Trump Accounts and the Power of Starting Early

This week’s insight is a bundle of joy—it’s all about baby bonds.

Amid ongoing tweaks to President Trump’s One Big, Beautiful Bill (OBBB), which we’ve dissected on our blog, new legislation may be on the way that benefits Americans not yet born. So-called “Trump Accounts” would plop $1,000 per child born from 2025 to 2028 into a dedicated, tax-deferred account meant to give all children a leg up on their saving journeys.

The little nest eggs would be set up and funded by the US Treasury, requiring no action from parents. When the kiddo turns 18, the investment could be used for a home down payment, education, or (a personal favorite) starting a small business.

Now, this isn’t big money—at a 10% annual return, the account could reach $5,500. After inflation, that’s like $4,000 in today’s dollars. But if the account is untouched until retirement age, which we’ll call 70 for those born today, then we’re talking about $100,000…after inflation (but before taxes). Not bad.

What I think is more valuable is the potential for good saving and investing habits to be instilled early on. It’s beyond me why the concept of compounding returns—the eighth wonder of the world—is not taught in grade-school math classes. With these proposed accounts, children from all backgrounds can capture real-life benefits by seeing their wealth grow as they grow themselves. It might inspire them to save not in a piggy bank but in the stock market. As the years press on, adding to the account by setting aside perhaps 10-15% of allowances, birthday checks, summer jobs, and graduation gifts can turbocharge the wealth-building process.

As they develop, they will better understand the benefits of, say, a Roth IRA—saving on an after-tax basis in a tax-free account. Considering the dire state of federal finances, imagine a generation of Roth-savvy young folks entering the workforce two decades from now. It’s easy if you try. Of course, there may be means-testing or other features to narrow the broader wealth gap, but the framework appears robust.

Maybe I’m a dreamer on this one, but Trump Accounts (or whatever name they go by) are pro-family, pro-investing, and pro-America. Will it solve all our financial challenges? No. Can it help folks from all socio-economic classes get set on the right path? Yes.