Latest / The Investor Shed Podcast / Trump Accounts for Kids
Transcript
- Nick & Jeremy: welcome back to the investor shed podcast. I am your co-host as always, Jeremy Kitchen, here with my beautiful and illustrious main host of the day, Nicholas Beverge. That was so kind of you. Jeremy Kitchen, congratulations, you are a father of a son. I am. I'm a s not a son of a bitch. I'm a father of a son. That's correct. yeah, had a baby over the weekend. Yeah. What day was that? That was on Friday. It's kind of all blended together. Yeah. Sleep is something that like you don't get that right now. He was born real healthy, real quick. Real healthy, real quick. Yeah. What's his name? his name is Arthur William. What a good name. Such a regal name. I love it. Everyone's like It was almost Wilhelm. Yeah. Everyone's like, such a good name. Every everyone I talked to him like Arthur Thanks. I I made it up. Arthur's a good name. Arthur is a good name. Especially if you're a Red Dead Redemption 2 fan. You are. Arthur Morgan. God, so good. Okay. He's a saint. I'm a fan. Good job on the Arthur name. Thank you. We appreciate it. How how is how was your first weekend with that kid? It's good. just getting getting to the adjustments, man. I mean, baby doesn't sleep much, but when he he sleeps a lot, but when he doesn't, he'll let you know. We've got such a good topic for exactly what just happened to you. Yeah. what happened to me later. It's a good disease. Well, you had a kid. And and it is time to get that kid set up with a retirement account. Immediately. Immediately. It is July twenty twenty six, and that means Trump accounts are live. Should we do the whole episode in like Trump voices? No, no, no. Then we're all gonna Okay. Now listen, real quick, for those that don't like Trump, totally fine. Totally get it. This has nothing to do with Trump. This is just a bad name for a great account. I was gonna say, like, I hate the name so much. Like yeah And it this isn't even about Trump, just like putting a president's name on a thing. It it's like buying like Trump gasoline or Obama cookies. Like it just like it's just don't do that, man. This is such an incredible opportunity that was just unleashed to the public. A lot of people probably don't even know about it, so we're gonna talk about it. if you love your kids more than you love your politics, you need to open a Trump account immediately. Right. We'll go through all the steps on how to do that, but let's first Break down exactly what a Trump account is if you don't Break it down, Jeremy. All right. So a Trump account is essentially what Nick said. It is a retirement account for an adolescent person. It can be you can start it at age 16, you can start at age 14, you can start it at age zero. As long as they have a social security number and you've done I need to pull up the form here. form forty five forty seven to elect your child. Yeah. So you need to go through the IRS.gov, we'll have all the details on actually how to set these up. These rolled out on America's 250th birthday. So July fourth, 2026, Trump accounts are now active. they're they have so many cool benefits and we are gonna get to them all. But I think like the best thing I think is that like anybody can contribute to this. It does not have to be earned income. That is tr that is the biggest thing. That is one of the one of the biggest things. It's got some really cool like it's you could technically kind of open retirement accounts for your kids at a very early age, but they had to actually make their own income. Yeah. Which is hard for a baby to do. Right. Like I can't have my baby do my social media. You know what I mean? Like you could have like Offering Holden do your work in your business. Mary Kate Olslin. Right. Like unless you have worker babies. Yeah, yeah. it's hard to put in a r you know, set up a retirement account and make it legit. Yeah. Now anyone can just contribute to it. You can kids are gonna walk around with QR codes on their heads, yeah, and be basically any any grandpa, you know, uncles, friends, your your rich neighbor down the street, anybody can re contribute. To these kids' retirement accounts, which is fantastic. So the money, real quick, the money going in is not tax You do not get a deduction for that. Not not tax reduction. So and that that's kind of a like downfall. You don't get a tax deduction. So it does kind of work like a Roth. And we're gonna get to actually why that's important later as well. Right. contribution limits on these five thousand dollars a year. Manageable, manageable, super manageable, especially since it's crowdsourced, right? Like this isn't something that has to be. Or funded by your parents. Yeah. You just have to say, like, you know, if your kid's having a birthday party, rather than getting them a crappy toy, like, hey, maybe put ten dollars into their retirement account. Exactly. I think it's such a good thing. If have 30 people coming and and you have too many toys in the house, you have a six year old, just be like, hey, we got a QR code. If you don't want to bring a present, please don't just contribute, you know, ten or twenty bucks to his retirement account. Yeah. you know, that That stuff goes a long way, I think, in the future. I think it's gonna be fantastic. Yeah. And and to kickstart these accounts, what I what I thought was really cool too. So any child born between January first, twenty twenty-five and December thirty-first, two