A new, specifically targeted investment initiative, dubbed “Trump Accounts,” has already begun. The goal is to provide U.S. citizens born from 2025 to 2028 with a tax-deferred investment vehicle. Under this program, eligible children will receive $1,000 from the government, which can be invested exclusively in low-cost, diversified U.S. stock index funds, particularly those tracking the S&P 500. The money will be released to the account holder when they reach 18 years of age.
The introduction of “Trump Accounts” is a big first step in how we allow future generations to invest in the stock market. This tax-deferred investment option offers significant long-term growth opportunities, making it possible to achieve remarkable growth through consistent contributions with the historical averages of diversified index funds. Historically, the S&P 500 index has returned an average of 10% a year. That’s right, investments made through this brand new program could save us a ton of money in the long-run!
Elisabeth is a seasoned impact investor. She began her investing journey at just 12-years-old and looks back on the valuable experience of starting to invest early. She notes that a $1,000 investment in the S&P 500 made 18 years ago is worth over $4,000 today. Today, that same investment is only worth around $4,000. This massive growth underscores the value in investing in low fee, broadly diversified index funds. They provide a safer option than picking individual stocks, which can be much riskier.
Here’s what makes Elisabeth’s story particularly extraordinary—she bought her first stock—shares of General Electric—when she was just 12 years old. Though this experience was formative, she admits that investing in individual companies is generally too risky for young investors. “A diversified approach is crucial,” she states. “Funds in ‘Trump Accounts’ can only be allocated to low-cost index funds, which spread risk and improve chances for long-term success.”
The law that recently put “Trump Accounts” into law stipulates that investments can only be made in the form of diversified U.S. stock index funds. This new requirement is meant to protect the financial futures of our nation’s young investors by lowering their risk of investing in more volatile single stocks. Elisabeth’s winning portfolio is evidence of how effective this strategy can be. Fifteen years later, her original investment of $1,300 has earned an astounding $4,200, a jaw dropping 145% return on her investment.
The federal government has been heavily promoting this new investment vehicle. It’s all a part of their mission to create a new generation of fiscally literate, fiscally responsible young American citizens. The campaign aims to get parents in the habit of planning for their children’s financial futures from a young age. “Trump Accounts” provide families with a fun and easy way to teach their kids about money. This highly regarded program provides a focused, energetic and collaborative environment rich in guided discovery.
As parents begin considering this new option for their children, they are encouraged to explore the benefits of investing in diversified stock index funds. By taking these actions, they can place their children on an extended trajectory toward financial independence and stability.