A $1,000 "Trump account" seed investment could grow to about $5,600 by the time a child reaches 18, based on the S&P 500's average annual return for nearly the past 70 years.
President Donald Trump has formally introduced the new Trump accounts program, a pilot initiative that would deposit $1,000 into individual investment accounts for children born between 2025 and 2028.
The accounts are designed to build long-term savings through market gains — an approach supporters say expands access to wealth-building tools traditionally used by families who already invest.
Under the program, the Treasury Department's designated financial agent would initially create the accounts and invest the funds in broad U.S. equity index funds, such as those tracking the S&P 500.
Parents or guardians would later be able to transfer the balance to a brokerage firm of their choice, though the precise mechanics of the investment process and specific fund choices have not been fully detailed.
University at Buffalo finance professor Scott Laing said the key advantage over a standard savings account is the market's "compounding effect," where reinvested gains generate additional growth over time, KCRA reported.
Since 1957, the S&P 500 has delivered an average annual return of more than 10%, Laing noted — making a $1,000 seed investment potentially worth around $5,600 by age 18.
Laing cautioned the realized value could be lower depending on taxes and penalties.
KCRA reported the accounts convert into an IRA when the beneficiary turns 18, potentially triggering the standard 10% early-withdrawal penalty for distributions taken before age 59½, plus taxes — meaning the after-tax value could be closer to roughly $3,600 depending on circumstances.
The initiative is part of Trump's "One Big Beautiful Bill Act," with the government aiming for a July 4, 2026, rollout.
The seed money would be invested in low-cost index funds that grow tax-deferred, with income taxes due at withdrawal.
Families could add funds, with total contributions generally capped at $5,000 per year and an employer component expected to be limited to $2,500 annually.
The accounts are intended to get more Americans participating in the markets and building assets early, even as critics argue the benefits could skew toward families able to contribute the most.
Still, supporters point to a basic truth: A stake in the market can create a stake in the country’s economic future.
Billionaires Michael and Susan Dell on Tuesday pledged $6.25 billion to help fund accounts for 25 million children under age 10 in ZIP codes with median family income of $150,000 or less, adding an extra private-sector push behind the program.
Newsmax Wires contributed to this story.
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