Trump's Baby Cash: A New Era for Generational Wealth in America

A New Approach to Building Generational Wealth

Inside the massive tax bill recently signed into law by President Donald Trump lies a proposal with the potential to transform how Americans build wealth: Trump savings accounts. This initiative aims to create an investment account for every child born in the United States between December 31, 2024, and January 1, 2029. Each account will be seeded with $1,000 and invested in a low-cost, diversified stock index fund. Parents are also allowed to contribute up to $5,000 annually.

The funds within these accounts are tax-deferred and gradually become accessible. At age 18, individuals can access half of the portfolio's value. By age 25, they can use the full amount for qualified purposes such as higher education or small business loans. Finally, at age 30, they gain full control over all the money.

This idea is simple yet powerful. When paired with a national push for financial literacy, it could reshape how Americans accumulate wealth. The math behind this policy is compelling. An initial $1,000 could grow to approximately $8,000 in 20 years, $69,000 in 40 years, and more than $500,000 by retirement age, assuming historical market returns. For many families who cannot afford to save or invest early, this could be life-changing.

Harnessing the Power of Compounding Interest

The genius of this proposal lies in its ability to harness the power of compounding interest, often referred to as Albert Einstein’s “eighth wonder of the world.” Compounding allows investments to grow exponentially over time, making it a key driver of long-term wealth.

Currently, slightly more than half of American households have active investment accounts, while over 90% of U.S. stocks are held by just 10% of households. These accounts would change that dynamic by giving every child, regardless of income or background, a stake in the economy from the start.

The cultural impact could be equally significant. Many young Americans feel disconnected from capitalism and skeptical of the system. However, ownership fosters engagement. A person who owns a piece of the economy is more likely to follow it, understand it, and eventually invest more in it. Over time, this mindset compounds just like the investment, anchoring families in habits that build lasting wealth.

Financial Literacy Is Key

While the policy itself is transformative, it alone isn’t enough. Even the best tools are useless if people don’t know how to use them. Today, about half of Americans lack a necessary understanding of personal finance. Nearly two-thirds can’t pass a financial literacy test, and more than 60% don’t have written financial plans.

Despite progress in schools—more than half of states now require some financial instruction—many students still graduate without learning how to budget, invest, or save for retirement. Information alone won’t fix this issue. We’ve tried that before. What we need is a cultural shift. Financial planning should be treated like annual checkups or dentist visits—something routine, expected, and normalized across society.

U.S. Treasury Secretary Scott Bessent has taken steps to promote financial education. He has revived the Financial Literacy and Education Commission, partnered with the ABA Foundation for “Teach Children to Save Day,” and joined forces with the Financial Literacy for All initiative. These efforts are meaningful, and his leadership deserves recognition.

A National Effort for Financial Literacy

President Trump should elevate this effort by launching a national task force with business leaders, educators, and local officials to build a shared strategy. This should include curriculum development, teacher training, and real investment in outreach. A White House-led campaign could finally put financial literacy on par with reading and math.

The private sector must also step forward. This idea, federally seeded savings, is the brainchild of some of America’s most successful business leaders. Now, they should lead on education. Companies can fund workshops, sponsor school programs, offer pro bono advice, and build tools that make planning engaging and accessible.

Financial advisers across the country see the transformative power of smart investing every day. It opens doors, creates options, and builds real wealth. But it doesn’t happen by accident. It takes planning, discipline, and the right tools.

These savings accounts are a powerful tool that can give every child a stake in the future and a foundation to build on. Let’s ensure they have the knowledge, guidance, and support to make the most of this opportunity.