How Old Do You Have to Be to Invest in Stocks?

view original post

A new generation of investors is hitting the market. However, how old do you have to be to invest in stocks? And can you open an account for your children? These are questions that new investors are considering in the current market.

Stocks are in a downturn and the price of entry is more appealing to younger investors with less capital to invest. Therefore, let’s take a closer look at the age requirements for the stock market in the United States.

How Old Do You Have to Be to Invest in Stocks in America?

Specifically, you have to be at least 18 years old to invest in stocks in the United States. This includes other investments such as bonds, cryptocurrencies, exchange-traded funds (ETFs) and mutual funds.

In addition, your permanent address does not change the age requirement. Which state you live in has no affect on age restrictions in the stock market. However, a parent or guardian has the ability to open a custodial account on behalf of a minor. In this case, the parent or guardian will have control of the custodial account until the minor reaches the age of 18.

But how old do you have to be to invest in stocks in Europe and Asia? In fact, the majority of countries around the world require a minimum age of 18 to invest in stocks.

For example, you must be 18 years old to open an investment account in the United Kingdom. Furthermore, parents and grandparents can set up a “junior investment account” for their child or grandchild until he or she comes of age.

Types of Custodial Accounts

Opening a custodial account may be of great benefit to your child in the long run. Moreover, it’s a great way to teach your children about investing as they get older. You will also have total control over the account to ensure it’s balanced and safely managed until your child becomes an adult. To open such an account, you will need both the child’s personal information as well as your own.

Let’s take a look at some of the most popular custodial accounts available in the United States. This includes:

  • Custodial Brokerage Account (UGMA/UTMA): Named for the Uniform Transfer to Minors Act and the Uniform Gift to Minors Act. Allows for the transfer of assets to a minor once he or she reaches legal adulthood. This includes stocks, bonds, index funds and much more.
  • Custodial IRA (Traditional or Roth): If your child has earned income, you can open a Custodial IRA account on their behalf. Contributions are made on a pre-tax basis for a Traditional Custodial IRA and on a post-tax basis for a Custodial Roth IRA.
  • 529 Plan: Known as a qualified tuition plan (QTP). A popular, tax-advantaged college savings plan that is sponsored by the state, state agencies and educational institutions.

Age requirements to invest in stocks aren’t changing anytime soon. But as you can see, there are many ways to begin the process for your children before they come of age. In fact, a custodial account can set your child on a great path moving forward into adulthood.

A New Generation of Investors

The wave of youth in investing is finally here. And this is mostly due to the meteoric rise of cryptocurrencies and non-fungible tokens (NFTs). Moreover, investing has taken social media by storm. This has also led to a younger demographic of investors.

If you are new to investing, you may want to consider signing up for one of the best investment newsletters on the market. These FREE e-letters can provide you with daily stock tips, trends and expert analysis. This can be greatly beneficial for less experienced investors. Even more so during a time of high volatility and market uncertainty.

So how old do you have to be to invest in stocks? The age requirement is 18 years old in the United States, but custodial accounts are often overlooked by parents and guardians. You may want to consider these options for your children.