The US administration is set to introduce a new savings initiative known as Trump Accounts, launching on 4 July to coincide with the 250th anniversary of the Declaration of Independence.

The scheme is designed to provide children born between January 2025 and December 2028 with investment accounts funded by an initial $1,000 contribution from the federal government.

These funds, along with any additional contributions from parents, employers, relatives, charities or other organisations, will be invested in stock market index funds managed by private firms.

Children will not be able to access the money until they turn 18, and withdrawals will be restricted to specific purposes such as education costs, starting a business or buying a home.

Parents are allowed to contribute up to $2,500 per year in pre-tax income, with total annual contributions capped at $5,000 excluding government and philanthropic payments.Older children who do not qualify for the newborn grant may still open accounts but will not receive the initial $1,000.However, certain private donations may provide smaller seed contributions for some older children in lower-income areas.

The programme has attracted significant backing from wealthy donors and business leaders, including large-scale pledges intended to expand access to millions of children.Supporters argue the initiative encourages long-term investment habits and broadens participation in the stock market from an early age.

Critics, however, claim it does little to address immediate childhood poverty and may deepen inequality by disproportionately benefiting families who can afford additional contributions.They also argue it coincides with cuts to social welfare programmes such as Medicaid and food assistance.Overall, the policy represents a major shift towards privately managed, tax-advantaged child investment accounts with government-backed seed funding.