It’s a question I didn’t expect to ask myself. Now I can’t stop thinking about it.
When the new Trump Accounts were announced, I didn’t think much of them at first.
I already have 529 plans for my kids. Those are fully maxed out. I figured this was just another account with another set of rules that I’d have to learn.
Then I started reading.
The more I read, the more I realized this wasn’t really about taxes or retirement accounts.
It was about parenting.
I have a daughter who’s about to turn six and twin boys who are three.
Because my kids were born before the federal eligibility window for the government’s $1,000 starter contribution, they don’t receive that “free money.”
If I want them to have these accounts, every dollar has to come out of my pocket.
The contributions are made with after-tax money, and they aren’t federally tax deductible.
So now I’m asking myself a simple question.
Do I even want to do that?
At first, my answer wasn’t obvious.
If I contribute the maximum every year and the money compounds at something close to the stock market’s long-term average, my kids could have around $150,000 by the time they turn 18.
And that’s where I hit the brakes.
Do I really want an 18-year-old to have access to that kind of money?
I started thinking about what I was doing when I was 18.
It wasn’t managing six figures.
The Number That Changed My Mind
I grew up in Miami.
One of my first jobs was working at Arbetter’s, a hot dog stand on the corner of Bird Road and 87th Avenue.
I learned a lot there.
Years later, I learned a lot at Merrill Lynch, too.
They were different lessons, but both mattered. I wouldn’t trade either experience.
If someone had handed me $150,000 when I was 18, I honestly don’t know what I would’ve done with it.
Actually, I do know. It probably wouldn’t have gone well.
But then I kept doing the math.
Let’s say my kids don’t spend it. Let’s say I do my job as a father.
Let’s say they understand what compounding is by the time they’re 18.
If history is any guide, that $150,000 could grow into well over $10 million by the time they’re 65 without adding another dollar.
Read that again.
The biggest financial decision they ever make might happen before they’re old enough to buy a drink.
That’s what keeps me thinking about this.
The account itself isn’t the story.
The lesson is.
Maybe This Isn’t About Money at All
A few years ago, I asked my financial advisor if I was saving enough for my daughter’s college.
At the time, I was putting a few hundred dollars a month into her 529 plan. I thought I was doing a pretty good job.
He looked at me and laughed. “That’ll probably get her through about halfway through sophomore year,” he said.
I thought he was joking. He wasn’t.
Then he reminded me I had twin boys on the way.
Everything I needed to save just tripled, and I wasn’t even saving at the rate I needed to at the time. .
That conversation changed the way I thought about planning for my kids.
Now this Trump Account has me asking another question.
Not whether it’s a good investment.
Whether I’m capable of raising adults who know what to do with it.
Because when they turn 18, the account becomes theirs.
Not mine.
If they want to leave it invested for decades, it could become life-changing wealth.
If they want to cash it out and buy something stupid, that’s their decision too.
That’s the part nobody is talking about.
The investment may be easy.
The parenting isn’t.
So I honestly don’t know what I’m going to do yet.
Maybe I open the accounts. Maybe I don’t.
I’m still thinking it through.
But I wanted to share what’s going through my head because I know I’m not the only parent asking these questions.
If your kids are already grown, maybe this doesn’t apply to you.
But if you have little kids, or you’re planning to have them someday, I’d love to hear what you think.
Would you trust your 18-year-old with $150,000?
Or is the real investment making sure they’re the kind of person who knows they should leave it alone?
Stay sharp,
JC Parets, CMT
Founder, TrendLabs