Is The Trump Account Enough? How To Maximize Your Child's Financial Future

Forbes

2 days ago

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There's a new baby bonus for newborns on the block, referred to as the 'Trump Account,' thanks to a recent law signed in 2025. Every baby born in the U.S. between 2025 and 2028 receives $1,000 deposited into this special account.
While these accounts are designed to provide kids a financial head start before they even learn to walk, an important question remains: Is this $1,000 enough to make a difference in your child's future?
The government now sets aside $1,000 in seed money for every newborn, placing it into an investment account managed by the U.S. Department of the Treasury. This money goes into broad market index funds as a way to grow over time by riding the stock market's ups and downs.
Parents can add up to $5,000 each year until their child turns 18. However, their child can't fully touch the money until they turn 30, so it's designed to be a long-term nest egg.
While $1,000 won't pay for a college degree or a first home, here's the interesting part: When invested wisely over decades, it can grow significantly thanks to compound interest. For example, if that $1,000 grows around 10% per year—about the stock market's historical average—it could turn into over $300,000 by the time your child retires. That's a long game, though, and there are no guarantees on stock market returns.
While the Trump Account is a starting point, it shouldn't be your only savings plan. A high-yield savings account is still important. It's simple, easy to use and a safe place to keep money for short-term needs or emergencies. Unlike the Trump Account, where the money is not entirely available until your child turns 30, high-yield savings accounts provide you easy access with no penalties.
Lately, some high-yield savings account interest rates have outpaced inflation, helping your money maintain or grow its value.
Opening a high-yield savings account for your child is also a smart way to teach them financial literacy early on. You can link it to chores, gifts or allowances so they get a feel for saving and spending. It's a clever way to balance the Trump Account's long-term growth with real-world money management.
When choosing the best high-yield savings account for your child, look for options that do not require a minimum deposit and do not charge monthly maintenance fees. The interest rates available on these accounts vary with market conditions, so shop around to find the highest APY currently available.
Aside from a high-yield savings account, there are also other investment account options for kids to think about: 529 college savings plans. These are tax-advantaged and designed for education costs—and they usually let you deposit additional money each year.
These are tax-advantaged and designed for education costs—and they usually let you deposit additional money each year. Custodial accounts. These let you invest in stocks or bonds in your child's name, with greater flexibility but fewer tax benefits.
Opening a high-yield savings account for your child is a smart first step—but to get the most out of it, consider these strategies: Every penny matters. Even small, consistent deposits add up over time. Try setting up automatic transfers to contribute funds monthly.
Even small, consistent deposits add up over time. Try setting up automatic transfers to contribute funds monthly. Take advantage of competitive rates. Look for accounts with the most competitive interest rates that beat inflation, so your money grows faster.
Look for accounts with the most competitive interest rates that beat inflation, so your money grows faster. Teach your child about money. Use the account as a tool to show them how saving works, linking deposits to chores, gifts or allowances to encourage smart savings habits early.
Use the account as a tool to show them how saving works, linking deposits to chores, gifts or allowances to encourage smart savings habits early. Avoid unnecessary withdrawals. Let the balance grow to maximize compound interest , especially if you don't need the money immediately.
Let the balance grow to maximize , especially if you don't need the money immediately. Combine with other savings vehicles. Use your savings account alongside the Trump Account, 529 plans or custodial accounts to meet different financial goals.
The Trump Account is a solid foundation, offering a financial gift for your child that can grow over time. But that $1,000 alone won't cover all their expenses, especially with rising college tuition and housing costs.
To give your child the strongest financial start, consider this account as one part of a bigger savings-plan picture. Pairing it with other high-yield savings and investment options will help set your baby on the right path toward a secure financial future.