I have lots of friends who had a new born this year, and they are excited as hell that they have an opportunity to give their children something they themselves didn’t get because their parents were hard-core Jehovah's Witnesses who refuse to support them in getting a better education to live a better life.
Not only will they not raise their children as Jehovah's Witness, but they now have the opportunity to give their children a better life. All my friends are still young, under 24, so they still have time,
The "One Big Beautiful Bill" includes a provision for "Trump accounts," which will provide a one-time government contribution of $1,000 for every child born between January 1, 2025, and December 31, 2028. Parents can also contribute up to $5,000 per year to these accounts.
The S&P 500 index has delivered an average annual return of about 10.33% since 1957, but when adjusted for inflation, the real return drops to approximately 6.47%. Recently, the one-year return for the S&P 500 was reported at 12.02%.
If parents take advantage of this Trump created opportunity, and contribute $5,000 per year till the child can start working and take over the payments, and continue to contribute $5,000 per year, for the next 22 years or by age 40, the child will have a total of approx $27,000,000 Million dollars in his/her account. Enough to retire and take care of his/her parents by age 40.
This is a lot better than Government Social Security.
If the child keeps contributing till he/she is 50, and the S/P continues to follow the trend on returns, then the compounding will result in approx $73,000,000 Million dollars by age 50. Meaning his kids and grand kids can take their place in a safer situation and pass along the wealth to their children.
Trump wants to introduce more Americans to investing and to build small amounts of wealth with little cost for the children or their families, instead of relying on a particular political party to oversee Social Security. Especially since DOGE has uncovered the fraud committed by the Democratic party in using Social Security and Medicaid/Medicare funds for illegal immigrants so as to pressure, intimidate, or force illegals to vote Democrat.
If a parent does not voluntarily create an account, the government will create one when the parent files a tax return.
When the account is opened, the government would deposit $1,000 in seed money. In any given year, a maximum of $5,000 can be contributed to the accounts.
When the child turns 18, they can spend the money in one of four ways:
Higher education expenses
Other qualifying post-secondary credentialing
Small business or small farm expenses
Purchasing a first home
When the child turns 31, they have access to the full funds of the account. Distributions are taxed at the capital gains rate.
If the parents are Wise and teach the child the importance of continual investing instead of taking the money out early in life, the child and the parents will both benefit if they allow the money to grow by compounding.
This opportunity is only during Trump’s Presidency. Once Trump leaves office, For sure the Democrats will end this opportunity for everyone else. And the Republicans never stepped up with this plan to execute it.
We will never have another President Like Trump ever again. This only comes once in several lifetimes. Where a President actually cares for the working class and is willing to take on the Deep State. Trump is a Billionaire at 78 years old. Why in the world he wanted to take on this Headache and deal with corrupt politicians, and open border, corrupt judges, assassination attempts on his life, instead of retiring and playing Golf, we will never know.
Parents who have children these four Trump years, have the greatest opportunity to give their children the Greatest edge ever. You would have to be a really dumb parent to not take advantage of this for their children. And I’m sure there will be plenty of dumb parents who will mess this up.
You can play with the rate of return here.