The Right Age to Start Investing: Your Complete Guide to Youth Investment Accounts

When you think about building wealth, age matters far more than you might realize. The key question isn’t just whether young people can invest—it’s understanding at what age they’re allowed to, and how to position them for maximum growth. Getting started early on the path to building an investment portfolio changes everything, thanks to one powerful force: compound returns amplifying your money over decades.

Before 18: What Minors Need to Know About Getting Into Stocks

Can children invest before reaching adulthood? The answer is yes—but with conditions. If you’re under 18 and want to open a brokerage account completely independently, you’re out of luck. You must reach 18 years old to maintain full control over investment decisions and accounts without parental involvement.

However, this doesn’t mean minors are locked out of the market. Numerous account structures exist that allow young people to begin investing with adult supervision. The distinction between these accounts often hinges on ownership and control: Does the minor own the investments, or does the adult? Can the minor make independent decisions, or does the adult retain that authority?

The Three Core Account Options for Young Investors

Joint Brokerage Accounts: Equal Ownership, Shared Decision-Making

Account Structure:

• Ownership: Both minor and adult jointly own the investments
• Investment Decisions: Both minor and adult can make choices
• Minimum Age: No strict minimum (though brokers may set their own standards)

Joint brokerage accounts represent the most flexible pathway into investing. Any adult—parent, guardian, relative, or even a trusted family friend—can open one with a minor. Both account holders own the assets and have the authority to make investment decisions, though naturally, the adult often guides choices early on, gradually empowering the teen as they demonstrate knowledge.

This account type shines for its adaptability. As a teen matures from age 10 to 17, an adult can transition them from making zero investment decisions to handling an increasing percentage—eventually supporting near-total autonomy by the time they turn 18.

The downside? Joint accounts lack tax advantages. Capital gains taxes apply based on the adult’s federal bracket and holding period. That said, the account offers maximum investment flexibility across stocks, bonds, funds, and other securities.

Practical Example: Fidelity Youth™ Account, available to teens aged 13-17, operates as a joint account with zero trading commissions, no account minimums, and no monthly fees. Teens can buy fractional shares starting at just $1, including most U.S. stocks, ETFs, and mutual funds.

Custodial Brokerage Accounts: Minor Ownership, Adult Control

Account Structure:

• Ownership: The minor owns the investments
• Investment Decisions: The adult custodian makes all choices
• Minimum Age: No strict minimum (broker-dependent)

A custodian (typically a parent, but potentially any responsible adult) opens and manages a custodial account on behalf of a minor. The minor legally owns all assets inside—cash, stocks, bonds, everything—but cannot withdraw or redirect funds without the custodian’s approval. The custodian retains full investment authority until the “age of majority,” which state law typically sets at 18 or 21.

Upon reaching the age of majority, the minor gains complete access and control. This is the moment they transition from a supervised investor to a fully independent one.

Tax Advantage: Custodial accounts offer meaningful tax benefits through what’s known as the “kiddie tax.” A set amount of unearned income (dividends, capital gains) faces no taxation annually, while another portion is taxed only at the child’s lower rate. Above these thresholds, the parent’s tax rate applies—but this still often means savings compared to the parent directly owning investments.

Two Custodial Variants:

• UGMA (Uniform Gifts to Minors Act): Limited to strictly financial assets (stocks, bonds, ETFs, mutual funds, insurance). Adopted across all 50 states.
• UTMA (Uniform Transfers to Minors Act): Broader scope—can hold financial assets plus real property (real estate, vehicles). Adopted in 48 states (South Carolina and Vermont excluded).

Both typically restrict higher-risk strategies like options trading, futures, or margin trading.

Practical Example: Acorns Early (part of the Acorns Premium tier at $9/month) lets parents establish custodial accounts for minors. The “Round-Ups” feature rounds everyday purchases to the nearest dollar and invests the difference—a painless way to accumulate investment capital over time.

Custodial Roth IRAs: Tax-Free Growth for Young Earners

Account Structure:

• Ownership: The minor owns the investments
• Investment Decisions: The adult custodian decides
• Minimum Age: No strict minimum (broker-dependent)
• Eligibility Requirement: The minor must have earned income

For teens who’ve worked—whether through summer jobs, babysitting, tutoring, or part-time employment—a custodial Roth IRA unlocks extraordinary long-term wealth potential. The IRS recognizes “earned income,” allowing contributions up to the lesser of that earned income or the annual contribution limit (currently $7,000 for those under age 50, as of 2026).

Unlike a Traditional IRA (where contributions reduce current taxable income but withdrawals in retirement are taxed), a Roth IRA operates inversely. You contribute after-tax dollars, but all growth and future withdrawals remain entirely tax-free (with limited exceptions before age 59½).

Why This Matters for Teens: Young people typically earn little and pay minimal—or zero—taxes. By locking in Roth contributions now at their low tax rate, they guarantee decades of completely tax-free compound growth. Imagine a 15-year-old opening a custodial Roth IRA with $2,000 earned from summer work. If that grows at an average 7% annually, it compounds to over $1 million by age 65, with zero federal tax ever owed on gains.

Practical Example: E*Trade’s IRA for Minors product allows parents to establish either a Traditional or Roth custodial IRA for children under 18 with earned income. The platform offers zero-commission stock and ETF trading, plus access to educational resources including articles, videos, classes, and webinars.