thousand twenty-eight, it's an automatic one thousand dollar contribution contribution. Yeah. From the government. Free money. From the government. Free money. So that means that Most children do not qualify for this. Right. So don't think that almost everybody's gonna get a free thousand bucks. It's mostly just for babies. Yeah, just from but that's a lot of kids. I mean, like there's gonna be millions of people born in these next couple of years, you know what I mean? Sure. Yeah. but it don't let that d distract you from actually opening an account just because there's no free money and because the the math is insane. You know, everybody when I was like eighteen ish talking to seniors and I remember talking to my grandma, she she always said, gosh, if I could have started that early, start early. And what they were saying by start early is eighteen. Right. Yeah. Setting up your retirement account like early then because most people don't even do it until they're in their thirties or forties. Sure. Most people don't even do it past that, I would say. and then time but what is on your side is compound interest. And You know, starting time is on your side. That's what you got. starting that compound interest at age eighteen months or you know, one year or seven years old or ten years old, like my kids. My kids are seven and ten. Yeah. We're starting them, baby. Yeah. Five five grand a piece. And they're gonna be working a little bit towards I I'm gonna teach how to put a little bit of income in or you know, how to contribute to these accounts or ask people to contribute to their accounts over time. Yeah. because all it takes is just contributing, you know, just a few thousand dollars a year for like eighteen years and then you can stop and then they will basically retire a millionaire if you do it right. Right. And there's numbers here. I'm gonna go over those numbers. I got some of those pulled up. the account is fully in your child's name and you were the sole custodian of it. So your parent or guardian is the sole custodian of the account until they turn eighteen. The day they turn eighteen, the account gets handed over to them. And it gets handed over and defaulted as just a regular IRA. Yes. And not as a traditional IRA, yes, I think. Yeah, it's just it's just a normal IRA, but you can convert it to a Roth. Yeah. We'll talk about that later. but what you can do, what Nick said, like if you have a brand new baby like we just did, right? From ages zero to eighteen, we can contribute five thousand dollars to this account based off contributions alone. That's a ninety thousand dollar account at the age of eighteen without any growth. Right. That's nuts. And like they've got some growth numbers here we'll kind of look at here. So at age 18, if you did the five thousand dollars a year plus the one thousand dollar free money from the government, you're looking at two hundred and seventy-one thousand dollars based off S P gains over the next eighteen years. So your ninety is gonna turn into two seventy-one. It's gonna basically triple. Right. In in eighteen years. That's that's crazy. Yeah. And giving a kid an eighteen giving eighteen year old two hundred and seventy-one thousand dollars that they can pull out tax-free for school or to buy a house or anything like that. Yeah, up to twenty five up to twenty five percent. Up to twenty percent. Or something like that without penalties to to to buy a house. But that's huge. Yeah. That's like an eighty thousand dollar. Yeah, so there are restrictions just so you know. Sure. or else you'll get penalized just like most retirement accounts. Sure. something else really I don't know if you already touched on this, but what I actually love is that it's not self directed. There are restrictions on the kind of investments that you can do. And Mostly it's gonna be S P five hundred index. Stock bonds mutual funds. Which is just I think, you know, being a real estate guy, I'm on board with it. I I think it's fantastic because if that many people are forced to invest in the S P five hundred index, what's gonna happen to that? It's just gonna grow. It's it's good for the economy too. It's good for the economy. It's a win win win. Right. Like it's not good for people that don't own anything. That's true. because people are just going to get, you know, it you're down in the game if you don't own stuff. Yeah. you'll just be a slave to inflation. It gives other hypothetical numbers here, obviously. So like at age 18, if you keep the account until age twenty-seven with no more contributions until after you're age eighteen, it would be at seven hundred and forty-two thousand dollars at the age of twenty-seven, just letting compound interest growth. So that trouble's gonna almost triple again. At what age again? Twenty-seven. Twenty-seven. This is f starting as a baby. Starting at eighteen. Starting at zero, sorry. Starting at zero, letting it contribu contribute till you're eighteen. Yeah. And then not contributing any more and just let's so being completely irresponsible then after eighteen. Yeah. But you let everybody else help you. Yeah. You just let the com compound in interest do its thing, basically. And then it says at fifty five, and this is all just like where the numbers start getting staggering about retirement accounts and and compound interest in general. You know, contributing zero a year, you'd have a thirteen million dollar account. At what age? At age