The power of time (and compounding) is critical when it comes to building long-term wealth. After all, the more time you have, the more your savings and investments can grow.
Not everyone capitalizes on that time. But if you’re starting a family, you might be in luck. There’s a brand-new kind of investment account in the works that’s geared toward helping young kids get a head start financially: “Trump Account.”
Here’s everything you need to know about Trump Accounts.
What are Trump Accounts?
According to the White House, Trump Accounts are a new type of investment account established under the “One Big Beautiful Bill Act” (OBBBA). Their purpose is to help American children jumpstart their savings from a very young age. They’re set to launch in 2026.
U.S. citizens who are under the age of 18 and have a valid Social Security number may be eligible for a Trump Account. Those born between Jan. 1, 2025 and Dec. 31, 2028 will receive an initial $1,000 from the U.S. Treasury to help grow their savings.
Each year, parents can contribute up to $5,000 into their child’s Trump Account. Employers may contribute up to an additional $2,500 to their Trump Account.
The earliest you can open a Trump Account, if eligible, is early next year. You won’t be able to start contributing until July 4, 2026, however.
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Key Advantages of Trump Accounts
One of the biggest advantages of Trump Accounts is that they’ll help children start saving from an early age. If families (and their employers) make the highest possible contribution each year starting from when their baby is born, below is what the total balance could be by the time their child turns.
- 18 years old: $303,800
- 28 years old: $1,091,900
This is assuming average returns on the U.S. stock market.
If the account starts with $1,000 but no additional contributions are made, the end balance will be significantly lower. In fact, the Council of Economic Advisers (CEA) estimates the balance would be:
- 18 years old: $5,800
- 28 years old: $18,100
Run your own calculations to see how a Trump Account for your child could compound upon itself with regular contributions over however much time you have until they come of age. This compound interest calculator by Investor.gov is a good place to start.
Trump Accounts also have a few tax advantages. The money in the account grows on a tax-deferred basis, meaning the account owner won’t pay taxes until they start withdrawals. Employer contributions, which cap out at $2,500, also won’t impact their employee’s taxable income.
The Dell Investment
It’s not just families and their employers who can contribute to Trump Accounts. Philanthropists can as well.
One such couple, Michael and Susan Dell of Dell Technologies, is set to donate $6.25 billion to help fund accounts for children who aren’t eligible for the initial $1,000 Treasury contribution. This donation will be spread across the accounts for 25 million children ages 10 and under. Broken down, this means a $250 initial deposit for these children.
Assuming an average stock market return of about 10% (based on S&P 500 data), here’s how that initial investment might look over the course of a child’s life (estimated):
- 18 years old (with maximum contribution): $343,000
- 18 years old (without additional contributions): $1,390
Other Long-term Impacts of Trump Accounts
The cash balance is already significant, but there are other possible benefits as well.
“Many parents are too afraid to start investing for themselves, let alone for their kids, because it seems too complex or out-of-reach,” said Victor Wang, CEO of Stockpile. “The new Trump accounts for newborns can provide a critical introduction: helping families learn what investing is, experience the benefits firsthand and maybe even start a pattern of investing consistently, even if it’s with just a few dollars a week.”
This could potentially help an entire generation gain confidence with investing from an early age. It could also help families make smarter financial decisions, which will impact not only themselves but their descendants.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Everything You Need To Know About ‘Trump Accounts’ Launching in 2026