Investment Accounts Opened by Parents (For Younger Children)

Beyond accounts that minors can use directly, parents have standalone options designed purely for saving on a child’s behalf:

529 Plans: College-Focused Tax Advantages

Account Structure:

• Ownership: Parent/adult owns the account
• Investment Decisions: Parent/adult decides
• Minimum Age: None (parent controls from birth)

A 529 plan is a tax-advantaged savings vehicle for education expenses. Contributions (made with post-tax dollars) grow tax-free, and withdrawals for “qualified expenses” incur no tax. Qualified expenses include college tuition, K-12 tuition, trade school fees, books, computers, and room/board (if enrolled at least half-time).

Flexibility has increased: 529 funds can now transfer to another family member if the original beneficiary doesn’t attend college, or roll over to a Roth IRA (up to limits). Non-qualified withdrawals are taxed, plus assessed a 10% penalty—though the penalty is waived if the beneficiary dies, becomes disabled, or receives a military academy appointment or tax-free scholarship.

Education Savings Accounts (ESA/Coverdell): Flexible Education Planning

Account Structure:

• Ownership: Parent/adult owns the account
• Investment Decisions: Parent/adult decides
• Minimum Age: None (parent controls from birth)

Also called a “Coverdell ESA,” this custodial trust account funds elementary, secondary, or college expenses. Contributions (post-tax dollars) grow tax-free, but withdrawals for qualified education expenses must occur before age 30. Income limits apply: single filers earning under $95,000 (with phaseout to $110,000) and married filers earning under $190,000 (phaseout to $220,000) can contribute the full $2,000 annual maximum per student until age 18. Special needs beneficiaries can receive contributions beyond age 18.

Parent’s Personal Brokerage Account

Account Structure:

• Ownership: Parent owns the account
• Investment Decisions: Parent decides
• Minimum Age: Not applicable

Parents can simply use their own standard brokerage account to invest for children—complete flexibility, no contribution limits, no restrictions on use. The tradeoff: zero tax advantages compared to 529s or ESAs.

Account Types at a Glance: Quick Comparison

What Investments Make Sense for Young People?

With decades ahead, young investors should prioritize growth-oriented holdings:

Individual Stocks

Buying individual stocks means purchasing fractional ownership in a company. If the company thrives, stock value typically rises. If it struggles, value falls. The benefit? Learning about companies, researching news, discussing strategy with peers makes investing engaging. The risk? Concentrated positions can suffer sharp declines if a single company performs poorly.

Mutual Funds

Mutual funds pool investor capital to purchase dozens, hundreds, or thousands of securities simultaneously. A $1,000 investment in a single stock faces complete loss if that stock crashes. A $1,000 investment in a mutual fund holding hundreds of stocks means any individual company’s decline has limited impact—your capital is spread across many positions.

Downside: Annual management fees (charged directly from fund performance) reduce returns. Compare funds carefully to ensure cost-effectiveness.

Exchange-Traded Funds (ETFs) and Index Funds

ETFs mirror mutual funds in diversification but differ in mechanics: they trade on exchanges throughout the day (like stocks), whereas mutual funds settle once daily. Most ETFs are passively managed—tracked to an index’s rules rather than actively managed by human decision-makers. This passive structure typically reduces fees and often outperforms active management over time.

Index funds, in particular, make excellent vehicles for young investors holding $1,000 across a broad selection of stocks and bonds. Lower costs combined with long time horizons create ideal conditions for growth.

Why Starting Young Changes Everything

The Compounding Advantage

Whether investing through joint accounts, custodial accounts, or Roth IRAs, the same powerful principle applies: compound returns. Here’s how it works:

Invest $1,000 in an interest-bearing account earning 4.0% annually. After year one, you’ve earned $40 (4% of $1,000 = $40). But in year two, you earn 4% on $1,040—not just the original $1,000. Year-two earnings total $41.60. By year three: $1,124.86. The earnings generate their own earnings, creating an exponential growth cycle.

Now extend this across 50 years from age 16 to 66. A $1,000 starting investment, with no additional contributions and 7% average annual returns, grows to approximately $113,000. Add modest regular contributions, and that figure multiplies dramatically. Start at 25 instead? You’re leaving tens of thousands on the table. Start at 35? The difference becomes hundreds of thousands.

Building Lifelong Financial Habits

Investing young isn’t just about money—it’s about identity. Teens who build a “savings mindset” early, setting aside money consistently for long-term goals, carry that discipline into adulthood. When you transition to independent life—paying rent, managing utilities, groceries—investing naturally integrates into your budget as a non-negotiable priority, just like these essential expenses.

Weathering Market Cycles

Stock markets cycle: periods of rise alternate with periods of decline. Similarly, personal finances fluctuate—earning more in some years, spending more in others. Young investors with decades ahead can weather these cycles without panic. A market downturn at 16 has 40+ years to recover before retirement. A downturn at 55 might permanently impact retirement timeline.

This extended timeline also permits flexible savings adjustments as circumstances change without derailing long-term goals.

The Bottom Line: Age Thresholds for Investing

To summarize:

• Full independence: 18 years old. At 18, you can open and control brokerage accounts, IRAs, and other investment vehicles entirely on your own.
• With parental involvement: Any age. Minors can invest through joint accounts, custodial accounts, or custodial IRAs—giving them real ownership and, in some cases, real decision-making power.
• Parent-only accounts: Any age. Parents can open 529s, ESAs, or standard brokerage accounts for children, controlling both assets and decisions until adulthood.

The earlier you begin—whether as a teen making decisions alongside a parent, or through a custodial account your parents manage—the sooner compound growth ignites. And compound growth, accelerated across decades, transforms modest contributions into substantial wealth. That’s not theory. The mathematics of exponential growth proves it conclusively. Start young, invest consistently, and let time become your greatest wealth-building asset.