July 4th marks the official launch of Trump Accounts, which allows parents to set up the new type of individual retirement account for children.
Any child with a Social Security number who is under 18 years of age at the end of the year in which the account is created is eligible. And for children born between January 1, 2025 and December 31, 2028, who have a Social Security number and are U.S. citizens, the Treasury Department will match their Trump accounts with $1,000.
For those who do not qualify for the $1,000, other contributions may come from a variety of sources. Parents, relatives and friends can donate up to $5,000 after taxes annually for years before the child turns 18. Employers who choose to participate can donate up to $2,500.
Businesses, nonprofit organizations, wealthy individuals, and state and local governments can also participate. In December, tech billionaire Michael Dell and his wife Susan announced plans to donate $6.25 billion, equivalent to 250 to 25 million children.
The Treasury Department announced Thursday that Trump Accounts will be able to accept public stock donations, saying this will help philanthropists make donations. Such gifts would be turned over to the Treasury Department, which would distribute them “in accordance with the donor’s instructions, applicable law and Treasury Department policies,” officials said Washington Post.
Meanwhile, the Treasury Department also said funds deposited into Trump accounts at launch will go into the State Street SPDR Portfolio S&P 500 ETF (SPYM) as a “first default investment.”
“The fund was selected to provide broad exposure to the U.S. stock market while keeping costs well below the statutory fee limit,” the ministry said in a statement on Thursday.
Over the past 30 years, the S&P 500 has delivered an average annual return of 10% to 11%, although this also includes large swings in individual years, such as a 37% plunge in 2008 and a 29% rise in 2021.
Still, legendary investor Warren Buffett has long preached that you should put your money in an S&P 500 index fund instead of trying to outsmart the market by picking individual stocks, as he did.
In 2007, he famously made a $1 million bet that the index would outperform a number of hedge funds over a ten-year period – and won.
A participant holds a Trump Accounts sign during a “Trump Accounts Tour” event in Westlake Village, Calif., May 29, 2026.
Patrick T. Fallon/AFP via Getty Images
When it comes to his personal finances, Buffett also follows his words with action. In his 2013 letter to Berkshire Hathaway shareholders, he laid out his simple advice for a trustee charged with managing his assets for his wife after his death.
“Put 10% of the money in short-term Treasury bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those of most investors – whether pension funds, institutions or individuals – who employ highly paid managers,” Buffett wrote.
So far in 2026, the S&P 500 is already up about 10%, and some Wall Street bulls expect the index to post a 20% gain for the full year.
As for the Trump accounts, additional funds will eventually become available, including the iShares Core S&P 500 ETF (IVV), the Vanguard Total Stock Market ETF (VTI), the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM), and the iShares Core S&P total US Stock Market ETF (ITOT).
But families looking to shift the holdings in their new Trump accounts will have to wait.
“In the coming months, Treasury expects to provide functionality that will allow parents or guardians to decide how to allocate funds among the additional investment options. Until this functionality is available, all contributions will remain invested in the standard fund,” the department explained.
“Treasury will announce when the investment selection feature will become available and provide instructions for responsible parties who wish to change their account’s investment allocation.”
https://fortune.com/2026/07/04/trump-accounts-children-stock-market-holdings-sp500-index-etf-spym-warren-buffett-advice/
