The government is giving families $1,000 to start investing for their children. But there is a catch - the money must stay in stocks forever. This is the opposite of a typical college savings plan, which slowly moves into safer bonds as a child gets older.
The Treasury Department announced five exchange-traded funds (ETFs) - baskets of stocks that trade like a single share - for the new Trump Accounts, also called 530A accounts. The default option comes from State Street's SPDR brand: the SPYM ETF. Investors can also pick State Street's SPTM, BlackRock's IVV and ITOT, or Vanguard's VTI.
The initial accounts will be managed by Bank of New York Mellon. "The fund was selected to provide broad exposure to the U.S. stock market while maintaining expenses well below the statutory fee limitation," the Treasury Department said.
Parents, guardians, grandparents, and others can add up to $5,000 per year after the launch date.
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A Vanguard research note pointed out that these accounts, unlike 529 plans, do not automatically move toward safer bonds over time. That means more potential growth, but also more short-term risk.
Rodney Comegys, who leads global equity as chief investment officer at Vanguard Capital Management, released a statement: "Trump Accounts offer a meaningful opportunity for families to begin investing early on behalf of their children."
The decision to avoid any bond allocation is a deliberate departure from traditional college savings strategies. Supporters argue that a decades-long horizon for a child's investments makes stocks the best choice for maximizing growth, even with the volatility that comes along the way. Critics, however, point out that families saving for a specific college date could face steep losses right before needing the money.
The Treasury's pilot program targets children born from 2025 to 2028, meaning the first withdrawals would likely occur in the mid‑2040s, giving the accounts a 20‑year runway. Additional contributions of up to $5,000 annually can be made by family members, with no requirement to ever rebalance into safer assets. The five selected ETFs all track broad U.S. stock indices, minimizing the risk of any single company failure.
The accounts officially launch on July 4, 2026. Some companies have already stepped up to help. State Street and BlackRock both said they will match the Treasury's $1,000 deposit for children of their own employees.
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