A Trump Account could make your kid a millionaire—but financial experts warn of a catch - Fortune

If you’ve opened the Trump Accounts app, the pitch for investing is hard to resist.

Enter a $250-a-year contribution, and the app shows the user would have $19,000 by age 18 or a whopping $878,000 by age 55. Bump it up to the $5,000 annual max, and the numbers jump to $271,000 and $13 million, respectively.

That eye-popping figure comes straight from the government’s own projection on TrumpAccounts.gov, but it rests on an assumption of the S&P 500’s historical annual return of more than 10%, sustained without interruption for 55 years. While that 10% has historically been the case, Morningstar provided CNBC with data showing U.S. stock market returns could be lower over the next decade, closer to an average return of 6.3% per year.

That being said, financial planners want parents to see the full picture before they start dreaming of what feels close to a trust fund, or at the very least, a nice nest egg, for their kids.

Trump Accounts, the tax-advantaged investment accounts for children created under President Donald Trump’s tax law that officially launched July 4, have drawn attention for a headline promise: that a child could retire a millionaire off contributions their family barely notices. The accounts function like a traditional IRA, but during the “growth period” that runs from birth through the year before a child turns 18, special rules apply.

Eligible babies born between 2025 and 2028 receive a one-time $1,000 seed deposit from the U.S. Treasury, and families, friends, and others can collectively add up to $5,000 per year in after-tax dollars, a limit indexed for inflation after 2027.

So what could a family actually build? And what should they understand before treating any app projection as a full financial plan? Here’s how four financial experts break it down—including Adam Vega, a certified financial planner and managing partner at Avance Private Wealth Management, who is weighing the accounts for his own newborn.

“We’re going through these nuances together,” he told Fortune.

How much could a Trump Account really be worth?

The four advisors who spoke with Fortune landed in a very similar range, and they got there using a more conservative return assumption than the Trump administration.

Pam Krueger, a registered investment advisor and founder of the advisor-matching platform Wealthramp, ran the numbers for a family that maxes out their accounts. Add the $1,000 government seed to $5,000 a year from birth through age 18, and the family has contributed roughly $91,000.

Assuming a 7% long-term annual return—her benchmark for money invested in the stock market over a lifetime—”that account could grow to roughly $185,000 by age 18,” Krueger told Fortune. Left untouched after that, with no further contributions, “it could grow to more than $1 million by age 45.”

“But that child could have much more by the time he/she is in their mid 40’s,” she added. “Time in the market is doing the heavy lifting. That’s the power of compounding growth.”

Mitch Hamer, founder and lead advisor at Intersecting Wealth, modeled the same idea for his own 5-year-old son, whose account he recently funded. Also using a 7% return, he projects those maxed annual deposits reach $1 million at age 45 and $3 million at 60. At 8%, which he also considers defensible, the figures climb to $1.4 million at 45 and $4.5 million at 60. Those totals, he notes, would be built on just $200,000 of contributions by age 45.

“A long time horizon and no interruption of compounding is a powerful concept in personal wealth accumulation,” Hamer told Fortune.

And that’s the lesson financial experts emphasized over and over: The contributions are almost beside the point.

“Here’s the part that should stop people in their tracks,” Matthew Chancey, a certified financial planner, tax strategist, and founder of Tax Alpha Companies, told Fortune. Of the $1.5 to $2 million he projects a maxed account could reach by age 55 at a 7% return, only about $91,000 came from the family.

“The other $1.5 million or so came from time,” he said. “That’s not a rounding difference, it’s the whole story. Which means the only real question isn’t how much you put in, it’s whether the kid can leave the money alone long enough for time to do what time does.”

Krueger made the same point using percentages: Using a 7% assumption, more than 90% of the account’s eventual value comes from decades of compounding, not deposits.