The passage of President Trump's "One Big Beautiful Bill" into law wasn't pretty to watch, but for Americans who have been or will be born in the years from 2025 through 2028, it offered something very new. The law sets up a pilot program for children born during this period that gives them a new way to save, plus a $1,000 credit to get them started.

Called "Trump Accounts", the new investment builds on legislation proposed by Senator Ted Cruz earlier in 2025, which was rolled into the "big beautiful bill". Here's NerdWallet's excellent summary of the basics for the new accounts:

Who qualifies?

Not every kid can get a Trump Account. To be eligible for the $1,000 credit under the pilot program, children must:

• Be born between Jan. 1, 2025, and Dec. 31, 2028.
• Be a U.S. citizen.
• Have a Social Security number.

How do Trump Accounts work?

Getting started

Under the pilot program, the Treasury will set up accounts for qualifying kids if their parents haven’t already done so. Parents aren’t required to make an election.

How do contributions and withdrawals work?

Trump Accounts come with some restrictions. Contributions made before the calendar year in which the beneficiary turns 18 are limited to $5,000 per year. Employers can contribute up to $2,500 to accounts, which won’t count as income for the parents or children.

Trump Account distributions aren’t allowed before the first day of the calendar year the child turns 18.

Contributions made after the child’s 18th year generally follow traditional IRA rules. The IRA contribution limit in 2025 is $7,000 for those under age 50. The money invested grows tax-deferred, and withdrawals are taxed as ordinary income.

There’s a 10% penalty for withdrawing money from an IRA before age 59-½, unless there’s a qualifying exception, such as homebuying, or paying for higher education expenses.

What about taxes?

Contributions made to Trump Accounts before the child’s 18th birth year must be made with after-tax dollars, which means no tax deduction for parents or employers, said Jacob Martin, a certified financial planner in Columbus, Ohio, in an email interview.

While the new Trump accounts aren't themselves necessarily better than existing types of investment accounts, they are aimed to benefit those Americans who stand to gain the most from the power of compounding over time:

The "proposal reflects a growing consensus: investing early in every child’s future is a smart and necessary step," said Marisa Calderon, president and chief executive of Prosperity Now, a national nonprofit organization focused on expanding economic opportunity for low-income families and communities in the United States....

"Research shows that lasting change comes from scale," Calderon said. "Deposits must grow over time and be available when they matter most, such as paying for college, starting a business, or buying a first home."

After 25 years, $1,000 invested in the S&P 500 would grow to approximately $10,835, for example. The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index.

We decided to put that last statement to the test. We have the tools to estimate how much any hypothetical investment in the S&P 500 in any month would be worth at the end of a given period of investing.

We put those tools to work to produce the following chart to show how much $1,000 invested at the average level of the S&P 500 was in any month from January 1955 onward, with the value of the investment shown as of May 2025 when Cruz' introduced his bill. Because the value of the investment grows by more than one order of magnitude over this 70+ year period, we're presenting the following chart showing that growth in logarithmic scale. If you prefer to see the data on a linear scale, we have you covered - just follow this link.

Some quick observations:

• Reinvesting dividends unlocks the power of compounding. In the 20 years from May 2005 to May 2025, an initial investment of $1,000 in the S&P 500 would grow to about $4,932 without dividend reinvestment. With dividend reinvestment, that value of that $1,000 grows to about $7,672.
• The longer the investment is held, the better it gets. At the very long investment horizon of 70 years, $1,000 invested in May 1955 would grow to about $154,546 without reinvesting dividends, but with dividend reinvestment, that $1,000 would have grown to almost $1,231,743 in May 2025.
• The peaks on the chart come from the initial investment being made when the S&P 500 had experienced a crash. By the same token, the troughs in the value of how much a $1,000 investment has grown comes from having been invested when the index itself had either peaked before crashing (such as in 2007) or was experiencing inflating bubble conditions (such as from April 1997 through August 2000).
• Investing just $1,000 once is nice, but making regular investments monthly over a long period of time can help smooth out the investment gains over time. Even if the size of those regular investments is much smaller than $1,000, the benefit of dollar-cost averaging can reduce the impact of the S&P 500's volatility.

There are several tools that use historic data where you can see how the value of money invested in the S&P 500 has changed over time. Here's a sampling:

• Investing Through Time (Political Calculations)
• Stock market returns since 1957 (OfficialData.org)
• S&P 500 Historical Return Calculator [With Dividends] (Of Dollars and Data)
• S&P 500 Historical Return Calculator (Don't Quit Your Day Job)

Each of these tools will deliver similar, but not necessarily the same results. These changes are often attributable to minor things like how a given month's estimated dividends are rounded, which can lead to notable differences when long periods are considered given the compounding math.

We're fans of both Nick Maggiulli's work at Of Dollars and Data and also PK's work at Don't Quit Your Day Job. We recommend exploring their sites and posts to where they've incorporated tools to explore investing and other topics!

Image credit: Photo of a little girl sitting on a couch holding money by Bermix Studio on Unsplash.