America’s wealthiest want to gift the nation’s children stock to help them start building their financial future, but like everything else, there are pros and cons, financial experts say.
When tax-advantaged Trump Accounts for children under 18 years old were established in July 2025, the only investments allowed were low-cost U.S. stock index funds. The aim was to “help every American child build savings and a stronger financial future,” the White House said. The government even pitched in $1,000 for each child born between Jan. 1, 2025, and Dec. 31, 2028. Fast forward to July 2, 2026, just two days before Trump Accounts went live, and Treasury changed the rules to allow “large philanthropic contributions of readily tradable public company stock.”
Prominent billionaires from high-flying companies like SpaceX and Anthropic quickly pledged to donate shares in their companies through Trump Accounts or other channels. But financial experts’ enthusiasm was tempered. Although investing early allows compound growth and stocks have historically been lucrative, returning on average about 10% annually, some advisers warned of account restrictions and possibly, smaller-than-expected payouts.
“Ultimately, the success of the program should be measured by whether the shares are delivered, the conditions attached to ownership and the value they provide over the longer term, rather than the publicity surrounding the announcement,” said James Vrachas, executive director at investment bank Post Oak Group.
Who’s Donating Stock?
- Elon Musk, chief executive of Tesla and SpaceX, plans to donate a SpaceX share next year to every American child under 18 and said this would be the first of many such donations. At approximately $147.96 per share, Musk’s pledge totals roughly $10.7 billion. He didn’t detail how he would distribute the shares to children, but Brad Gerstner, founder and chief executive of investment firm Altimeter Capital and Trump Account architect, hinted on X that Musk would use Trump Accounts.
- Gwynne Shotwell, SpaceX president, plans to gift shares to Trump Accounts opened for more than two million children ages 11-17 who “live in areas with lower average household incomes, with a bit more emphasis for those that live near our central Texas home.”
- Daniela Amodei, co-founder and president of Anthropic, said the company’s committing 5% of Anthropic’s shares to a new public benefit fund. It will donate an additional 2% at the board’s discretion for every 50% increase in the company’s value above a certain set level. The plans are subject to shareholder approval. The fund could make large donations to traditional nonprofits or direct distributions to specific populations.
What Are the Pros and Cons of Stock in Trump Accounts?
Here’s how some financial experts see it:
Pro: Families, specifically children, will own a small piece of some of the most highly desirable innovative companies.
Con: “Innovation does not eliminate investment risk,” Vrachas said. Companies can lose focus, face intense competition or new regulations, for example, that can affect profits, outlook and share price.
Pro: Investing early provides the most growth potential and stocks usually return positive gains over time.
Con: While it’s true there could be significant long-term gains, shares can’t be sold for five years or the end of the calendar year in which the beneficiary turns age 17, whichever is earlier. So if the stock nosedives during the holding period, families are out of luck, advisers said. “Families should…distinguish between being able to trade a publicly listed share and being permitted to sell shares held within a restricted investment account,” Vrachas said. “The structure of the distribution will therefore be just as important as the underlying investment.”
Pro: Families can say they own individual stock in a company.
Con: You didn’t choose it, the company may not fit your values, you can’t refuse it and you don’t get any voting rights attached to the stock. One share or a fractional share also may not amount to a huge windfall.
Pro: It’s free.
Con: “A single share is unlikely to materially change a child’s financial circumstances today,” Vrachas said. But “its long-term value could become more meaningful through compounding,” Vrachas said. “For perspective, a $150 investment growing at an illustrative 10% annually would be worth approximately $1,000 after twenty years.” He added, “families should view the shares as an investment with potential upside, rather than a guaranteed financial benefit.”
Pro: The potential lesson is invaluable. “The bottom line is it’s not meant to make you rich, it’s to teach a lesson,” said Steve Azoury, financial adviser and owner of Azoury Financial. “A kid has a statement with his name on it, and parents can use it to teach them what it is, what an index fund is, what an investment is, what compounding is and what building wealth means. Kids can start learning this at 12 (years) instead of 31.”
Con: Owning one or two stocks, potentially in the same sector, isn’t diversified. Successful long-term investing should not depend entirely on the performance of a single company or two. Azoury noted that the portfolio should also hold low-cost stock indexes. “If it also has an index, you can’t get more diversified than that,” he said.
What Do Donors Get Out of This?
Donors can use this as an opportunity to offload appreciated shares, giving them a tax advantage. But such calculations aren’t unusual for wealthy donors and aren’t only used by the rich. All Americans can directly donate appreciated shares to churches and other nonprofits to avoid capital gains tax on the shares if they sold them and take a tax deduction for the full fair-market value of the donated shares.
Economically, these billionaire donors may actually end up worse off, said Richard Pon, a certified public accountant in San Francisco.
Using a simple example, assume “the most you can save from federal taxes is 35%, and let’s say, they pay high state taxes of 9%,” Pon said. “They effectively save 44% tax. But economically, they lost 56%. A $1 million stock donation decreases their net worth by $560,000.”
What donors and companies may get out of their charity is publicity, goodwill and loyalty, Azoury said. “If people own Coca-Cola, they’ll drink Coca-Cola and maybe buy more stock,” he said.
“It’s okay if they get something out of it,” Azoury said. “So do you. It’s free…Take the gift.”
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
Reporting by Medora Lee, USA TODAY / USA TODAY
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