address economic challenges, such as funding retirement and infrastructure needs. Fink believes that capitalism is the best way to achieve financial freedom and improve the quality of life for people around the world. He concludes that the capital markets will be crucial in addressing the economic challenges of the mid-21st century.

Here is the letter:

Dear Investors,

At the beginning of each year, I write to you about the topics that I believe are critical to the world and BlackRock. This year, I want to talk about why the capital markets are essential to prosperity and financial freedom.

When I went over my parents' finances after they passed away, I was surprised by the size of their retirement savings. My dad had been an enthusiastic investor, and his investments had grown significantly over the years. My parents had not been in the top tax bracket, but their retirement savings were much more than expected for a couple with their income. The capital markets provided an avenue for their savings to grow, and this helped them retire comfortably.

The experience made me realize the importance of what BlackRock set out to do. We wanted to help people invest in the capital markets so they could have financial security and retire well, just like my parents.

I believe that participating in the capital markets is crucial for people who want to retire comfortably and securely. The capital markets have fueled growth and generated wealth for millions of people. They provide an avenue for people to save for their futures and ensure financial freedom.

The history of capital markets in the United States is brief but important. Traditionally, people relied on banks for their savings and loans. However, with the growth of capital markets, publicly traded stocks, bonds, and other securities became a new avenue for financing. This growth helped the United States rebound after the Great Recession, as described in my letter last year.

The experience also taught me a crucial lesson: countries need strong capital markets to support a strong banking system. I traveled to 17 countries last year and met with policymakers and heads of state. The most frequent conversation we had was about capital markets. More and more countries recognize the power of American capital markets and want to build their own.

But capital markets aren't just about providing an avenue for financing. They also help to generate economic growth and prosperity. For example, when people invest in a new house, it creates a multiplier effect because they need to furnish and repair the house. The capital markets can help countries achieve their economic goals, such as decarbonization and energy security.

In conclusion, I believe that the capital markets will be key to addressing the economic challenges of the mid-21st century. Countries aiming for prosperity don't just need strong banking systems – they also need strong capital markets. And I believe that capitalism is the best way to achieve financial freedom and improve the quality of life for people around the world.

Thank you for investing with BlackRock. I look forward to working with you in the years to come.

Sincerely, Larry Fink

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