‘Trump accounts’: Wall Street-backed investment funds for children to go live

Trump accounts, a savings vehicle named after the US president and authorized by congressional Republicans, are set to go live on Saturday, offering American parents a new way to save money for their children by investing in funds managed by major Wall Street firms.All accounts established for children born between January 2025 through December 2028 – nearly the entirety of Donald Trump’s second term – will receive $1,000 from the government. Parents, friends and employers will be able to deposit as much as $5,000 a year into the accounts.Trump has linked the accounts both to the 250th independence celebration on Saturday, as well as his own personal brand. To open an account, the Internal Revenue Service directs parents to fill out form 4547 – an apparent reference to Trump’s position as the 45th and 47th president.Their debut comes as Republicans prepare for November’s midterm elections in the US, in which they will be defending their control of Congress to voters who have grown concerned about the president’s handling of the economy.Created by the One Big Beautiful Bill Act, the signature domestic policy measure of Trump’s second term that congressional Republicans passed last year, the accounts will be controlled by parents and guardians until their children turn 18, after which they will take responsibility and be able to use saved-up funds to pay for college, buy a home or start a business.Money in the accounts is intended to be invested in funds that track major Wall Street indices, and on Wednesday, the US treasury department announced that all deposits would by default go into a fund managed by the investment bank State Street that tracks the S&P 500 index. Funds managed by the world’s largest asset manager BlackRock and Vanguard will become available later on, the Treasury said.Earlier this year, the department announced that Bank of New York Mellon and Robinhood, a trading platform that allowed amateur investors to easily play the market and enjoyed soaring popularity during the Covid pandemic, would develop an app to manage the accounts.The government’s effort has attracted donations from billionaires, including Dell Technologies founder Michael Dell and his wife Susan, who last year contributed $6.25bn so 25 million children under the age of 10 living in poor areas receive an extra $250 into their accounts. Hedge fund manager Ray Dalio and his wife Barbara donated so that about 300,000 children living in lower-income areas of Connecticut receive an additional $250.GOP lawmakers have referred to last year’s bill as the “Working Families Tax Cuts Act”, and argued that families have benefited from lower tax rates that it extended indefinitely.However, recent polls have found the US president to be underwater with voters on his handling of the economy. A PBS News/NPR/Marist survey released last month found that two-thirds of respondents disapproved of his performance on the issue.