Trump Accounts are here. Yahoo Finance Senior Reporter Jennifer Schonberger joins Market Domination Overtime to break down the key ETFs expected to play a central role in the new child savings accounts and what they could mean for long-term investors.
00:00Jen
Hey there, Josh, that’s right. Those Trump accounts officially launched July 4th. And today, the US Treasury is announcing the funds, the money in those Trump accounts will be invested in. At launch, all funds in Trump accounts will be invested in the following fund, the State Street Spider portfolio S&P 500 ETF. Now, that fund was selected as the default investment for Trump accounts because it is the lowest cost S&P 500 ETF with an expense ratio of just two basis points while still offering broad access to the US stock market. Now, key to the Treasury selection of funds was that they were the lowest cost for the American public. In the coming months, other funds, low-cost funds will be offered to parents to help diversify those portfolios for the children. And those funds include the I shares core S&P 500 ETF, Vanguard Total stock market ETF, State Street Spider portfolio S&P 1500 composite stock market ETF, and I shares core S&P Total US stock market ETF. But for now, all contributions into Trump accounts will be invested by default in that State Street fund. Now, the Trump accounts for those who are not familiar are essentially tax-advantaged funds for children. They’re geared towards educating children about finance, while also helping them build wealth to help save towards college, a first-time house, or retirement savings. And for babies born between 2025 and 2028, Trump’s second term, the government will contribute $1,000 to each child’s portfolio or account. Though, other kids who are older can still have Trump accounts. And parents, as well as an uh, employers, family members, friends can all contribute to these Trump accounts, $2500 per year beginning July 5th with a $5,000 annual cap. Now, parents will be able to directly contribute to these uh, Trump accounts through the Trump Accounts app available on the App stores for Google and Apple, and they do not need to file a specific IRS form in order to contribute to these funds. Josh.
02:44Josh
All right, Jen, thank you.
