Can you invest in stocks under 18? What you need to know

Kids can invest in stocks under 18 with a parent

With a rising cost of living, student debt, and an economy that has shifted financial responsibility to individuals (through 401(k)s instead of pensions, for example), it’s vital for teens to understand investing and financial planning. Kids under 18 usually can’t open their own brokerage accounts, but there are several options for them to invest in stocks with parental oversight through custodial accounts.

4 ways teens can invest

There are several ways for kids under 18 to invest, including the following:

1. Custodial accounts (UGMA/UTMA)

What is it?

UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act) custodial accounts allow adults to transfer financial assets to a minor without needing a formal trust.

How does it work?

The assets are managed by a parent/custodian until the child reaches adulthood (typically 18–21 depending on the state), at which point the child gains full control of the account.

What’s the benefit?

Even though the child doesn’t technically own the account, it’s one way to involve them in investment decisions as they watch their assets grow.

2. Custodial Roth IRA

What is it?

A Roth IRA is an investment account you use to save for retirement. Similar to a UGMA/UTMA, parents can open a Roth IRA as the custodian or owner of the account for their child under 18.

How does it work?

There is no age limit for a custodial Roth IRA, but the child must have earned income to contribute to the account. Once the child becomes an adult, they can convert the account to their own Roth IRA and continue to invest on their own.

What’s the benefit?

Earnings grow tax-free and qualified withdrawals after age 59 1/2 are also tax-free.

3. 529 plans

What is it?

A 529 account is an investment plan families can use to save for college.

How does it work?

Investments grow tax-free, and withdrawals aren’t taxed as long as the funds are used for qualified education purposes. While kids can’t open a 529 plan themselves (it has to be set up by an adult, usually a parent or guardian), they can still contribute to their own 529 account.

What’s the benefit?

If your child plans to attend college, a 529 plan can be an excellent way for them to get exposure to investing while also saving for college.

4. Greenlight

What is it?

With hands-on educational tools like Greenlight’s investing app for kids and teens, kids can explore stocks and exchange-traded funds (ETFs) and propose trades for as little as $1.

How does it work?

Every trade is subject to parental approval before it’s processed, so you can discuss the risks and rewards together and help your child make informed decisions.

What’s the benefit?

With built-in safety features††, educational tools, and no hidden fees, it’s a collaborative, low-risk way to introduce kids to investing fundamentals.

Why start investing early?

Many people don’t think about investing until later in life, when they start retirement planning. There are several benefits of and reasons for investing early, including:

• Benefit from compound interest: Instead of only earning returns on your original investment, you also earn returns on the gains you accumulate, thanks to compound interest.

For example, if you invest $1,000 and it grows 10%, you now have $1,100. The next period, you earn 10% on the full $1,100, not just the original $1,000. The longer your money stays invested, the more those returns compound, helping your balance grow at a faster pace. Use a compound interest calculator to show your child the power of one of the most important money lessons they’ll ever learn.

• Learn real-world skills: A hands-on investing experience enables kids to learn about the stock market, saving, budgeting, risk management, and other financial concepts that will be essential as they grow into adulthood. Greenlight shows parents and kids how to get started with investing in five simple steps.

• Get a head start on wealth building: According to a Charles Schwab report, Gen Zers are investing earlier than older generations. Providing your teen with the proper tools and education can help them invest thoughtfully and safely. Plus, they’ll be ahead of the average investor by starting early.

Start investing early

If your child or teen starts showing interest in investing, seize the opportunity to start the conversation and begin building good money habits early. Kids can learn about investing through Greenlight's investing app and Level Up™ financial literacy game. Greenlight’s education platform provides indispensable resources to empower your family to tackle the investing journey together.

Want to raise savvy investors? With Greenlight, kids get real-world experience under your guidance. Try Greenlight, a fun, easy way to start investing.

Frequently asked questions

Is it legal to invest under 18?

Yes, with a custodial account, a joint account, or a family-managed platform like Greenlight, teens under 18 can invest with the help of a parent or guardian. However, it is not legal for children under 18 to invest on their own.

What happens to the custodial account when my child turns 18?

For custodial accounts, ownership typically transfers to the teen at age 18 or 21, depending on your state.

Do minors have to pay taxes on their investments?

Sometimes. It depends on investment earnings and the type of account. In many cases, if a minor earns a certain amount from things like dividends or selling stocks, it could be taxed at the parent’s tax rate, known as the “kiddie tax.” It’s always a good idea to check with a tax professional.

Can I pick my own stocks or ETFs?

On platforms like , teens can research and suggest trades right from the app. Parents approve or deny each transaction, giving kids the freedom to learn while staying safe. You can also invest in fractional shares to start small.

Are schools teaching investing and wealth building?

Some schools offer personal finance courses, but most don’t go deep into investing. That’s why apps like Greenlight include engaging learning tools and real-time investing insights, so you can learn the pros and cons of investing even if your classroom doesn’t cover it.

© 2025 Greenlight Investment Advisors, LLC (GIA), an SEC Registered Investment Advisor provides investment advisory services to its clients. Investing involves risk and may include the loss of capital. Investments are not FDIC-insured, are not a deposit, and may lose value.

††Requires mobile data or a WiFi connection, and access to sensory and motion data from a cell phone to utilize safety features including family location sharing and driving alerts and reports. Messaging and data rates and other terms may apply.