The simple version
A child's investment account is a way to put money away for your kid — and have that money grow through investing, not just sit in a savings account earning almost nothing.
Unlike a savings account, the money in an investment account is put into things like stock market index funds. Over long periods of time (like, say, 18 years), the stock market has historically gone up. That means your child's money has the potential to grow significantly more than it would in a bank account.
What makes it different from a savings account?
A savings account is safe — your money is always there, but it barely grows. A high-yield savings account today might earn around 4–5% interest. That sounds decent, but it doesn't compound the same way investments do over 18 years.
An investment account puts that money to work in the market. Historically, the U.S. stock market has returned around 7% per year on average after inflation. On small, regular contributions, that difference adds up to tens of thousands of dollars by the time your child turns 18.
What's a Section 530A account?
You might have heard of the new government-backed child investment accounts, sometimes called "Trump Accounts." The official name is a Section 530A account — that's the part of the tax code that created them.
Here's what makes them special:
- The government contributes $1,000 to start for children born between 2025 and 2028
- The money grows tax-deferred — you don't pay taxes on gains while it's growing
- Parents, family, employers, and others can add up to $5,000 per year
- The child gets access to the money at age 18
Seedling is built specifically to work with these accounts.
What happens to the money?
The money is invested in low-cost index funds that track the U.S. stock market. Your child can't touch it until they turn 18 — which is actually a feature, not a bug. It can't be spent on impulse purchases. It just grows.
Is this different from a 529?
Yes. A 529 plan is designed for college expenses. A child's investment account (Section 530A) is for any use — your child can use it for college, a home down payment, starting a business, or anything else when they turn 18. It's more flexible.
The bottom line
A child's investment account is one of the most powerful things a parent can set up. The earlier you start, the longer the money has to grow. Seedling makes it automatic — so you don't have to remember to add money. Every purchase you make does it for you.