Ready to invest but hit a wall because youโre under 18?
Donโt worry! I started investing at 7, and Iโll walk you through exactly how to open a custodial brokerage account that lets you invest before youโre even an adult.
The Account Problem (and How to Solve It)
Hereโs the catch: You canโt just open an investment account by yourself if youโre under 18.
You can have a debit card. You can buy stuff online. You can even open a savings account.
But try to open a brokerage account on your own? Nope.
So what now?
Enter: the custodial account. Itโs like an investment account with training wheels.
There are two types of custodial accounts: UGMA and UTMA.
UGMA allows investment only in financial assets like stocks and bonds, while UTMA allows a wider range of assets including real estate.
Your parent or guardian opens it for you and manages it with you until youโre 18 or 21, depending on your state.
But donโt worry – itโs your money. They canโt take it out and buy a new TV. Legally, the money can only be used for your benefit.
And yeah, you might not agree with every decision your parents make. But having them involved can actually be a good thing. Theyโve made financial mistakes and can help you avoid them.
More importantly, it gets you started early. And thatโs what matters most.
How to Actually Open an Account
Alright – now that you know what account to open, letโs talk about how to actually open your first account.
Hereโs the checklist.
1. Pick a brokerage
The top 3 are Fidelity, Vanguard, and Charles Schwab.
2. Get your information ready
Youโll need your name, birthday, Social Security number, and maybe your driverโs license. Your parent or guardian would need the same stuff.
3. Open the custodial account
Just go to the brokerageโs website and complete the online application. Itโs a quick process that usually takes under five minutes.
4. Link a bank account to fund it
This is also easily done online and your bank will send a confirmation once itโs linked.
That’s it! Youโve successfully opened and set up your custodial account, and you’re ready to make your first investment!