How the recently launched 'Trump Accounts' follow Warren Buffett's popular stock market advice

US President Donald Trump recently launched 'Trump Accounts' for children to have investments in stock indices, which interestingly follows a simple stock market strategy that legendary investor Warren Buffett has been preaching for several years now.

The Treasury Department of the White House announced last week that Trump Accounts can accept donations of public stock, which in turn will be put in the State Street SPDR Portfolio S&P 500 ETF (SPYM) as an “initial default investment.” “The fund was selected to provide broad exposure to the US stock market while maintaining expenses well below the statutory fee limitation,” the department said in a statement on Thursday.

What Warren Buffett had advised

Warren Buffett has long preached the advantages for parking your money in an S&P 500 index fund instead of individual stock picking, somethings that the newly launched program is also following. Back in 2007, the market expert made a $1 million bet that he could outperform hedge fund managers over the course of a decade by investing in an S&P 500 index fund. And in 10 years, he won the bet.

In fact, Buffett once regretted buying his first-ever share at the age of 11 instead of investing in an index focussed fund. He bought shares of natural gas company Cities Service for $38 apiece in 1942, just after Japanese air forces attacked the US Pacific Fleet at Pearl Harbor, amid the raging World War II.


"I bought my first stock when I was 11 years old. It was the first quarter of 1942, shortly after Pearl Harbor. I spent $114.75," he said during an interview with Yahoo Finance in 2018. "If I put that $114 into the S&P 500 at that time, and reinvested the dividends, think of a figure as to what it would be worth today?" he said.

"The answer is about $400,000. So if I as a little kid had taken that 114 bucks I would have saved shoveling snow or whatever I had done — $400,000 today. One person's lifetime. That's America,” he further said during the 2018 interview.

Also Read | What Warren Buffett learnt from buying his first stock at age of 11 amid World War II

In his 2013 letter to Berkshire Hathaway shareholders, Buffett had laid out a clear strategy. “Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions or individuals—who employ high-fee managers,” he wrote.

The S&P 500 had gained around 10% in 2026 so far. In the longer term, the index has jumped nearly 21% in the past one year and 72% in five years. Over the last 30 years, the S&P 500 has averaged annual returns of 10-11%, although that includes big swings in individual years, such as a 37% crash during the 2008 recession and a 29% surge in 2021, according to a report by Fortune.

All about Trump Accounts

The ‘Trump Accounts’ is a program designed to give newborn Americans a stake in the stock market and ‌help build wealth from an early age. Trump on Monday rang the opening bell from the White House Oval Office alongside executives of the New York Stock Exchange and Nasdaq.

The program is supposed to act as a new savings vehicle to other tax-efficient college savings plans and retirement accounts. The beneficiaries are automatically invested ‌in ⁠a low-cost index fund designed for long-term growth. Account holders take control when they turn 18, at which point they can withdraw the funds or continue investing. Gains will be taxed upon withdrawal.

Several US-based companies have pledged support for the program, with employer matches or additional seed funding. These include payment giant Visa, technology company Dell, and media ⁠and telecom firm Comcast. Chipmaker Micron has pledged $250 million to support Trump Accounts.

Also Read | Trump rings NYSE, Nasdaq Opening Bells in Oval Office to celebrate 'Trump Accounts' launch

(With inputs from agencies)

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