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How Old Do You Have to Be to Invest?
In most cases, you need to be 18 years old to open a brokerage account on your own. However, teens under 18 can start investing with the help of a parent or guardian through a custodial account, such as a UGMA or UTMA.
These accounts allow an adult to manage investments on the teen’s behalf until they reach the age of majority, which varies by state.
How to Start Investing as a Teen: Step-by-Step Guide
Starting to invest as a teen or young adult can set you up for lifelong financial success. With the right tools and guidance, you can begin building wealth earlier than most people expect.
1. Understand What You Need to Get Started
Before you begin investing, it’s important to understand the basics and prepare a few key items. If you're under 18, you’ll need a custodial account managed by a parent or guardian.
This account can be opened through platforms like Fidelity Youth Account or Charles Schwab’s custodial service. You should also:
Have a source of income – This can be from a part-time job, allowance, or gifts.
Set financial goals – Are you investing for college, a car, or long-term wealth?
Create a basic budget – Know how much you can safely invest without needing it soon.
Learn core investing terms – Understand compound interest, risk tolerance, and diversification.
This preparation ensures you're building financial habits that last and making informed decisions from day one
2. Know Your Investment Options
As a teen or young adult, you have a surprising number of investment choices—some designed specifically for beginners.
Each option carries its own risk and time horizon, so understanding them helps you avoid common pitfalls.
Custodial Brokerage Accounts – These allow you to invest in ETFs, mutual funds, and stocks under a guardian’s supervision.
Roth IRAs (if you have earned income) – Great for long-term retirement growth with tax-free withdrawals later.
Micro-Investing Apps – Apps like Acorns or Stash let you invest spare change or start with as little as $5.
529 Plans (for college savings) – Tax-advantaged accounts that help save for future education expenses.
These tools are beginner-friendly, and many are built with automation to help you stay consistent even with small amounts of money.
Account Type | Age Requirement | Who Manages | What You Can Invest In |
|---|---|---|---|
UGMA/UTMA Custodial Account | Under 18 | Parent or Guardian | Stocks, ETFs, mutual funds, bonds |
Fidelity Youth Account | 13–17 (with parent) | Teen (with parent access) | Stocks, ETFs |
Charles Schwab Custodial | Under 18 | Parent or Guardian | Stocks, ETFs, mutual funds |
Acorns Early | Any age | Parent or Guardian | Automated ETF portfolios |
3. Choose Where to Open Your Account
Selecting the right brokerage or platform can make investing simpler and more educational. Look for accounts that offer strong educational tools, no minimums, and a user-friendly interface.
Look for no-fee options – Many apps offer commission-free trades and no account minimums.
Consider learning resources – Apps like Schwab and Fidelity include built-in tutorials.
Check parental controls – Custodial accounts give guardians some oversight, which is helpful for teens.
Mobile vs. desktop access – Choose what’s easiest for you to stay engaged.
Where you open your account affects how easy it is to build good habits, track your progress, and stick with it over time
Platform | Ideal User | Fees |
|---|---|---|
Fidelity Youth Account | Teens (13–17) | $0 trading fees |
Schwab Custodial | Kids and teens under 18 | $0 for most trades |
Acorns Early | Beginners with small $ | $3–$5/month |
M1 Finance Custodial | Teens with set goals | $0 basic tier |
4. Decide What to Invest In
Once your account is set up, it’s time to decide what to actually buy. This is where your goals and risk tolerance play a big role.
For example, someone saving for college in 5 years may choose safer index funds, while someone investing for retirement may take more risk early on. To decide:
Start with index funds or ETFs – They’re low-cost and diversified, reducing risk.
Reinvest dividends – Automatically reinvesting helps your account grow faster.
Consider dollar-cost averaging – Invest a fixed amount regularly to smooth out market ups and downs.
Stay away from hype – Meme stocks or trending crypto may seem exciting, but they can derail your progress.
Understanding what you’re investing in—and why—keeps your strategy focused and consistent.
Investment Type | Risk Level | Example |
|---|---|---|
Index Funds | Low to Moderate | Vanguard Total Stock Market (VTI) |
Dividend Stocks | Moderate | Johnson & Johnson (JNJ) |
ETFs | Low to High | SPDR S&P 500 ETF (SPY) |
Individual Stocks | High | Tesla (TSLA) |
Crypto (Small % only) | Very High | Bitcoin (BTC) |
5. Make Your First Investment
Now that you’ve chosen what to invest in, it’s time to put your plan into action. This step involves actually buying your first stock, ETF, or fund using your chosen platform. To get started:
Fund your account – Transfer money from your bank or allow the app to auto-invest.
