How Old Do You Have to Be to Open a Brokerage Account?

You're probably wondering how old you need to be to open a brokerage account. The minimum age requirement varies from one brokerage firm to another, but most require you to be at least 18 years old to open an account on your own.

Some brokerages may allow minors to open an account with a custodial parent or guardian, but this is not always the case. For example, Fidelity Investments allows minors to open a custodial account with a parent or guardian as the custodian.

To open a brokerage account, you'll typically need to provide identification and proof of address. This is usually a straightforward process, but it's essential to ensure you're providing the correct documents to avoid any issues.

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If you're under 18, you can't own stocks, mutual funds, or other financial assets outright, but you can make investments through a custodial account with your parent's supervision.

To open a custodial account, you'll need to choose between a UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act) account, depending on your state's laws.

Both types of accounts have strict rules to prevent custodians from using them as personal piggybanks, and assets in a UGMA account can't be used to pay for things you're legally obligated to provide to your child.

You'll need to find an online broker that offers custodial accounts, such as Charles Schwab, E-Trade, or Fidelity, and consider factors like no stock trading fees, low-balance requirements, and the ability to buy fractional shares.

Here are some popular online brokers that offer custodial accounts:

Once you've chosen a broker and opened a custodial account, your parent will be able to give you money to invest in stocks or other assets, and you'll own the assets in the account, but your parent will control the investments until you're no longer a minor.

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As a parent, it's great that you're considering teaching your teen about investing. Did you know that teens under 18 can't invest on their own and must do so through custodial accounts supervised by adults?

These accounts are established under the Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA), which allows parents to save and invest in a child's name. The parent will have control over the investments until the child is no longer a minor.

You can open a custodial account with an online broker, such as Charles Schwab, E-Trade, or Fidelity, which are some of the top 10 affordable custodial brokerage accounts for kids. These accounts will allow your teen to invest in stocks and other financial assets.

To determine if your kid is ready to invest, consider their money management skills, such as saving through a bank account, and their ability to think about the future. You can also try setting up a dummy trading portfolio to help them get a feel for the ups and downs of the stock market.

Here are some online brokers that offer custodial accounts:

Remember, investing is a great way to teach your teen about money management and responsibility. With the right guidance and tools, they can start building their financial future early on.

To get started with opening a brokerage account, you can visit your broker of choice, either online or in person, and provide the necessary identifying information, such as your name, address, email address, birthday, social security number, and other details.

This information might also include your investing experience and financial goals. You might be asked to fund the account right away, but that depends on the account you choose.

You'll need to link your brokerage account to a checking or savings account, which is a standard requirement. Some online brokers, like Fidelity, have made it easier for kids to invest in stocks through their Youth Account program, but parents need a regular Fidelity account to register their children.

You can also consider opening a custodial account, which allows parents to save and invest in a child's name. This type of account is available through the Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA).

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Here are some online brokers you and your parents may want to investigate for suitable custodial accounts:

Keep in mind that some of these companies, like Greenlightcard and Bloom, were established specifically to serve teen investors and their parents. They offer investing apps that make it easy to open investment accounts for teens and for these teens to invest in stocks with their parents' approval.

Opening a brokerage account can be a great way to start investing, but it's essential to understand how it affects your taxes.

Brokerage accounts are considered taxable investment accounts, which means you'll need to report the gains and losses from your investments on your tax return.

You can deduct capital losses from your taxable income, but you can only use up to $3,000 of losses against ordinary income.

The IRS requires you to report all dividends and interest earned on your brokerage account on your tax return.

You'll need to provide your brokerage account information, such as the account number and type of account, on your tax return.

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In the United States, the minimum age to open a brokerage account varies by state. You can invest in the stock market at age 18 if you live in one of the following regions: California, District of Columbia, Kentucky, Louisiana, Maine, Michigan, Nevada, New Jersey, Oklahoma, or South Dakota.

Some states allow minors to invest at age 19, including Alabama, Delaware, Nebraska, and Mississippi. However, individual brokerage firms may have their own requirements in addition to those of the state, so make sure to check with your broker.

You can check the specific state requirements to determine the minimum age to invest in the stock market. It's also worth noting that custodial accounts have no age restrictions, as an adult will serve as the custodian of that account.

Here's a breakdown of the states and age requirements:

Keep in mind that these requirements may change, so it's essential to check with your broker or the state's financial regulations for the most up-to-date information.

Charles Schwab is ideal for beginner investors with a $0 account minimum and $0 maintenance fees. It offers a wide range of investment options, including over 4,000 non-transaction fee mutual funds.

You can choose from a variety of trading platforms, including StreetSmart Edge, StreetSmart Central, and Schwab Mobile apps. These platforms are great for active traders and those who want to test the waters.

Some online brokers, like E-Trade and Fidelity, offer custodial accounts that are perfect for parents who want to help their kids learn about managing money. These accounts are designed to make it easy for young investors to get started.

Other options, such as Greenlight and Bloom, are relatively new and were established to serve teen investors and their parents. They have investing apps that make it easy to open investment accounts for teens with parental approval.

The following custodial brokerage accounts are great options for kids:

These are just a few examples of the many brokerage account options available. Be sure to do your research and choose the one that best fits your needs.

Investing as a minor comes with some unique benefits, but also some important considerations to keep in mind.

You can get ahead of your peers by investing in the manufacturers of the latest devices and fashion, while they're worried about affording them.

Investment principles learned early will stay with you forever, and you'll appreciate how money grows by earning interest on interest (compounding) and investing long-term in stocks and mutual funds.

One of the biggest advantages of investing as a minor is that you'll have a head start on saving and growing your money.

However, there are some limitations to consider. Teens under 18 can't invest on their own and must do so through custodial accounts supervised by adults.

Additionally, teens generally have very little money, which limits the variety of investments they can make, such as investing in mutual funds.

You can start investing as a minor through custodial accounts, which allow parents to save and invest in a child's name.

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There are two types of custodial accounts: UGMA and UTMA, which work similarly to a standard brokerage account.

A 529 savings plan is another option, designed for paying for college and other educational costs, and offers a tax break when used for qualified educational costs.

Kids who earn income can also contribute to a Roth IRA, but they'll need a grown-up to open and manage the account legally.

Here are some key options for investing as a minor: