How Is a Trump Account Invested?

Trump Accounts have a simple investment rule: all money must go into S&P 500 or broad U.S. equity index funds. You cannot pick individual stocks. You cannot invest in bonds or crypto. The law intentionally keeps it simple and low-cost.

This design is not a limitation — it is a feature. Here is why, and how it works in practice.

The Investment Requirement

Under IRC Section 530A, Trump Account funds must be invested in mutual funds or exchange-traded funds (ETFs) that track one of these:

• The S&P 500 Index — the 500 largest U.S. publicly traded companies
• A broad U.S. equity index — such as the total U.S. stock market

This means every dollar in a Trump Account is invested in a diversified basket of American companies. When you contribute $100, you are buying a small piece of Apple, Microsoft, Amazon, Johnson & Johnson, and hundreds of other companies all at once.

What Is NOT Allowed

The law is specific about what you cannot invest in:

• Individual stocks — no picking Apple or Tesla on their own
• Bonds or bond funds — no fixed-income investments
• Cryptocurrency — no Bitcoin, Ethereum, or crypto funds
• Real estate — no REITs or direct property investments
• International-only funds — must track U.S. equities
• Sector funds — no tech-only or healthcare-only funds
• Target-date funds — unless they meet the index tracking requirement

The Expense Ratio Cap: 0.1%

Every fund charges a small annual fee called an expense ratio. Trump Accounts cap this at 0.1% (10 basis points). That means for every $10,000 invested, you pay no more than $10 per year in fund fees.

This cap protects families from high-fee funds. Many popular S&P 500 funds are well below this limit:

How the Custodian Works

Every Trump Account is held by a custodian or trustee — a financial institution approved to manage these accounts. The custodian:

• Holds the account assets
• Provides a menu of eligible index funds to choose from
• Processes contributions and investment changes
• Reports account activity to the IRS
• Handles the conversion to a traditional IRA at age 18

As the authorized individual (parent or legal guardian), you choose which eligible fund to invest in from the options your custodian provides. You can also switch between eligible funds during the growth phase.

Why Index Funds Work for Long-Term Growth

The S&P 500 has delivered an average annual return of roughly 10% before inflation (about 7% after inflation) over the past several decades. Over any 18-year period in history, the S&P 500 has never delivered a negative return.

Index funds keep costs low, provide instant diversification across hundreds of companies, and eliminate the risk of picking the wrong individual stock. For an 18-year time horizon, this is widely considered one of the most reliable investment approaches available.

For more on expected returns, visit our expected returns guide. To learn what happens during market downturns, see What Happens in a Market Crash?. And to run growth projections, try the Growth Calculator.