Search for your investment – Use the ticker symbol to find the right asset (e.g., “VTI” for Vanguard Total Market ETF).
Place a trade – Choose between a market order or a limit order, depending on your strategy.
Review the confirmation – Double-check everything before submitting, especially if using real cash.
Making your first investment is exciting, but be sure you understand the asset and feel confident about the decision
6. Track, Learn, and Stay Consistent
Investing isn’t a one-time action—it’s a long-term process that improves the more you learn and stay engaged. After you invest, it’s important to monitor your portfolio occasionally, learn from market trends, and adjust based on your goals.
Review your investments monthly or quarterly – But avoid obsessing over daily fluctuations.
Keep learning – Follow trusted resources like Investor.gov or Morningstar to build knowledge.
Use auto-investing tools – Set up recurring contributions so you stay consistent, even during busy school or work periods.
Celebrate small wins – Watching your account grow, even by a few dollars, can build motivation to keep going.
By building these habits early, you’ll gain confidence and discipline—two key traits of successful long-term investors.
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Low-Risk Investments for Teens and Young Adults
Starting with low-risk options helps teens and young adults learn how investing works without losing sleep over volatility.
High-Yield Savings Accounts – Ideal for parking money while earning better interest than traditional accounts; great for short-term goals.
U.S. Treasury Bonds – Backed by the government, these offer predictable returns and can be purchased through TreasuryDirect.
Certificates of Deposit (CDs) – Lock your money in for a set time to earn interest; best if you don’t need immediate access.
Index Funds (Conservative Mix) – A fund tracking a broad market index like the S&P 500 but with heavier bond allocation can balance growth and safety.
These options help you grow savings slowly while minimizing risk and learning how compounding works over time.
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Balanced Growth Investments for Teens and Young Adults
Once you’re comfortable, you can explore investments that offer both growth and stability for long-term wealth building.
Total Market Index Funds – A diversified fund like Vanguard’s VTI exposes you to thousands of stocks, spreading out risk naturally.
Target Date Retirement Funds – Ideal for teens saving for retirement, these adjust risk over time based on your age.
Dividend Stocks – Companies like Coca-Cola or Johnson & Johnson pay regular dividends, which can be reinvested for compound growth.
REIT ETFs – Real Estate Investment Trusts in ETF form give exposure to property markets without needing to buy property.
These investments balance reward and risk, helping you build a solid foundation for long-term goals like buying a home or retiring early.
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High-Risk, Aggressive Investments for Young Adults
For teens ready to take risks and possibly see higher returns, aggressive strategies come into play—but caution is key.
Cryptocurrencies – Coins like Bitcoin or Ethereum can offer fast growth, but prices swing dramatically, so only invest what you can afford to lose.
Individual Growth Stocks – Betting on companies like Tesla or Shopify can pay off, but these stocks are also highly volatile.
Options Trading – Platforms like Robinhood allow options trading with parental permission in some custodial setups, but this requires a solid understanding of risk.
These investments require research, self-control, and a willingness to accept losses in pursuit of higher potential gains.
FAQ
Not legally. If you’re under 18, you’ll need a parent or guardian to open a custodial account for you. Once you turn 18, you can manage your own brokerage account.
No. Many apps and brokerages let you begin with just a few dollars. Micro-investing platforms and fractional shares make it easier than ever to start small.
Fractional investing lets you buy a small portion of a stock or ETF, instead of a whole share. This is helpful if you're working with limited funds but still want exposure to expensive stocks like Amazon or Apple.
It depends on your goals. Saving is great for short-term needs or emergencies, but investing offers better long-term growth through compound returns—especially if you start young.
Investing is about long-term growth, while trading focuses on short-term price movements. Teens are usually better off investing for the future instead of trying to time the market.
Only through a parent-managed custodial account or a crypto gift. Most crypto exchanges require users to be 18, but parents can invest on a teen's behalf and later transfer assets.
All investing involves some risk, but starting young gives you more time to recover from market dips. You can also start with lower-risk investments and diversify as you learn.
Teens may have to pay taxes on dividends and capital gains. Parents should help track earnings, and in some cases, the “kiddie tax” rule applies to unearned income.
A dividend is a portion of company profits paid to shareholders. Reinvesting dividends can accelerate portfolio growth, especially over long timeframes.
It's okay to consider familiar brands, but don’t rely solely on personal preference. Look into a company’s financials, business model, and long-term outlook before investing.
