The Trump Accounts, or Invest America accounts, depending on your political preference, are a unique tool for creating wealth for our children or, let’s say, a possible pathway to wealth. Thoughtfully designed and well-intentioned, they aren’t the most tax-efficient vehicles, but they do offer optionality we should all consider.

First, for newborns (2025–2028), there is the immediate $1,000 payment from the U.S. Treasury, which makes it a no-brainer for young parents. Then you can deposit up to $5,000 a year until the child’s 18th birthday. The deposits are made with after-tax dollars and don’t create a tax credit, so they are not as efficient as a traditional IRA, but parents, grandparents, employers, and anyone can also make a gift, so they have unique utility. The accounts also restrict investment options to low-cost index funds, which isn’t terrible, as the goal here is to get a head start, not start gambling early on meme stocks. At age 18, the account rolls over to a traditional IRA that can be self-managed at a typical brokerage firm and then follows IRA rules with RMDs (required minimum distributions) beginning at age 73. These distributions will be taxable at ordinary income rates, which makes them less favorable than Roth IRAs, which don’t tax withdrawals but require earned income to fund. A good reason for my boys to have summer jobs.

There are three reasons I’m still attracted to these accounts. First, any retirement vehicle (which really means tax-deferred) that encourages my children to save with a long-term mindset is a lesson I want them to fully comprehend through multiple accounts, 529 plans, Roth IRAs, and traditional IRAs. This also means I have more funding choices, so I can maximize their annual savings.

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Secondly, and most importantly, is TIM (time in the market). If I can show my sons the magical power of compounding over a long period, I might be able to convince them to develop a savings mindset. Consider the magic here. A one-time $5,000 deposit into my 13-year-old’s account, compounding at 10% annually, would grow to $586,954 in 50 years, when they are 63 years old. This is 117x on their money! Alternatively, if they waited 10 years and began investing at 23, and had only 40 years to compound, it would grow to $226,296 (45x), and if they had only 30 years to compound, it would grow to $87,247 (17x). The early start makes all the difference.

Thirdly, opening a Trump account gives your child the opportunity to receive philanthropic dollars from some of our country’s most generous and successful philanthropists. For example, Michael and Susan Dell led the pack with a $6.25 billion pledge to provide $250 per child to lower-income zip codes (mine qualify), and just yesterday, Gwynne Shotwell, President of SpaceX, announced she would donate 2 million shares of SpaceX to lower-income children in Texas and her neighborhoods. This is only the beginning: as the accounts continue to roll out and prove successful, more donors will follow suit. I could imagine that over the next 5 years, many older children who didn’t qualify for the initial $1,000 will find support from other donors. Donating to this project is likely to be a good business decision, too, based on Trump’s flattering comments to the Dells yesterday.

The bottom line is that when I open the accounts for my son and make the first $5,000 contribution, I am setting them up for success: 117x their money in 50 years. But when a grandparent, employer, or philanthropist is looking to make an impact, I can simply provide the link to donate directly to my child’s financial future. If they are lucky enough to receive $1,000 in the next five years from anyone other than my wife and me, let’s remember that is really $100,000 for their retirement. With a deposit of $5,000 today and $5,000 for the next 4 years until the limit at 18, I or others will have contributed a total of

$25,000, and if they never contribute again after 18, the account would be worth $2,224,982 at retirement. This is powerful math nobody was talking about when we were kids.

My focus in the second half of my life is running a program I created called “The Finance Camp” for teens in our area, and the lesson of compounding money is the most important and potentially life-changing concept we teach to our students. When you start is far more important than how much you start with. You can learn more at www.thefinancecamp.com.

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Ron Speaker

Financial Consigliere

Midlife Male Contributor

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