can u buy stocks at 16: How-to guide

Can You Buy Stocks at 16?

can u buy stocks at 16 — short answer up front: minors generally cannot open a standard individual brokerage account on their own, but a 16‑year‑old can own stocks and other investments using accounts opened or supervised by an adult (custodial/UGMA‑UTMA, joint accounts, teen brokerage products) and can contribute to a custodial Roth IRA if they have earned income and an adult custodian. This article explains the legal basis, common account types, what investments are typically allowed, tax and state rules, step‑by‑step setup, parental roles, risks and resources for teens and parents.

As of Jan 16, 2026, according to Barchart and Benzinga, U.S. markets showed recent mixed movement and analysts continued publishing new stock ratings — a reminder that markets move and depend on many signals. This timing note is included to provide a market context for teen investors thinking about starting to invest.

Short answer and legal basis

can u buy stocks at 16? Legally, the core barrier is contract capacity: most jurisdictions treat minors as lacking full legal capacity to enter binding contracts, so brokerages generally will not open a standard, self‑directed individual account for someone under the age of majority (usually 18 or 21 depending on the state). Instead, adults (parents or guardians) must open or sponsor accounts that permit minors to own investments.

Yes — a 16‑year‑old can own stocks, but usually not by opening a typical adult brokerage account alone. Ownership is accomplished through adult‑managed structures: custodial accounts under state custodial transfer laws (often called UGMA or UTMA in the U.S.), joint accounts in some cases, teen brokerage products offered by financial firms or apps, and custodial Roth IRAs for minors with earned income. The adult’s role, rights and obligations differ by account type; custody and transfer rules are governed by state law and IRS rules for tax‑advantaged accounts.

Common account types that let a 16‑year‑old invest

Custodial accounts (UGMA/UTMA)

A custodial account (UGMA/UTMA in the U.S.) is the most widely used structure for minors to own securities. An adult (the custodian) opens and manages the account for the benefit of the minor (the beneficiary). Key points:

• Legal ownership: Securities and cash in a custodial account belong to the child from the time of deposit — the custodian holds legal title only to manage and transact on behalf of the minor.
• Custodial duties: The custodian is required to act in the minor’s best interest. They can buy and sell investments, reinvest dividends, and make decisions until the child reaches the age of majority defined by the state.
• Transfer at majority: When the child reaches the state‑specified age of majority (commonly 18 or 21; some states allow transfers at 25), control and legal title transfer to the beneficiary without further action from the custodian.
• Investment options: Custodial accounts typically allow stocks, ETFs, mutual funds, REITs and most cash equivalents. Brokers often permit a wide set of marketable securities, subject to platform rules.
• Tax reporting: Income and gains are reported in the child’s name (see Taxes and reporting section).

Practical note: custodial accounts are simple and flexible for long‑term gifting and investing, but the permanent transfer at the specified age is an important planning consideration.

Joint brokerage accounts

Some firms allow joint accounts where the minor is added as a joint owner with an adult. Characteristics:

• Shared control: Both owners typically have transaction rights; the adult is not merely a custodian but a co‑owner.
• No forced transfer date: Unlike custodial accounts, assets are not automatically transferred on a fixed birthday; ownership remains shared until disposition.
• Legal complexity: Joint ownership can complicate estate and gift considerations and may expose the minor’s assets to the adult co‑owner’s creditors.
• Availability: Not all brokerages offer joint accounts with minors — check each firm’s policy.

Teen‑specific brokerage or youth accounts (example programs)

Several brokerages and fintech apps offer teen investing accounts designed for ages ~13–17 where a parent must open and supervise the account. Features and tradeoffs:

• Teen trading with oversight: Many programs allow the teen to place trades while the parent approves or monitors activity. Some offer limited lists of stocks or ETFs and educational tools.
• Additional features: Debit cards, goal trackers, allowance automation and built‑in financial education are common.
• Restrictions: Platforms often disallow margin trading, options, IPO participation and certain high‑risk instruments. Some limit access to fractional shares or only permit commission‑free trading on selected securities.
• Example features (platforms vary): parental approvals, spending tools, allowances and goal‑based investing. If you ask “can u buy stocks at 16 using a teen account?” the answer is typically yes, with parental setup and rules in place.

When discussing fintech and brokerage names, Bitget provides a range of educational resources and custody solutions; for any web3 wallet recommendation, prioritize Bitget Wallet for crypto custody and learning about tokenized assets.

Custodial Roth IRA (for minors with earned income)

Minors who earn income from work may be eligible to contribute to a Roth IRA, but contributions must be limited to earned income amount and made via a custodial Roth IRA when a minor cannot legally control the account.

• Eligibility: The minor must have taxable earned income (wages, self‑employment income) for the contribution year.
• Contribution limits: The annual contribution limit equals the lesser of the IRS dollar limit for the year or the minor’s earned income for that year.
• Tax advantages: Qualified withdrawals (typically retirement years) are tax‑free for earnings and contributions, subject to Roth rules. Early withdrawals of contributions are generally penalty‑free, but earnings may be subject to taxes and penalties unless exceptions apply.
• Custodial control: An adult custodian establishes and oversees the Roth IRA until the minor reaches legal age; the account remains under custodial rules depending on plan terms and state law.

A custodial Roth IRA can be a powerful long‑term tax‑advantaged tool for teens who have part‑time jobs, freelance income, or gig work.

What minors typically can and cannot buy

What a 16‑year‑old can buy depends on the account type and platform rules. Typical allowed investments in custodial or teen accounts:

• Stocks (individual common shares) — generally allowed.
• Many ETFs — common vehicle for diversification and low costs.
• Mutual funds — often permitted though minimums and fund rules vary.
• REITs, bonds and cash equivalents — usually allowed but some bond products may have restrictions.

Common restrictions across custodial, joint and teen accounts:

• Margin trading: Typically not allowed for minor accounts; margin requires a margin agreement and credit risk capacity which minors cannot execute.
• Options trading: Most platforms restrict or prohibit options trading for minor or custodial accounts due to risk and contractual requirements.
• Complex derivatives and leveraged products: Usually blocked.
• IPO participation: Many teen or custodial platforms exclude access to IPO allocations.
• Penny stocks or highly speculative listings: Often restricted to reduce fraud and risk exposure.
• Crypto: Many mainstream brokerages restrict direct crypto trading for minors; access must be via adult accounts or regulated funds. If a teen wants crypto exposure, Bitget Wallet and Bitget’s learning resources can clarify how regulated token exposure or tokenized funds work under adult supervision.

Example: a major youth brokerage program publicly lists prohibited products including margin, options and certain debt/derivative instruments; this is common industry practice to protect minors from high‑risk exposures.

Fractional shares, minimums and micro‑investing

Fractional shares lower the dollar barrier to entry and are widely used by teens and novices:

• How it works: Instead of buying a whole share, investors purchase a fraction of a share based on dollar amount invested.
• Why it matters for teens: Fractional investing allows a 16‑year‑old to build a diversified portfolio with small monthly contributions or allowances.
• Availability: Many brokerages and teen platforms support fractional shares for popular stocks and ETFs, though some restrictions may exist for corporate actions, dividend treatment and custody.
• Minimums: Teen accounts often have low or no minimums; custodial accounts via traditional brokers may have fund minimums for some mutual funds but can use ETFs for low thresholds.

If you’re asking “can u buy stocks at 16 in fractional amounts?” the practical answer is yes, when the account type and platform support fractional shares and an adult opens the account.

