Trump Accounts opened for business on July 4. Babies born between 2025 and 2028 can get $1,000 from the federal government, which can be invested in a low-cost S&P 500 index fund, and the money will grow until adulthood.
You can debate the merits of the accounts themselves. Money expert Clark Howard already has. His advice is simple: “Take the free money.” But he recommends against adding your own contributions because he believes there are other places you can put that money that offer greater tax advantages. You can read his full breakdown in our Trump Accounts guide.
Politics aside, Trump Accounts give millions of American children the one investing advantage no adult can ever buy back: time.
That head start is the lesson everyone should take from Trump accounts. Let’s look at the math.
Scenario 1: $1,000 and Nothing Else
Say the government’s $1,000 goes in at birth and nobody ever touches the account again. No birthday contributions, no grandparents chipping in. Just $1,000 earning the stock market’s long-term average return of about 10% a year.
At age 18, the account holds about $5,560. Respectable, but nobody’s retiring on it.
Now leave it alone until age 60. That same $1,000 grows to roughly $304,000. Leave it there till full SS retirement age of 67 and you’d have $593,000
The first 18 years turned $1,000 into $5,560. The next 42 years turned $5,560 into $304,000, and the final 7 years ADDED $289,000. Compounding is slow at first and dramatic at the end.
Scenario 2: Add $500 a Year, Then Stop Forever
Now suppose the family adds $500 a year until the child turns 18 and never contributes another dime. That’s about $42 a month, totaling $9,000 out of pocket over the full 18 years.
At age 18, the account holds about $28,360.
At age 60, with no further contributions, it’s worth about $1.55 million. At age 67, it’s over $3 million.
The total principal invested across both sources is $10,000. The $1,000 seed plus $9,000 from the family. Everything else is growth. And nearly all of that growth happens after the contributions stop.
You can use our investment growth calculator to run your own numbers.
The Investing Lesson of Trump Accounts
The real story of Trump Accounts isn’t the politics, the rules or even the free $1,000. It’s that time is one of the keys to success in investing, and you can’t get more of it than starting at age zero.
Every big number in this article came from the same ingredient. Not a hot stock pick, not perfect timing, just ordinary market returns stacking on top of each other for decades. A child born this year has more of those decades ahead than any adult can buy at any price.
Final Thoughts
If your child is eligible to receive the $1,000 government seed money or matching grants from employers or philanthropists, take advantage of it and let that money start compounding. However, Clark believes there are better places than Trump Accounts for many families to make ongoing contributions.
The bigger lesson applies no matter where you invest. Whether it’s a Trump Account, a 529 plan or a Roth IRA for a teen, starting early gives compound growth its greatest advantage.
Choosing the right account matters. But getting money invested while someone is young may matter even more. Decades of compounding can turn relatively modest contributions into life-changing wealth.
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