How To Go About Investing In Stocks – Learn more about what age you can start investing in stocks and what to do if you’re under 18.

Stocks represent partial ownership of companies. For example, if you own Amazon stock, you technically own a very small portion of Amazon!

How To Go About Investing In Stocks

As the company grows, so does the value of your shares. Over time, this can lead to significant wealth creation.

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And the sooner you can start, the better. But how old do you have to be to invest in stocks?

You must be at least 18 years old to open your own account and invest in stocks. However, there are ways around this rule that allow minors to invest with the help of a parent or guardian.

To invest in stocks, you need a stock brokerage account. This account will give you access to the stock market, where shares of publicly traded companies are traded. These accounts are available from companies like Fidelity, Schwab, and Vanguard. All standard brokerage accounts have a minimum age requirement of 18 years.

Luckily, there is a special type of account called a custodial investment account. This type of account has 2 account holders: the beneficiary and the custodian.

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Custodians must be at least 18 years old and they are the ones who actually open and manage the account. The beneficiary can be under the age of 18, however, although they technically own the account, they do not directly control it.

The custodian remains in control of the account until the beneficiary turns 18, at which point the beneficiary can sell the assets or take over management of the account.

Parents and guardians typically act as account guardians—although technically any legal adult can be a guardian. So, grandparents or even family friends can open a guardianship account on behalf of the minor.

Takeaway: An individual must be at least 18 years old to open his or her own brokerage account and buy stocks, but adults can help set up a custodial investment account on behalf of a minor .

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Investing in stocks doesn’t have to be complicated, but it can certainly seem intimidating to new investors! Here’s what you need to know.

If you’re just starting out (and you’re over 18), a standard brokerage account is a good choice. Retirement accounts are also beneficial, but they have more restrictions and rules.

Once you’ve decided which type of account to use, you need to choose where to open it. You can open any of the accounts listed above with a reputable broker, such as Vanguard, Fidelity, or Schwab.

Some account types are also offered by newer investing apps, like Robinhood or Webull. These apps are simple to use but often have fewer advanced features and a limited number of accounts/investments.

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After choosing the broker you want to use, you can open an account following their instructions. Brokers require a fair amount of information to open an account but it doesn’t take long. You will need to provide:

Next, it’s time to decide what stocks you actually want to buy. We will discuss this further below, but there are two main types:

If you’re new and just want to get started, choosing an index fund is a great starting point.

Now is the time to pull the trigger and actually buy something! If not, you’ll need to transfer money from your bank account. Once you have deposited them into your investment account, you can start buying.

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To buy stocks, you must place a buy order. To do this, you simply enter the name of the stock you want to buy, the number of shares you want (or the amount you want to spend), and the order type.

For beginners, using “market” orders is the simplest. This means that the transaction will be made at the current market price of the stock. If you place a “market” buy order for 10 shares of XYZ and XYZ is trading at $11/share, the buy order will be filled at $11/share (for a total of $110).

You can also place “limit” orders, which allow you to set the price you want to pay. For example, you could say you want to buy 10 shares of XYZ stock at $9 per share. In this case, the order will not be executed unless XYZ begins trading at $9 or less per share.

Stock trading takes place during fixed trading hours, from 9:30 a.m. to 4 p.m. ET. If you place an order outside of these hours, your trade will be executed the next trading day.

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Getting started with your first stock is exciting! But building real wealth requires a long-term commitment to investing regularly.

It would be wise to set up automatic transfers to your investment account every month. That way, you can automate your investments and build wealth passively.

There’s no need to invest a lot every month to get more cash over time. If you invested just $100 per month for 30 years and earned a 10% return, you would net over $208,000!

There are literally thousands of companies you can invest in, in addition to thousands of mutual funds, exchange-traded funds (ETFs), hedge funds, and more. Where do you even start?

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Buy individual stocks. This is buying shares of a particular company because you think that company will do well. It is a riskier strategy and requires more research and time.

Buy stock funds. This is a way to spread your bets using products like index funds and mutual funds. These funds buy different baskets of stocks. When you buy into these funds, you are buying a small portion of all the stocks they own.

Specifically, stock index funds are a great choice. These funds buy hundreds of stocks and track the performance of the broader stock market.

Funds that follow the S&P 500, such as VOO, IVV and SPY, are quite popular. S&P 500 funds own the 500 largest publicly traded companies in America. So when you buy into the S&P 500 index fund, you’re buying a microscopic slice of 500 companies, including Apple, Amazon, Microsoft and Nike.

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A retirement account is a type of investment account that offers tax benefits if you save money for retirement. But do they have different regulations regarding the minimum age to invest?

In short, no—retirement accounts have the same minimum age requirement of 18. However, there are custodial retirement accounts that parents can open for their underage children.

However, retirement accounts have another requirement that prevents many minors from using them: You must have earned income to contribute to the retirement account.

“Earned income” is income from a job, business or side hustle. It does not include gifts, grants or anything similar.

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So, for example, a 16-year-old with a summer job could ask their parent or guardian to open a custodial Roth IRA for them. They can then contribute to the account using some of the money they earn from their work.

If a minor has income and wants to save for retirement, a custodial Roth IRA is a good choice.

A Roth IRA account allows you to contribute and invest money, allowing the investments to grow tax-free. When you retire, you can withdraw money without paying any income taxes. Over the long term, this can significantly improve your investment returns and reduce your tax liability.

Minors can use “custodial” investment accounts. The account custodian must be over 18 years of age and willing to open the account on behalf of the minor.

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Guardianship accounts are typically not opened by parents or guardians – although technically any legal adult can act as a guardian.

The custodian must open an account with the broker using both their own and the minor’s information. From there, the custodian manages the account and investments, but the minor may play a role in making overall investment decisions.

For example, a daughter can ask her mother to open a guardianship account on her behalf. From there, they can work together to set up accounts, deposit money, and make investment choices.

The guardian will still have legal control of the account until the minor becomes an adult. When the minor turns 18, control of the account will transfer to the minor’s name. This may happen automatically or require a manual process—this depends on the type of account and where the account is being held. Note: In some states and for certain accounts, accounts cannot be transferred until the minor turns 25 years old.

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Aside from the need to use a custodial account, investing as a child is just like investing as an adult.

UGMA/UTMA Custodial Accounts: These are the “standard” types of custodial investment accounts available. The corresponding acronyms are Uniform Gifts to Minors Act and Uniform Transfers to Minors Act. These accounts can be opened by any adult on behalf of a minor. There are no restrictions on contributions and funds can be used for any purpose after withdrawal. Control of the assets in the account is transferred to the minor when he or she turns 18 to 25 (this varies by state).

Custodial retirement accounts: These are accounts specifically for retirement, such as a custodial Roth IRA. These accounts offer significant tax benefits but have more limitations. To contribute, the minor must have earned income and cannot contribute more

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