By Allan Sloan
About the author: Allan Sloan is an independent business journalist and seven-time winner of the Loeb Award, business journalism's highest honor.
You really have to admire Michael and Susan Dell for committing $6.25 billion of their own money to give 25 million kids grants of $250 each to invest in low-cost index funds.
But you need to know that those Dell Dollars aren't remotely enough to make much of a difference in the lives of the middle- and lower-income kids to whom the grants are going.
Why do I say that? Because I've got an actual number for the return that these grants will likely produce for their owners if historical patterns replicate themselves.
The number is 9.42% per year. That is the return that Vanguard says the Institutional shares of its Total Stock Market Fund earned from their launch in September of 1997 through this past Nov. 30.
Those shares, which exceed the investment criteria laid out by the Dells, are almost unknown to the general public because they require a minimum investment of $5 million. They carry a fee of 0.03% -- significantly below the 0.10% that the Dells have set as the top permissible number for stock market index funds in which Dell Dollars will be invested.
Institutional shares' history, which covers several market cycles, seems like a reasonable estimate for future returns of the index funds in which large numbers of Dell Dollars will be invested.
If you assume that 9.42% annual return, someone who gets 250 Dell Dollars at birth next year would have $1,263.81 at the age of 18, according to the calculator on the Investor.gov website of the Securities and Exchange Commission.
That isn't enough to really make a difference to a kid in 2044.
Similarly, the $1,000 the federal government plans to give to all children born to legal U.S. residents from 2025 through 2028 doesn't make all that much difference, either. Assuming a 9.42% return, that initial $1,000 at birth works out to $5,055.23 at 18, according to the Investor.gov calculator.
Some families will surely benefit from an extra $5,000 18 years from now, but we aren't talking life-changing sums here.
Even though $6.25 billion is only a sliver of Michael Dell's net worth, which the Bloomberg Billionaires Index put at $141 billion when last I looked, the Dells are being amazingly generous.
I say that even though I assume that the Dells will fund the program in a tax-advantaged way.
(A Dell Foundation spokesperson told me that, "The Dells' contribution is from various charitable funds." I think that confirms my thesis.)
What especially impresses me about the Dells' plan is that it's targeted much better than the federal dollars are.
The Dells are offering grants to kids up to 10 years old who live in zip codes where the median family income is $150,000 or less. They say this will reach about 80% of eligible children.
That seems like a more intelligent use of financial resources than just giving $1,000 to every baby born in the next few years, regardless of their families' net worth, which is what the federal program does.
But as I hope my numbers make clear, both the federal accounts and Dell accounts aren't enough to make a serious long-term difference to many families.
Clearly, we should look at these as only starter accounts. It will take supplemental contributions from families or employers or other sources for these accounts to make a serious long-term difference to recipients, even if they produce the close-to-double-digit annual return that I'm using.
It could happen. BlackRock, the mega investment manager, says it will match the $1,000 in its employees' kids' accounts. Investor Ray Dalio is giving $250 to some Connecticut kids. But now you know the math. It will take a lot more generosity to make a mark.
And that, as they say, is the bottom line.
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December 17, 2025 14:53 ET (19:53 GMT)
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