The United States launches the "Trump Account" children's investment plan; Wall Street institutions warn that high-return promotions are misleading
The U.S. government recently officially launched the "Trump Accounts" application, a tax-preferential investment tool for minors, and disclosed policy forecast data. However, many Wall Street financial analysis institutions and wealth management experts, including Morningstar, pointed out that the "millionaire" asset blueprint promoted by the official platform was based on overly aggressive and unsustainable stock market return assumptions, and was suspected of misleading family financial planning. Its actual investment risks and rules details have triggered widespread doubts in the industry. According to the details announced by the U.S. Department of the Treasury and the Internal Revenue Service, this project, as a core component of the Family Tax Relief Act, officially launched the commercial capital injection channel on July 4. The policy stipulates that all eligible U.S. infants and children born between 2025 and 2028 can receive a one-time seed capital of US$1,000 allocated by the Ministry of Finance; thereafter, families and all sectors of society can voluntarily invest up to US$5,000 in after-tax funds each year during the "growth period" before the child reaches 18 years old. The assets in the account enjoy tax deferral benefits until the owner switches to a regular individual retirement account (IRA) management after reaching adulthood. The promotion model of the official application shows that if a family invests US$250 per year, the assets can reach US$878,000 by the time the child is 55 years old; if the maximum investment limit of US$5,000 per year is reached, the asset size can even reach US$13 million. However, professional analysts on Wall Street pointed out that this "eyeball effect" forecast data has serious underlying loopholes. This calculation is entirely based on the S&P 500 Index's historical average annual return rate of over 10%, and assumes that this growth rate can continue uninterrupted for a 55-year cycle. In response to this optimistic expectation, the latest forecast data provided to the media by Morningstar, a global authoritative rating agency, shows that due to the suppression of macroeconomic cycles and valuation structures, the average annual return rate of the U.S. stock market in the next ten years is expected to decline sharply to around 6.3%. This means that, after deducting the costs of inflation and market fluctuations, the scale of assets that most households can eventually build will be far lower than the theoretical peak officially promoted. In response, certified financial planners (CFP) from multiple third-party financial institutions jointly issued compliance warnings. Pam Krueger, founder of wealth management platform Wealthramp, stresses that parents must take a comprehensive look at the potential rules and regulations before considering the account as a "trust fund" or a stepping stone to long-term retirement. Since at least 90% of the account's assets during the "growth period" are required to be allocated to low-cost U.S. stock index funds or ETFs, and any form of early withdrawal is in principle prohibited before the age of 18, family funds will face extremely high liquidity lock-in risks and single market fluctuation risks. Industry experts generally advise that, despite the appeal of an initial $1,000 government subsidy, the public should not directly equate the app's marketing projections with complete household financial planning. Blind pursuit of high-risk single stock equity allocation may not only fail to achieve the expected wealth appreciation, but may also weaken families' ability to meet urgent financial needs such as higher education savings in the short to medium term.