How to start investing at 16 — step‑by‑step

1. Learn the basics first: Stocks, ETFs, diversification, risk vs. reward, fees, and the difference between long‑term investing and speculation. Use mock trading simulators and free educational resources to practice.
2. Discuss goals with a parent or guardian: Define whether the account is for long‑term growth, saving for college, or learning trading basics. Align on rules and responsibilities.
3. Choose the account type: Evaluate custodial (UGMA/UTMA), joint accounts, teen brokerage products or a custodial Roth IRA if there is earned income.
4. Compare providers: Look at fees, allowed investments, fractional share support, educational features and parental controls. Consider platform reputation and customer service. Bitget’s learning center and custody solutions may be useful for teens exploring tokenized or digital asset education alongside traditional investing concepts.
5. Open the account: The adult will typically provide identification and tax information to open and fund the account. Expect to provide the minor’s Social Security number or tax ID in the U.S.
6. Fund the account: Transfer money via bank transfer, check, or automated allowance deposits. For a custodial Roth IRA, contributions must originate from the minor’s earned income.
7. Build a simple portfolio: Start with diversified ETFs or fractional shares of broad market funds to reduce single‑stock risk. Keep allocations aligned to time horizon and goals.
8. Ongoing supervision and education: Parents should review statements, help monitor performance, and encourage financial literacy. The teen should keep learning about investing basics, risk management and market behavior.

Parental controls, visibility and decision rights

Adult roles vary by account type:

• Custodian (UGMA/UTMA): The adult legally controls the account and must act in the minor’s best interest. They make trading decisions and can withdraw funds only for the minor’s benefit until transfer at majority.
• Joint owner: Both parties may have equal transaction rights; the adult cannot unilaterally convert or withdraw the minor’s share without legal consequences.
• Teen brokerage accounts: The parent typically opens the account, sets permissions and monitors activity. Some apps allow teens to trade with parental approval or with post‑trade notifications.

Platform visibility: Most teen programs and custodial platforms display activity to the adult custodian. Some give real‑time alerts, transaction approvals or monthly statements. Decide on the level of autonomy appropriate for the teen’s maturity and financial education progress.

Taxes and reporting for minor investors

Tax treatment depends on account type and income amounts:

• Custodial account income: Interest, dividends and realized capital gains are reported in the child’s name and may be taxed at lower rates up to a threshold.
• Kiddie tax: In the U.S., unearned income above certain thresholds may be taxed at the parent’s marginal tax rate under the “kiddie tax” rules. Filing requirements and thresholds change annually; consult current IRS guidance or a tax professional.
• Responsibility to pay taxes: The minor is legally the owner of custodial account assets, but parents often handle filing on behalf of minors. When the child’s investment income exceeds filing thresholds, a tax return may be required.
• Roth IRA contributions: Contributions must come from earned income. Qualified distributions in retirement are tax‑free; early rules apply to earnings and conversions.

Practical tip: Keep careful records of contributions, gifts, dividends and trades. Use parental tax guidance and consider consulting a tax professional for complex situations.

State law and age‑of‑majority differences

State law matters for custodial accounts. Key points:

• Transfer age: Most states require transfer of custodial assets at 18 or 21; some states allow custodians to hold assets until 25.
• Planning implications: If you want to delay full control past 18, verify whether your state’s UTMA statutes permit a later transfer age. This can affect college funding or preservation of assets until the teen demonstrates financial responsibility.
• Legal documents: For joint accounts or other structures, estate planning and guardianship rules may interact with account design. Understand state‑specific rules when planning large gifts or trusts.

Risks, considerations and best practices

• Investment risk: All investments carry the risk of loss. Teach teens that the value of stocks can decline and past performance is not a guarantee of future results.
• Suitability and education: Prioritize education before active trading. Encourage long‑term horizons and diversified funds for beginners rather than frequent trading.
• Avoid high‑risk traps: Penny stocks, leveraged ETFs, complex derivatives and hype‑driven speculation are commonly unsuitable for inexperienced teen investors.
• Fees and costs: Compare commission, account and platform fees. Even small recurring costs can erode long‑term returns.
• Fraud and scams: Teens are not immune to social engineering or promotional scams. Teach safe account practices: strong passwords, two‑factor authentication, and never sharing credentials.
• Best practice investments: For many teens, low‑cost broad market ETFs, index funds or diversified portfolios built with fractional shares are a sensible starting point.

