Ready to invest but hit a wall because you’re under 18?
Don’t worry! I started investing at 7, and I’ll walk you through exactly how to open a custodial brokerage account that lets you invest before you’re even an adult.
The Account Problem (and How to Solve It)
Here’s the catch: You can’t just open an investment account by yourself if you’re 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. It’s 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 you’re 18 or 21, depending on your state.
But don’t worry – it’s your money. They can’t 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. They’ve made financial mistakes and can help you avoid them.
More importantly, it gets you started early. And that’s what matters most.
How to Actually Open an Account
Alright – now that you know what account to open, let’s talk about how to actually open your first account.
Here’s the checklist.
1. Pick a brokerage
The top 3 are Fidelity, Vanguard, and Charles Schwab.
2. Get your information ready
You’ll need your name, birthday, Social Security number, and maybe your driver’s license. Your parent or guardian would need the same stuff.
3. Open the custodial account
Just go to the brokerage’s website and complete the online application. It’s 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 it’s linked.
That’s it! You’ve successfully opened and set up your custodial account, and you’re ready to make your first investment!