Source: Fortune
Summary
Trump Accounts, a new type of custodial individual retirement account for kids, launched on July 4. Eligible children under 18 can receive up to $5,000 in annual contributions from parents, relatives, and friends, as well as up to $2,500 from employers. The Treasury Department will also kick-start accounts with $1,000 for children born between 2025 and 2028. Contributions can be invested in various funds, including the State Street SPDR Portfolio S&P 500 ETF. Warren Buffett has long advocated for investing in an S&P 500 index fund.
Our Reading
The numbers tell one story.
The Treasury Department is launching Trump Accounts with an initial default investment in the State Street SPDR Portfolio S&P 500 ETF. Warren Buffett has long preached the benefits of investing in an S&P 500 index fund. The accounts can accept donations of public stock, and the Treasury Department will transfer them “consistent with the donor’s instructions.” The S&P 500 has averaged annual returns of 10%-11% over the last 30 years. Trump Accounts will eventually offer additional investment options, but for now, all contributions will remain invested in the default fund.
The strategy enters a familiar phase: follow the money, and the money follows Warren Buffett’s advice.
Author: Evan Null