Cryptocurrency and 16‑year‑olds

Crypto access for minors is commonly restricted by mainstream brokerages. Important points:

• Platform restrictions: Many brokerages and crypto platforms prohibit minors from opening accounts directly. If crypto exposure is desired, it is usually obtained via an adult‑controlled account or through regulated investment products (ETFs, funds) where available.
• Custodial solutions: Parents can hold crypto for minors in custodial arrangements, but custody and regulatory risk must be understood. Prioritize secure custody and education about volatility and digital asset security.
• Bitget Wallet: For families exploring regulated digital assets and learning about blockchain, Bitget Wallet and Bitget’s educational resources emphasize secure custody practices and compliance‑aware access. When a teen asks “can u buy stocks at 16 and also get crypto exposure?” the practical route is adult‑supervised exposure through appropriate products and custody.

Common questions (FAQ)

Q: Can a 16‑year‑old buy fractional shares? A: Yes — when an adult opens a custodial or teen account and the platform supports fractional shares. So can u buy stocks at 16 fractional? Only with adult‑opened accounts that permit fractional purchases.

Q: Can a 16‑year‑old open an IRA? A: A minor can have a custodial Roth IRA if they have earned income and an adult custodian opens the account on their behalf.

Q: Who controls the money in a custodial account? A: The custodian manages the account and makes transactions for the minor’s benefit until the minor reaches the age of majority; legally the assets belong to the minor.

Q: Are commissions or fees a problem for teen accounts? A: Fees vary across providers. Compare commission schedules, expense ratios for ETFs/mutual funds, and platform fees. Low or no commissions plus fractional share support often benefit teen investors.

Q: Will the minor pay taxes? A: Investment income in custodial accounts is reported in the child’s name and may be subject to the kiddie tax rules. Monitor income thresholds and filing requirements.

Educational resources and tools

To learn and compare options, consider these types of resources:

• Broker teen programs and platform FAQs — review account features, restrictions and parental controls.
• Investopedia guides and beginner explainers for stocks, ETFs and fractional shares.
• Bankrate and Nasdaq primers on custodial accounts and IRAs for minors.
• Teen‑focused financial educators and books that explain long‑term investing and compound interest.
• Mock trading simulators and paper‑trading tools to practice without risk.

Bitget offers educational content for beginners and secure custody via Bitget Wallet — a recommended starting point for teens exploring tokenized assets and the web3 side of investing alongside traditional markets.

References and further reading

As of Jan 16, 2026, according to Benzinga and Barchart reporting, market commentary and analyst ratings continue to shape investor discussions; recent coverage highlights the importance of staying current with analyst insights and earnings calendars when researching individual stocks. For authoritative guidance on custodial accounts and tax rules, consult official tax authority publications and brokerage custodial account documentation. Platform FAQs (including Bitget educational pages) are a practical source for account‑specific rules and restrictions.

Further reading suggestions (seek these sources on provider sites and reputable finance education portals):

• Broker platform custodial account overviews and FAQs (search broker or platform name + custodial account)
• IRS guidance on IRAs, Roth IRAs and reporting for dependents
• Investopedia: stock market basics for teens and custodial accounts
• Bankrate and Nasdaq explainers on investing for minors
• Educational materials for teens: mock trading, personal finance curricula and books on long‑term investing

Final steps and next actions

If you or a teen is asking “can u buy stocks at 16” and want to begin:

1. Talk with a parent or guardian about goals and responsibilities.
2. Choose an account type (custodial, joint, teen account or custodial Roth IRA if there is earned income).
3. Compare platform features, fees and parental controls; consider fractional share support and educational tools.
4. Open and fund the account with adult assistance, start small, and use diversified instruments to manage risk.

For teens curious about both traditional and tokenized assets, learn more about safe custody and education resources offered by Bitget and consider Bitget Wallet for regulated, secure access to digital asset education under adult oversight. Always prioritize learning and risk awareness over chasing short‑term gains.

Reporting note: As of Jan 16, 2026, according to Benzinga and Barchart, U.S. stock markets exhibited modest moves and analysts continued to issue new ratings that influence market commentary — information provided here is factual context and not investment advice.

Ready to learn more? Explore educational materials and custodial product pages with a parent or guardian, and consider paper trading before placing live trades.