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- The new Trump Accounts are a good step in setting up children for a secure retirement, and families should take advantage of the $1,000 in one-time seed money from the U.S. Treasury if they have a child born between 2025 and 2028.
- These accounts highlight the importance of starting as early as possible with investing, but financial advisors stress that these accounts should complement broader financial planning for under 18-year-old Americans.
- Those who can afford to invest up to the annual $5,000 limit (not including the seed money) in a Trump account should do so, and beyond that, tax-free gifting allows those with more funds to also consider 529 college savings plans, UGMA and UTMA accounts, and taxable brokerage offerings.
U.S. President Donald Trump rings the opening bell for the New York Stock Exchange (NYSE) and Nasdaq during an event to mark the launch of “Trump Accounts” in the Oval Office at the White House in Washington, D.C., U.S., July 6, 2026.Evan Vucci | Reuters
Now that Trump accounts have made their debut, many parents are wondering how to invest in them appropriately. They should also be wondering how to save elsewhere for their children to increase the odds of lifelong financial security.
More than seven million American children have been signed up for the tax-deferred accounts, allowing families, friends and employers to contribute $5,000 for a child that’s under age 18. The goal of these accounts is to jump-start retirement savings, and they are designed to make sure the money stays in the market over the long-term. Once the child turns 18, any withdrawals before age 59½ are generally subject to income taxes and a 10% penalty, though distributions for higher education expenses are among the penalty exceptions.
But it would be a mistake for families to rely on Trump accounts alone. Robert Raimondo, co-founder and chief development officer at Brookwood Investment Group in Phoenix, Arizona, says these new accounts are best thought of as “a complement” to the planning families are already doing, or should be thinking about.
To set up children for financial success, within Trump accounts and outside of them, financial advisors suggest some key portfolio construction moves.
Soon-to-come S&P 500 index ETF competitors
For starters, there is at least one important decision to be made with a Trump Account in the months ahead.
All contributions to Trump Accounts are being allocated to a default fund to start: the State Street SPDR Portfolio S&P 500 ETF (SPYM). Four additional ETFs will be available in the coming months, according to a press release from the Treasury Department.
“Treasury will announce when investment election functionality becomes available and will provide instructions for responsible parties wishing to change their account’s investment allocation,” according to the press release. A Treasury Department spokesperson declined to provide more specific guidance by press time when asked by CNBC.
There are a few things to consider when it comes to the four additional options. All are U.S.-equities based and all have similar expense ratios and performance to the SPDR S&P 500 ETF. One fund, iShares Core S&P 500 ETF (IVV), also tracks the S&P 500 index, but has a slightly higher expense ratio than the default fund, 0.03% versus 0.02% — though both are extremely low to begin with.
More significantly, three of the funds have more stocks than the default fund, offering investors an option for more diversification within the U.S. equity market. The Vanguard Morningstar Total Stock Market ETF (VTI), a large-blend fund, includes more than 3,500 stocks and has an expense ratio of 0.03%. Another option is the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM), which has an expense ratio of 0.03% and, with around 1,500 stocks, represents about 90% of the investable U.S. equity market. The other option is the iShares Core S&P Total U.S. Stock Market ETF (ITOT). It has an expense ratio of 0.03% and has more than 2,400 holdings of various market capitalizations.
watch nowVIDEO04:17Investing in Trump AccountsClosing Bell: Overtime
Why you might shift into total U.S. stock market
The soon-to-be-added ETFs are worth considering given the concerns about concentration in the S&P 500 after record stock market gains. In recent years, with the largest-cap stocks among the S&P 500’s top holdings doing so well, being all-S&P 500 has been a great place to be. Even though the S&P 500 has outperformed the total stock market in recent years, advisors say the performance difference over the long-term should not be the only deciding factor in fund selection.
