Investing Under 18 – Getting Started

investing under 18

Investing is one of the most effective ways to build wealth and financial freedom in life. When you start investing early, you get a head start on your peers and enable yourself to build wealth that will grow and help you reach your goals in the years to come.

Getting Started

You can begin investing in the stock market under 18 with the help of your parent or guardian, but you need to be at least age 18 to open a brokerage account online. There are a few investment vehicles available that allow minors to invest in stocks, and some of them are even tax-advantageous.

Savings accounts

A savings account is an easy way to earn interest on your funds. It’s also a great first step in the process of building a habit of saving money. Many banks and credit unions offer savings accounts that have a higher interest rate than typical savings accounts, which can help your money grow faster.

Buying stocks

Stocks are another popular investment option for teenagers because they have the potential to rise in value over time. This is known as compounding and is a powerful force in generating wealth over the long term.

There are several ways to invest in stocks as a teenager, including through the use of custodial accounts, joint accounts or investment apps. You can also look into investing in stocks through crowdfunding platforms, such as Fundrise.

Investing in exchange-traded funds (ETFs)

ETFs are similar to stocks in that they offer the potential for price gains, but they do so on a much larger scale. They can be used to create portfolios of shares, with each share holding a fraction of the total value. This means that if one company’s stock goes up, then the entire value of the ETF will go up too.

These funds pay dividends to their owners, which can make them an excellent choice for teenagers who want to grow their portfolio quickly. The dividends are a form of income that can be taxed at lower rates than regular wages.

The stock market is full of opportunities for teens to invest their money, but some may struggle with how to get started. The first thing that they should consider is what type of investing they would like to do.

Some teenagers might want to look into investing in a variety of companies, including the ones they’re interested in and those they see as safe bets. They could also explore investing in real estate, which can be an excellent way to generate income and grow a portfolio over time.

Choosing the right investments is crucial for making the most of investing under 18. In general, you should focus on stocks that have the potential to appreciate in value over time, as well as mutual funds.

A UGMA/UTMA custodial account

These types of accounts are popular among teens because they allow them to have control over their investment funds until they turn age of majority, which is either 18 or 21 in most states. Parents can choose to open the accounts, and the money can be withdrawn without penalty once the beneficiary reaches that age.