Will Trump accounts lead to a financial boon? Experts differ on impact

Tuesday's announcement of a massive private donation to expand President Donald Trump's "baby accounts" renewed the debate over how effective the seed investment will be.

Michael and Susan Dell are donating $6.25 billion to create about 25 million additional "Trump Accounts" for children across the country. Michael Dell joined Trump at the White House Tuesday for the announcement.

The new accounts will be seeded with $250 each, and available to children ineligible for the $1,000 federally funded "Trump Accounts" given to babies born after Jan. 1, 2025.

"These deposits will reach the accounts of most children age 10 and under who were born prior to the qualifying date for the federal newborn contribution," the Dells said in a statement.

"Children older than 10 may benefit, too, if funds remain available after initial sign-ups," the statement said. "It is an incredibly practical and direct step to help families begin saving today."

The Dell donation adds to a program Trump inserted into the One Big Beautiful Bill Act passed by Congress and signed by the president on July 4.

Each account begins with a $1,000 seed investment in a low-cost, diversified index fund, and parents can contribute up to $5,000 annually. The funds grow tax-deferred and become accessible when the child turns 18, operating under similar rules as traditional individual retirement accounts.

The Dell family donation will expand the seed money program “to reach nearly 80% of children age 10 and under across 75% of U.S. zip codes,” according to nonprofit Invest America.

"Aside from the obvious economic benefit, these accounts can serve as a real-world lesson on both the power of compounding and the power of saving," said Robert Johnson, chairman and CEO at Economic Index Associates. "Prohibiting withdrawals before the age of 18 will introduce many parents and children into the power of compounding in a long-term time horizon."

Michael Dell, 60, is the founder, chairman, and CEO of Dell Technologies, one of the world's largest technology infrastructure companies. As of 2025, according to the Bloomberg Billionaires Index, he is the 10th-richest person in the world with a net worth of $151 billion.

'Unlikely' to have an impact

Supporters say the Trump accounts could start a wealth-building era. But critics are not convinced they will have a significant impact. The $250 is "unlikely to be meaningful," said Lisa Whitley, owner of MoneyByLisa, a registered investment advisor firm in the District of Columbia.

"The biggest beneficiary of Trump Accounts will be high net worth households that have maxed out every other (better) tax-advantaged savings scheme and are looking to shelter more income from taxes," Whitley said. "Low-income households are unlikely to have the free cash flow to contribute meaningfully to the accounts."

The Trump accounts can only be invested in low-cost index funds or ETFs that either reflect the S&P 500 or "another American stock index," according to the White House Council of Economic Advisers.

Whitley called that lack of investment choice "troubling," noting that it leaves out the choice of international diversification.

"It also does not allow one to de-risk as the child enters their teens and looks to use the funds for college in just a few years," she said. "A target date fund approach would be a better default investment option."

Investment fund companies are unlikely to charge anything less than the allowed 0.1% fund expense ratio, Whitley said. "Very importantly, we also do not know if there will be plan administration fees on top of that."

No answer for inequality

Even with a multi-billion-dollar boost from the Dells, the Trump accounts are unlikely to put a dent in widening income inequality, said Rod Skyles, blogger at The Unconventional Economist.

Between 1979 and 2021, the average income of the richest 0.01% of households, a group that represents just over 12,000 households, grew nearly 27 times faster than the income of the bottom 20% of earners, according to the Congressional Budget Office.

The current American system provides little incentive for Americans to escape poverty, Skyles said. Adding another government program will do little to change that cycle, he explained. Investing in improving the educational system and opportunities for the poor would be a better use of public funds, he maintained.

Instead, the federal government "continues to put Band-Aids on a system that is in full bleed-out mode," he said. "Even if it was just to require school choice to get students out of a failed government-run school system, it would be a huge step in the right direction."

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