A savings account is the default for most parents. Open one at your local bank, deposit money, watch it (slowly) grow. Simple.
But now there's a Trump Account, officially called an Invest America Account, and it works very differently. So which one makes more sense for your child?
What a Savings Account Actually Does
A savings account at a bank is safe and liquid. Your money earns interest (usually somewhere between 0.01% and 5% depending on the account type and current rates), and you can withdraw it anytime.
High-yield savings accounts have been popular recently because interest rates climbed. But historically, savings account rates have barely kept pace with inflation. You're not really building wealth. You're preserving it.
What a Trump Account Does
A Trump Account, created under the One Big Beautiful Bill Act, invests your child's money in low-cost S&P 500 index funds managed by the U.S. Treasury. The S&P 500 has historically averaged around 10% annually over long periods.
If your child was born between 2025 and 2028, the government seeds the account with $1,000 for free. Families can contribute up to $5,000 per year on top of that. The account is tax-deferred, meaning the money grows without being taxed every year.
At 18, it converts to a traditional IRA.
The Real Comparison: Long-Term Growth
Here's the honest math. Say you open a savings account for your newborn with $1,000 and add $100 a month. At a 4% annual rate (generous for a savings account), you'd have roughly $31,000 by the time they turn 18.
A Trump Account with the same $1,000 seed, $100/month in contributions, and a 7% average annual return (conservative for an S&P 500 index fund over 18 years) would be closer to $45,000. And if you contribute more, the numbers grow significantly.
Over 18 years, the difference between a savings account and an index fund is substantial.
When a Savings Account Makes More Sense
Savings accounts aren't bad. They're just a different tool.
If you need the money to be accessible, a savings account makes sense. Emergency fund, money you might need in the next 1-3 years, college spending money your kid will actually use soon. You can't touch the Trump Account without penalty before your child turns 18 (with narrow exceptions).
For truly long-term money you won't need until your child is an adult, a savings account is likely leaving a lot of growth on the table.
Can You Have Both?
Of course. Most families will want both. A savings account for short-term accessible savings, and a Trump Account for long-term wealth building.
If your child qualifies for the free $1,000 government seed, you'd be leaving money on the table by not opening the Trump Account. That money gets invested in the market and compounds for 18 years. A savings account doesn't offer that.
How to Get Started
To claim the $1,000 government seed, you'll need to file IRS Form 4547 with your 2025 tax return by April 15, 2026. The account itself opens in July 2026. We've got a full step-by-step guide to opening a Trump Account when you're ready.
Not sure if your child qualifies? Check the Invest America landing page or take the quiz below.
Find out in 30 seconds if your child qualifies at investamericaquiz.com.
Still have questions? Here's everything people are asking about Trump Accounts.
This post is for educational purposes only and is not tax, legal, or investment advice. Grifin is not affiliated with the U.S. government or the Invest America program.
