Donald Trump’s baby bonds are moving closer to reality.
Hedge fund billionaire Ray Dalio has signed up to the idea, as has Michael Dell.
Dalio will provide $250 each for 300,000 children, while Dell’s $6.25 billion pledge would fund 25 million accounts nationwide.
The so-called Trump Accounts resemble retirement accounts, except they begin at birth with the US government depositing $1,000 in index funds.
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Parents can contribute annually, allowing money to grow steadily through compounding.
US treasury secretary Scott Bessent says if the S&P 500 continues its historical 10.5 per cent annual growth, the one-time $1,000 deposit could swell to $600,000 by retirement.
With regular contributions, an account could reach $300,000 by age 18. Even modest annual deposits, $250 a year, could turn into $20,700 by adulthood.
Too ambitious?
Perhaps. Additionally, Trump’s branding will put some people off. Still, policymakers from across the US political spectrum have voiced support for the concept of baby bonds. Indeed, Dalio frames it as bipartisan nation-building.
In Ireland, the programme for government promised to explore a “managed savings account for newborns with an initial once-off contribution by the State, ensuring lower-income families benefit most”.
We haven’t heard much about that since, but it’s a worthwhile idea that not only gives children a head start, but insights into financial literacy, investing, and the magic of compounding.