fifty five. At age fifty five not contributing anymore? Well, that's where it gets. Can you contribute to these over age eighteen or no? yeah, you can continue to contribute. Okay, so then I guess if you are contributing thirteen five thousand dollars a year, it would be at three. Okay. Yep. Yeah, okay. So sorry, start with the wrong information. I didn't I wasn't that's even better that people can contribute to these after the age of eighteen. I thought they couldn't contribute. Only five grand a year. Yeah, that's that's not much. I mean that's not much for most people. So adults, right? What, get their own retirement accounts? Get a Trump account. well, y there's no point. Right. There is a point because if you were to use this in conjunction with a Roth, you know what I mean? Like you can do both. Well, you can open multi you can have multiple Roths. Yeah. I I the cool thing about the Trump account is that other people can contribute to it. Yes. for minors, anyone under eighteen. Yeah. That that's that's the the magic. Other than that, it kind of works like a regular retirement account, but you got you got time on your side. that that you know, starting a retirement account with fifty thousand or a hundred thousand dollars when you're eighteen, depending on how early or how old you were when it first started. Sure. that gives such a leg up because then you're you'll s actually see year after year your investments grow. But what's what's tough with most people when they get started in Even if they start super early at eighteen, you know, for the first decade or so until they're thirty ish, they still don't they don't see these b a big number if they're contributing seven grand a year or whatever it is, because they're still under a hundred grand almost for the first ten years. Once you get over a hundred grand, then magic starts happening with compound interest. Right. The more you have in the account, the more the account grows. Kind of crazy, right? Well, just the just the older that you can live and not spend the money. Right. And contribute and con consistently reinvest. Yeah. I I love these accounts. Honestly, like I said, as soon as my little baby Arthur gets a social security number, which we're getting that paperwork, you know, and it'll come in the next month or two. I'm just gonna sign up him a quinn. Nice. Yeah. And you're waiting on your part, right? For your kids? I've already signed them up. cool. Yeah, I'm just waiting on the approval. Yeah. it said it would take three business days. I think we're on like four business days now. It maybe the system's clogged or something like that. But do you do you have to pay to keep an upkeep on this account or is it just included? This is a free account to manage, like a Robinhood light type of thing. I don't know yet. Okay. I haven't seen any like like required payments on this stuff. I haven't seen anything like that either. You would think that would be kind of at the forefront. Like a custodian charge. Sure. I mean I think that the SP if you're it depends on what you're invested in, I would imagine. But when you have a Robin Hood account it's free. Right. and and this is these are gonna be Robinhood accounts. Right. to start off with, yeah. Mostly. But I don't know. I know that with our directed IRA accounts with that company, it's like what 400 bucks a year or so. Yeah, which is fine because we're doing kind of bigger deals with them and yeah, we'll have to look into that. Yeah. actually we have the internet right here. Why don't you continue talking about that and I'm gonna look it up? Yeah. it basically says, you know, with the Trump accounts app. You can also get an app, which it which I love by the way. Like people are on their phone all the time. And just having that QR code that you can give to your relatives, your uncles, your brothers, say, like, hey man, rather than you know, pay him for mowing your lawn, why don't you just contribute to his retirement account? He has no basis of what money is anyway. the app is super cool, super clean. I'm only at the surface level 'cause I haven't actually signed in yet, but everything is easily navigatable. I got good news. What's that? Okay. I got the answer right right there. Mm-hmm. So no. There are no account level fees, commissions, or trading commissions for open or maintaining a Trump account with the Robinhood app exclusively. Okay. so maybe with other I I checked Robinhood directly, but may maybe with other platforms there are annual fees. But if you're gonna be using Robinhood with your kids, which is just so user friendly. yeah. no fees. Cool. So that sounds good. That's so cool. like I said, I hate the name, but the account is just it's so good. Yeah. and I don't I don't I don't hate Trump like most like a lot of people. but I just I just hate that the I wish they could have done a better name because there's so much Trump derangement syndrome out there that I feel like this is going to having his name attached to a thing. Even my my wife had no interest in setting up these accounts just because of the name and I'm like, you gotta look past that. Yeah. but it's just whoever comes in next with the presidency will probably update that name. Like Who knows? Who cares? Who knows? Who cares? It's just a name, but it's it's something that's going to help your kids not take from anybody. Right. And and it's just, you know, it it's a double edged sword, obviously, because if you give your