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In a recent podcast interview<\/a>, U.S. Treasury Secretary Scott Bessent argued that one of the Trump administration\u2019s most impactful long-term legacies will be the creation of Trump Accounts.<\/p>\n Trump Accounts<\/a> are a new, tax-deferred savings account for American children. Starting in 2026, the federal government will give US$1,000 to eligible newborns that will be invested on their behalf in low-cost index funds.\u00a0<\/p>\n \u201cThese Trump Accounts, I believe, are a game changer,\u201d Bessent said.\u00a0<\/p>\n \u201cRight now, about 38 per cent of Americans do not own equites \u2026 By giving every child $1,000 at birth for these accounts, we\u2019re going to increase financial literacy, we\u2019re going to increase people\u2019s optimism in the market. \u2026 [E]veryone gets a stake in American prosperity. I think this is going to make every man and woman a market participant.\u201d\u00a0<\/p>\n The Trump administration\u2019s move in some ways follows in Canada\u2019s footsteps. Canada already does help children save for their future education through the Registered Education Savings Plan (RESP) and Canada Learning Bond (CLB).\u00a0<\/p>\n But certain features of the Trump Accounts would be worth emulating here.<\/p>\n One of the Trump Accounts\u2019 most attractive features is that the money will be invested for children in a diversified portfolio of equities. This $1,000 investment will have an estimated worth of about $6,000 by the time a child turns 18, if historical stock market returns continue.\u00a0<\/p>\n Canada, by contrast, gives low-income children an initial payment of $500 at birth, and up to $2,000 by the time they turn 15 if they remain low income. But this Canada Learning Bond is simply placed in an account; it is not necessarily invested on their behalf.\u00a0<\/p>\n Our journalism isn’t possible without paid subscribers.<\/p>\n If you value a free and fair press, become a paid subscriber today. <\/p>\n Parents who are themselves not financially literate may leave that money sitting in the bank, uninvested \u2014 a missed opportunity for wealth creation. Others may invest the money in high-fee mutual funds or conservative Guaranteed Investment Certificates.<\/p>\n Thank you for being a paid subscriber. Our work would not be possible without your support.\n\t\t\t<\/p>\n Subscribe to Editor’s Picks. Receive our free Saturday newsletter featuring our best stories from the week.<\/p>\n It is of course parents\u2019 prerogative to invest their own money as they see fit. But it should also be the government\u2019s prerogative to invest its contributions in the most wealth-maximizing way. Any investment advisor worth their salt will tell you that low-cost index funds are the best way to invest for the long-term today.\u00a0<\/p>\n Trump Accounts are also attractive in their simplicity. The government will give all eligible newborns a single, one-time payment of $1,000 at birth, and parents (or other contributors) will be permitted to contribute up to $5,000 per child each year.\u00a0<\/p>\n The RESP and CLB are, by contrast, very complicated. Just look at their rules<\/a>.<\/p>\n For the CLB, a child\u2019s parents must continually re-confirm that they remain low income each year to entitle the child to an additional $100 contribution from the government.<\/p>\n With the RESP, parents (or other contributors) can contribute up to $50,000 per child, with the government matching up to $7,200 per child. However, there are specifications around the government\u2019s annual match amount, lookback provisions, family account sharing rules and so forth. And we haven\u2019t even gotten into the withdrawal terms.<\/p>\n Subscribe to Family Matters. Receive our free quarterly newsletter featuring stories that matter to your family’s health and well-being.<\/p>\n As we have written<\/a> before, complexity favours the wealthy. Indeed, the government\u2019s data<\/a> show the \u201ctake-up rate\u201d for the CLB in 2024 was just 43 per cent, meaning a majority of children who were eligible to receive a government contribution did not receive it. Canada could almost certainly increase the take-up rate by simplifying its rules.<\/p>\n