President Donald Trump, flanked by top financial and political figures, virtually rang the opening bells of the New York Stock Exchange and NASDAQ in the Oval Office yesterday, formally launching so-called Trump Accounts, the investment vehicles for children jump-started by a $6.25 billion donation from Michael and Susan Dell. 

“This is a very special kind of thing,” Trump said at the launch. “In a way, it’s a miracle. Nobody thought it was possible. Think of it: Children that are born without money, without any money… they can become very wealthy children at 18.”

The accounts, which have gained additional backers since they were announced in December, are meant to provide a lump sum once those children turn 18; the funds can be used for higher education or to purchase a first home. Babies born during Trump’s current term in office, from January 2025 to December 2028, are eligible for an account seeded with $1,000, which will be invested in a fund tracking the S&P 500. Children ages 10 and under, living in ZIP codes with a median household income of under $150,000, are also eligible to receive accounts seeded with $250. Each year, an additional $5,000 can be added to the tax-advantaged investment accounts.

“This makes every child a shareholder in the greatest prosperity-creating engine the world has ever known — American capitalism,” Michael Dell said on Saturday. “Through this public-private partnership, we’re giving the next generation a real stake in our economy and a path to the American Dream: education, a first home, starting a business, and building lasting wealth.”

The Dells have pledged $250 to the first 25 million children registered for the accounts. 

The White House estimates that, based on average S&P 500 growth, children who do not have additional funds added to their accounts can expect to receive $6,000 when they turn 18, while those who have $5,000 added annually are expected to receive $271,000. 

While the Trump Accounts have been hailed for offering a potential leg-up for American children and for encouraging greater financial literacy, some economists have warned that by requiring parents to opt into the program, millions of children — and particularly the neediest children — will be left out and that the greatest beneficiaries of the tax-advantaged accounts will be those who already have the means to take full advantage of them. Taken together, the program risks increasing economic disparities.

A cautionary tale can be found in a similar program in Israel, dubbed “Saving for Every Child,” which deposits NIS 58 ($19) into an account every month from birth to age 18. Those funds can either grow slowly with the interest rate (for those who are more risk-averse) or can be invested in a retirement savings fund (where it can grow more quickly, but could also lose value depending on the market). Similar to the Trump Accounts, under Saving for Every Child, parents can add funds to the account, matching the amount put in by the government.

Also meant to improve social mobility, the Saving for Every Child program, which launched in 2017, has been found to increase the wealth gap. 

“In reality, less than a third of parents in the lowest income quintile add money to the state contribution, versus 65% of parents in the highest quintile, who also choose to put the money in the higher-yield provident funds. Thus, it appears that children from well-off families are benefiting more from the program than children from lower-income families, which could inhibit social mobility,” the Israeli social policy-focused Taub Center wrote in 2020.

Though some improvements to the program have been made since that finding — making the process easier and having the default options be those most likely to result in the highest return — many of the core issues remain in place. 

A study last year by Israel’s National Insurance Institute, which runs the program, found that Arab and Haredi Israelis — the two populations with the highest rates of poverty — are the least likely to take full advantage of the program. While the majority of non-Haredi Jewish Israelis (62%) choose to match the government’s funds, 39% of Haredi Israelis and 23% of Arab Israelis opt to do so.

The Israeli model shows that, for philanthropy, in addition to supporting the Trump Accounts program directly, to ensure that the most and the neediest children are helped by the funds, efforts must be made to remove barriers and make the accounts as accessible as possible and to educate parents about their benefits.