Personal finance expert and The Ramsey Show co-host George Kamel said Thursday that Trump Accounts can help families understand the power of starting to invest early, but parents should prioritize their own financial security first.
Kamel discussed the accounts and his approach to investing for children in an interview with Fox News Digital, explaining how compound growth could turn early contributions into significant wealth over several decades.
‘Compound Growth Is The Magic’
Kamel said he opened Trump Accounts for his 1-year-old and 3-year-old children and received the $1,000 government contribution for his son. He said he plans to add another $3,000, which he estimated could grow to nearly $500,000 or more by the time his child reaches 65 without any additional contributions.
The main benefit, Kamel said, is getting families to think about investing early.
“If you can understand the power of compound growth,” Kamel said, adding that the Trump Account is valuable because it gets people thinking about investing for their children.
Trump Accounts are tax-deferred investment accounts for children. Eligible U.S. children born between Jan. 1, 2025, and Dec. 31, 2028, can receive a one-time $1,000 Treasury contribution, while families, employers and others can collectively contribute up to $5,000 annually.
Recent Treasury guidance also allows employers to contribute up to $2,500 annually for employees’ dependents, while employees can direct pretax dollars into their children’s accounts. The proposal is subject to public comment and an October hearing before it can be finalized.
Trump Accounts Vs. 529 Plans
Kamel cautioned that Trump Accounts do not offer the strongest tax advantages for every financial goal.
“The truth is the tax benefits are not great on this account,” he said.
For education expenses, Kamel recommended a 529 plan, which allows after-tax contributions to grow tax-free, with qualified withdrawals generally also being tax-free. He also pointed to custodial Roth IRAs as another option, although children need earned income to contribute.
Trump Accounts, by contrast, do not require the child to have earned income. Parents, grandparents and other family members can contribute, making it possible to begin investing from a young age.
The accounts have also raised questions about college financial aid. The Department of Education has not yet issued official guidance on how Trump Accounts will be treated on the FAFSA. A higher education expert previously estimated that a $10,000 account could reduce need-based grants by as much as $2,000 if treated as a student asset.
How Much Can Trump Accounts Grow?
Financial planners have cautioned that the large balances sometimes projected for Trump Accounts depend on decades of investment growth and should not be viewed as guaranteed outcomes.
One analysis using a 7% annual return estimated that a family making the maximum annual contributions could accumulate about $185,000 by the time a child turns 18. If the money remained invested, the account could grow to more than $1 million by age 45.
The key factor is time. Financial experts have noted that most of the eventual value in long-term investment scenarios comes from decades of compound growth rather than the original contributions.
Kamel made a similar point, saying that even a relatively small amount invested early can have decades to grow.
Parents Should Invest For Themselves First
Kamel’s broader message was that parents should not invest for their children at the expense of their own retirement.
He recommended becoming debt-free, maintaining an emergency fund and investing 15% of personal income toward retirement before prioritizing investments for children.
“The sad truth is most Americans aren’t investing for themselves,” Kamel said, adding that many also lack the ability to invest for their children.
He said parents who fail to prepare for retirement could eventually leave their adult children responsible for supporting them financially while those children are also managing their own households and raising their own families.
“If you can get this early, this mindset that compound growth is the key,” Kamel said, “then you can make a plan and the Trump Account can be a part of that.”
The program has continued to attract interest from employers and families. More than 50 companies have committed to making Trump Account contributions, while an April Mercer poll of nearly 350 U.S. employers found that about 4% expected to implement contribution programs in 2026 or 2027.
For Kamel, however, the account is only one piece of a broader financial plan: build a strong financial foundation first, then use long-term investments to help create wealth for the next generation.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
Recent Comments