kid a hundred thousand dollars when they turn eighteen, yeah. They can be completely financially irresponsible with that. but that's up to you, like to kinda give them that like final. You still gotta teach because they can take this money when they're eighteen, they're an adult, they can have control, they can they can Just cash it all out and take it and spend it on drugs. Yep. So you gotta teach your kids too. You can't just contribute. Teach them about money. Obviously, these are so new. It will be interesting to know like what those numbers turn out being on how many people actually continue investing their accounts and how many people like like if people have access to this kind of money. But also it it just depends on, you know, the parents, like I said again, like if the parents are probably drug addicts. Yeah. And they're contributing five thousand dollars a month to their Trump accounts. Five thousand a month? No, five thousand a year. Yeah, yeah. Five thousand to your Trump accounts, like maybe they're okay. I don't know. Maybe but it's it's a really cool account. Like you said, there's no charges or no fees on the back end for trading, which is great. they've made it super easy just to get started with these and And it's such an attainable amount of money to put into an account. Like think about it, most people are making at least fifty grand a a year. And so I mean this is you know, ten percent of your income. Mm-hmm. That's it. So if you can if you can pretend like ten percent of your income doesn't exist for the rest of your life, you can do that. You can contribute let's see. What once once they turn eighteen and actually have they'll have a different account then. It won't it will no longer be a Trump account. It'll be just like a an IRA or you convert it to a Roth. Now if you convert it to a Roth, they're gonna pay they're gonna pay taxes on the game. On the games, not not the contributions because all the contributions were never tax deductible anyway. Yep. So the ninety thousand or whatever in both case. So if let's say over ten years you had fifty thousand dollars worth of contributions, let's say your kids started at age, you know, seven or eight. Yeah. and then let's but let's say you have ninety two thousand dollars in that account, which is c pretty p common, you might be you know, forty two thousand dollars of that might be taxable when you convert it. but it also depends on the tax r bracket that they're in. Correct. so they may not even still have to pay the that much in taxes, depending on their situation. But it's from what I've heard, just totally worth it. Just convert it, pay the taxes if there are any due anyway. and then that will grow and you can take it out tax free. Yeah. And it will grow tax free. But then they can also put in Up to seventy five hundred dollars a year in it instead of five. Which that contribution will probably go up in the next eight. That contribution will go up. It goes up like every two years. But it's very manageable. I just I just contr contributed to my mine and another yeah, seventy five hundred as of last week. I think I did it. You did it w right after we were done with the podcast. All right, done. Yeah. that easy. Yep. But but it would be easier for somebody that doesn't have to do it all in one breath. Yeah. and they can just set it up with their payroll with their company and just say, Hey, take ten percent of my pay to go towards this. And sometimes I I've heard that employers are going to be contributing to some of these accounts as well, right? Yes. So they may not even have to contribute their full amount. Yeah. Because the con the employer could contribute half of that or up to twenty five hundred a year or whatever their whatever their plan is. So if you are on a W two job, obviously like maybe it's important to talk to your employer and see like, Hey, are you guys gonna be contributing to Trump accounts for kids? Mm-hmm they might not, but it it'd be nice to know that, like, hey, if we're gonna contribute, you know, two thousand dollars a year per child per account or whatever, like take advantage of that, man. Take advantage. So don't delay everybody. That's the name of the game today. Go download the Trump account. That's where you start. Yeah, the Trump account app just type cert it's an app. Yep. Just type tr Trump account in the app store. It'll say download it and it's a it's actually a really user friendly app. It is. It'll walk you through it. So you need no further instructions from us. You just go go to your app store, whether it's Android or Apple. Download the Trump account app, you get started there. it will take one to three business days for you to get approved. and that's it. Yeah. So, so just the real instructions on what it says on IRS.com, just so people have it, it says, you know, sign in or create an IRS account. So start there. elect. So complete and submit your form 4547 to elect your child. So you need to have that form done in order to elect your child for a account. But the form is done within the app. The form is done within the app. Okay. Yeah. Good to I mean it sent me to another place, but I also I don't I don't have I don't have Arthur's social yet, so I got I got that was the hiccup I got. So so I completed mine and it was all just done in the app. It was it was made as as user friendly as possible to get everybody to sign up. Yeah, says the entire process should only take five to ten