Age Requirements for Stock Investing: A Complete Guide for Young Investors

Why Starting Early Matters More Than You Think

Time is your most valuable asset when it comes to building wealth. The math is simple: the earlier you begin investing, the more you benefit from compounding—where your earnings generate their own earnings, creating exponential growth over decades. A teenager who invests just $1,000 today could watch that grow to significantly more money by retirement, simply by letting time do the heavy lifting.

Beyond the numbers, young investors who start early gain hands-on experience that shapes their financial decision-making for life. They learn to research companies, understand market cycles, and develop discipline around saving—habits that prove invaluable once they reach adulthood.

When Can You Actually Start Investing?

Here’s the straightforward answer: You must be at least 18 years old to open and manage your own brokerage account or retirement account independently. But that’s not the whole story.

The good news? Several account structures allow minors under 18 to invest with parental or guardian supervision. The key differences lie in who owns the assets and who controls the investment decisions. Understanding these distinctions helps you choose the right account for your situation.

Investment Accounts Available for Minors

Jointly Owned Brokerage Accounts: Maximum Flexibility

In a joint account, both the minor and adult co-own the investments and can jointly make decisions. This structure offers the widest range of investment options—stocks, bonds, funds, and more.

The flexibility works both ways: parents can start managing all decisions for a young child, then gradually hand over control as the teenager matures. The account provider doesn’t typically impose an age minimum, though individual brokers may set their own requirements.

Real-world example: Fidelity Youth™ Account lets teens aged 13-17 build a portfolio by purchasing individual US stocks and ETFs for as little as $1. The account includes no trading commissions, zero account fees, and a free debit card. Parents receive real-time alerts on all trading activity and can monitor transactions through the Fidelity Youth™ app, which also features educational content that rewards teens for completing financial literacy lessons.

Custodial Accounts: Adult Control, Minor Ownership

A custodial account is technically owned by the minor, but the appointed custodian (usually a parent) makes all investment decisions until the child reaches the age of majority—typically 18 or 21 depending on your state.

Two main types exist:

UGMA (Uniform Gifts to Minors Act): Restricted to financial assets like stocks, bonds, mutual funds, and ETFs. Adopted in all 50 US states.

UTMA (Uniform Transfers to Minors Act): Can hold financial assets plus physical property like real estate or vehicles. Adopted in 48 states (South Carolina and Vermont are exceptions).

Both account types offer tax advantages through the “kiddie tax” framework, which shields a portion of unearned income from taxation annually while the remainder is taxed at the child’s rate—typically lower than parental rates.

Real-world example: Acorns Early, available through the Acorns Premium subscription ($9/month), lets you open a custodial investment account for children. The platform uses a “Round-Ups” feature that automatically invests spare change from purchases, turning small increments into a growing portfolio. Users typically see around $30 invested monthly this way.

Custodial Roth IRAs: Tax-Free Growth for Earning Teens

If your teen has earned income from a summer job, freelance work, or tutoring, they can open a custodial Roth IRA. In 2023, teens can contribute up to $6,500 annually (the lesser of their earned income or this limit).

A Roth IRA offers a unique advantage: contributions are made with after-tax dollars, but all growth and withdrawals remain completely tax-free (with limited exceptions before age 59½). Since teenagers typically pay minimal taxes, locking in this tax-free status now creates decades of compounding without future tax liability.

Real-world example: E*Trade’s IRA for Minors account allows you to build a diversified portfolio through thousands of holdings or let their robo-advisor (Core Portfolio) manage selections automatically. The platform offers zero-commission trading on stocks, ETFs, options, and mutual funds, plus educational webinars and resources.

Choosing Your Investments: Growth Over Safety

Young investors benefit from a long time horizon, which means growth-oriented investments make more sense than conservative, low-yield options. Three primary choices emerge:

Individual Stocks: Buying shares means owning a piece of a company. As companies perform well, stock values typically appreciate. The tradeoff? Individual stocks carry company-specific risk—poor performance can trigger losses.

Mutual Funds: These pools combine dozens, hundreds, or thousands of stocks and bonds into a single investment. You’re spreading risk across many holdings rather than betting on one company. The convenience comes with annual fees, so comparing fund expenses matters.

Exchange-Traded Funds (ETFs): Similar to mutual funds in their diversification benefits, but ETFs trade like stocks throughout the day rather than settling once daily. Most ETFs are passively managed, tracking an index rather than relying on active management. This passive approach typically costs less and often delivers better returns than actively managed competitors.

Index funds—a category of ETFs—prove particularly attractive for teens, offering instant diversification across broad market segments with minimal fees.

Parent-Controlled Accounts: When Adults Invest for Kids

If your child isn’t yet ready or interested in involvement, several accounts exist purely for parental asset management:

529 Plans: Tax-advantaged accounts designed for education expenses. Funds grow tax-free and withdrawals for qualified education costs (tuition, room and board, books, technology) incur no penalties. Unused funds can transfer to other family members without tax consequences.

Education Savings Accounts (Coverdell ESA): Similar benefits to 529 plans but with a $2,000 annual contribution limit per student. Funds must be used for qualified education expenses by age 30. Income limits apply: single filers with modified adjusted gross income under $95,000, or married filers under $190,000, can contribute fully.

Standard Brokerage Account: Parents can invest through their own account with complete flexibility—no contribution limits, no restrictions on use. The tradeoff: zero tax advantages compared to 529s or ESAs.

The Compounding Power You Can’t Ignore

Understanding how compounding works reveals why age matters. Invest $1,000 in an account earning 4% annually:

• After Year 1: $1,040 (you earned $40)
• After Year 2: $1,081.60 (you earned $41.60 on the original $1,000 plus the $40 from year one)

That extra $1.60 seems trivial, but over decades, this exponential growth accelerates dramatically. A 16-year-old investing $1,000 today could see that grow substantially by retirement—purely from the time component working in their favor.

Building Lifetime Financial Habits

Starting young transforms investing from an intimidating concept into an integrated part of your financial routine. When saving and investing become habitual early—as natural as paying rent or buying groceries—you’re far more likely to maintain these practices throughout adulthood. This consistency, compounded over 40+ years, creates the foundation for genuine wealth accumulation.

The Bottom Line on Age Requirements

You must reach 18 years old to independently manage investment accounts. However, minors can begin investing immediately through joint accounts, custodial accounts, or custodial retirement accounts with parental guidance. The minimum age to start varies by account type and provider, but many brokers welcome investors as young as 13.

The real takeaway? Don’t wait. The combination of youth, extended time horizons, and the compounding effect means that starting even a few years earlier creates substantially different outcomes by retirement. Whether your child is interested in active stock picking through a joint account or a more passive approach through custodial accounts, the sooner they begin, the better positioned they’ll be for long-term financial success.