For diversification purposes, though, investors might want to sell out of the S&P 500 core fund and buy the Vanguard Morningstar Total Stock Market ETF once it becomes available, because it’s the option with the most stocks. “You have more eggs in more baskets. When you hit a down market, you’re spreading out your risk over more companies,” said Marissa Beyer, partner and senior wealth advisor at Fidato Wealth in Middleburg Heights, Ohio. This fund will give investors more exposure to small and mid-size companies compared with an S&P 500 fund, she added.
Jaymon Meikle, a senior wealth advisor on the Gertsema Wealth team in St. Joseph, Mo., looks at things through a somewhat different lens. He opened a Trump Account for his daughter, and said he plans to stick with the core S&P 500 fund, even after the other options become available. His goal for this account is to help his infant daughter kickstart her retirement, and he wants to focus on large stocks in this account given the time frame, while diversifying in other investments.
Financial advisors say holding more than one fund in a Trump account isn’t necessary, since there is still considerable overlap, and the returns are likely to be similar. Investors shouldn’t get too hung up on trying to pick the perfect one, since they are all solid choices. In the end, “the difference really is more about investor behavior and contributions than which fund you select,” Raimondo said.
And because the account isn’t liquid for decades, investors shouldn’t worry that it’s 100% stock. “We don’t want one-year-olds owning bonds. Put it in stocks and let it ride for as long as you can,” Beyer said.
Don’t dismiss international markets
For some families, a Trump account may be all they can afford to invest for their children. These families should take advantage of the $1,000 in one-time seed money from Treasury if they have a child born between 2025 and 2028. Families who can afford to invest up to the annual $5,000 limit (not including the seed money) in a Trump account should do so, advisors said. Beyond that, they have several options if there’s additional money to invest, taking into account gifting limits to avoid tax consequences, which in 2026 is $19,000 for singles and $38,000 for a married couple.
What type of investment funds to choose depends on when you’re going to need liquidity, risk tolerance and how much you can afford to lose. “I’m inclined to spread my eggs across many baskets, and that includes international as well,” said Josh Radman, founder of Presidio Advisors in Denver.
Radman said he looks for low-cost, tax-efficient ETFs, including international exposure, and doesn’t recommend trying to guess which sector is going to outperform. He also encourages parents to look at their investment holdings from a household level — not the individual account level. Sometimes, in an international fund, for example, a region may be down, but the overall returns of a portfolio are solid because it’s well diversified. “We’re trying to get more uncorrelated asset classes so when one zigs, the other zags,” he said.
Additional accounts for families to consider
Parents looking to save for their children’s education might consider opening a 529 college-savings plan. These are state-sponsored tax-advantaged savings accounts to help families pay for qualified education expenses. There are many investment options to choose from, including investments that match the time horizon and risk tolerance. As you get closer to needing the money, time-oriented investments in these plans tend to shift to a more conservative approach, with much more allocated to bonds.
That makes it worth considering a taxable investment account with any additional money that can be set aside for a child and withstand greater equities market risk. There’s a full array of investment options to choose from based on risk tolerance, goals and time horizon. These accounts allow widespread flexibility compared with a 529 account. Parents still own the account and the money is available when they want it for a down payment for a house, college, a new car or another purpose, which can include something unrelated to a child. The downside is that these accounts are not tax-advantaged.
Parents might also choose to sock some savings for a child in a custodial account known as an UGMA or UTMA. Custodial accounts are not subject to contribution limits, and there are no early withdrawal penalties. However, contributions are irrevocable and cannot be withdrawn by a parent or guardian (unless it’s for the benefit of the child). There can be other downsides. For starters, the money is all theirs once they reach the age of majority, either 18 or 21 in most states, so parents might want to consider limiting how much they invest in these accounts, Raimondo said. There can also be tax considerations. The first $1,350 of unearned income is tax-free, the next $1,350 is taxed at the child’s marginal tax rate, and any unearned income above $2,700 is taxed at the parent’s marginal tax rate.
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