minutes. But that's yeah, probably it probably took it probably took ten minutes for the two kids. And and seriously, like I I mean this like with all urgency. Anyone with a child born between January first, twenty twenty five and December thirty first, twenty twenty eight. Take advantage of this. Yeah, it's a free thousand bucks waiting for you. So get it before it's gone. Well, it's not gonna go away, but hey, it might. They might actually run out of funding. I don't know. It's available right now. I I think like as these accounts grow, I know you were kind of that was a wrap-up sentence from you, but like as these accounts grow, just teaching your kids about money. Yeah, so important. Yeah, like like hey, this is your that's all that's the only reason we're here anyway. Yeah, we're here to have kids, teach them how to do life, and then die. So yeah. Don't forget this step. Yeah. This is a download the Trump account and get them on the path to learn how to save for retirement. but it's really more investing. Yeah. because the investments will take to thirteen million, not contributing, you know, not not squirreling away money. It's it's all about being invested in the markets as we experience hyperinflation. Yeah. going into this new digital world. Yeah. And like we like we briefly touched on, like I think like with all this influx of account money coming into the you know the S P and mutual funds and stocks and everything like that, I think it's gonna really strengthen the economy too. The co the economy's already strengthened. Yeah, but like I mean but if it can have a better backbone, yeah. People people just have to buy in. There's a lot of people that are not bought in and that's why people are struggling these days. Yeah. You have to buy in. You have to you you can't be a renter for the rest of your life. You can't not own a piece of the stock market. That's where the country is. Yeah. If you wanna be if if you wanna live well in this society in the United States, you need to buy in. Yeah. Yeah, I you need to go buy an unaffordable house and make it affordable somehow. It sounds unaffordable because that's just the way our our money is losing value year after year. Yeah. You may think a five hundred thousand dollar house is insanely expensive. I'm never gonna do it. And then you'll go buy a twenty dollar sandwich. Right. That was five dollars just ten years ago. Yeah. Or twenty years ago. Congratulations. Does that make sense? Yeah. Because that house was also a fourth of the price twenty years ago. But now it's not because our dollar is losing value. But you can catch up. The income is there. Yeah. You can just do better income. Yeah. Be self employed. You can make more money out there. Don't rely on jobs that pay very little. Yeah. And huge, huge advice here in in all in one sentence, but like you gotta buy into America if you want to enjoy yourself here. Yeah. And and if you are at a point in your life where you think, like, you know, five thousand dollars is it's kinda hard to s just you know, ask my people for or contribute for myself. You can contribute less. Nothing's stopping you from putting a thousand bucks a year in and still giving your child a leg up. You know what I mean? Yeah. You don't have to have it maxed out, but if you can, I think you should. But if you can't, you should still attempt. Well said. Thank you. All right, next week. I'm gonna talk to you about NickBooks. Okay. Way better than QuickBooks. Version two is coming your way. I had to find I had to fight. I'm excited to share. I had to fight Nick before the episode. I'm like, let's talk about something actually investing. I know your systems are great, and I think it's super cool you showed me it. Like, I'm like, but like, let's give them a little bit of investing tips. We haven't talked about investing on the investors. It is important to talk about the Trump accounts, and that's what we did today. Yeah. we can go on and on and blab and blab about it, but I think we I think we did it. Yeah, the last thing I do want to say is like you can use this in conjunction with a Roth account if they do have earned income. So if you're maxed out at the 5,000, you can still give your kid twenty five hundred dollars of earned income for working in your business. And really? Yes, you can, absolutely. So you can have a Roth going at the same time you can have a Trump account going. As long as your kid has five grand enough. If if five grand a year is not enough. Yeah. If you want to supercharge it, you know what I mean? You absolutely can do that. And a lot of people like your kids can work in your business. You can find a way to pay them twenty five hundred bucks for payroll. Don't put on payroll, you ten ninety nine, of course, but then pay that money into their account, pay that money into their You're right. You could. You could. But also like What are your goals, you know what mean? The only things I've done really for them so far is I set up on universal life insurance plans. I got that. Where they'll have they they'll get a little bit of cash. but it's not gonna be nearly as much as just contributing to this. So I'm excited to change it up a little bit. Yeah. I'll still keep those life insurance plans for but yeah, get your kids a head start in life. That way they don't live with you forever and make you take care of their baby until you're dead. Yeah. All right. America Dream, everybody. Enjoy yourself. Have a great Monday.