Most teenagers can start trading stocks independently at age 18 in the majority of U.S. states, though a few states require waiting until 21. The age requirement exists because trading involves signing legal contracts, which minors cannot do without adult help. However, younger investors don’t have to wait on the sidelines. Custodial accounts and special youth programs from brokerages allow teens as young as 13 to begin investing with parental supervision, creating excellent training wheels for future financial success.
When can someone start trading stocks on their own? The answer depends on where they live, but most people must wait until they turn 18. In most U.S. states, 18 marks the legal age when someone can independently open a brokerage account and start buying stocks. However, a few states set this age at 21, so young adults might need to wait a bit longer depending on their location.
The age requirement exists because trading stocks involves signing legal contracts. Since minors cannot legally sign contracts, they need adult help to enter the stock market. States like California, Virginia, Michigan, and Nevada allow independent trading at 18, while others require individuals to be 21 before they can trade without supervision.
But here’s the good news for younger investors: minors don’t have to wait until they’re adults to start investing. Custodial accounts make it possible for kids and teens to invest with parental supervision. These special accounts come in two main types called UGMA and UTMA accounts. Parents or guardians control these accounts, but the money legally belongs to the young investor.
Even better, some brokerages now offer youth accounts specifically designed for teenagers. Fidelity, for example, allows teens as young as 13 to make investment decisions through their Youth Account program. In these accounts, teens can actually choose which stocks to buy while parents monitor their activity. Parents can see what’s happening but don’t need to approve every single trade.
These youth-friendly accounts often come with helpful features. Many have no fees, no minimum balance requirements, and educational tools to help young investors learn. Some even allow fractional share purchases, meaning teens can invest small amounts of money instead of needing hundreds of dollars for expensive stocks. Understanding that stocks represent ownership shares in companies helps young investors grasp what they’re actually purchasing when they buy into the market. Young investors can also gain valuable knowledge by learning about trading assets like cryptocurrencies, forex, and options contracts before they begin actual trading.
When the young investor reaches the age of majority in their state, the account transfers completely to them. Until then, parents maintain legal control while allowing their teens to gain valuable investing experience. This setup creates a perfect learning environment where young people can develop financial skills with a safety net. Brokerage firms typically require proof of age and a linked bank account before allowing account opening to ensure compliance with legal requirements.
Frequently Asked Questions
Can Minors Trade Stocks With Parental Permission?
Minors cannot trade stocks directly, but they can invest with parental permission through custodial accounts.
Parents or guardians manage these special accounts and make trading decisions until the child reaches adulthood.
Some brokerages offer youth accounts where teens can trade under parental supervision.
The adult remains responsible for all trades and decisions.
This setup helps young people learn investing basics while staying within legal boundaries.
What Documents Are Needed to Open a Trading Account for Teens?
Opening a teen trading account requires several important documents.
Parents need to provide their government-issued ID, the teen’s birth certificate, and Social Security numbers for both.
Banking information from a linked parental account is necessary for funding.
Custodial account agreement forms must be completed, outlining everyone’s responsibilities.
Some brokerages also require parental consent forms confirming willingness to supervise the account.
Are There Investment Limits for Underage Traders?
Young traders face several investment limits designed to protect them.
They cannot trade risky options, futures, or use borrowed money (margin trading). Most brokerages restrict teens to basic investments like stocks, ETFs, and mutual funds.
All trades need custodian approval, and withdrawals must benefit the minor.
There’s no annual contribution limit, but gifts over $17,000 may trigger taxes.
Do Custodial Accounts Require Adult Supervision for All Trades?
Yes, custodial accounts require adult supervision for all trades until the minor reaches the age of majority.
The adult custodian must make every investment decision and cannot let the minor trade independently.
Think of the custodian as the account’s designated driver – they hold the keys until the minor is legally old enough to take control, typically at age 18 or 21 depending on state laws.
Can Teenagers Keep Trading Profits or Do Parents Control Them?
Teenagers keep all their trading profits in custodial accounts.
Parents cannot take these earnings for personal use since the money legally belongs to the teen. While parents manage the account until their child reaches adulthood, they must act in the teen’s best interest.
Once the teenager becomes an adult, they gain complete control over their account and all accumulated profits.
