can u buy stocks under 18? Complete Guide

Can You Buy Stocks Under 18?

can u buy stocks under 18 — short answer: yes, but usually not in the minor's standalone brokerage account. This guide explains how minors can legally own or access stocks and other securities (custodial UGMA/UTMA accounts, teen/youth brokerage accounts, custodial Roth IRAs, 529 plans, trusts), the practical steps to get started, tax and reporting rules, parental fiduciary duties, product restrictions, and how to pick a platform (with a Bitget-focused note on Web3 wallet options).

Reading this article will help parents, guardians, and teen investors understand which account type fits their goals, what documentation is needed, common investment choices and limits, and how financial-aid, taxes, and control transfer work when a child reaches majority.

Legal and Regulatory Background

The question can u buy stocks under 18 touches both contract law and securities rules. In the United States, minors (typically under 18) generally cannot enter binding contracts in the same way adults can. Because opening a standard brokerage account involves a contractual agreement between the individual and the broker, most brokerages require an adult to open and control accounts for minors. To enable investment for minors, legal vehicles were created that allow adults to hold and manage assets for the benefit of a child while preserving the child’s constructive ownership.

Key legal points:

• Most broker agreements require a legal adult (the custodian or account owner) to accept terms and conditions. That is why a minor rarely opens a fully independent brokerage account without adult enrollment or a teen program.
• Federal securities regulation governs what products can be offered, but state law primarily governs custodial account mechanics. The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) provide standardized custodial frameworks that many brokers support.
• Age-of-majority and property-control rules vary by state, so while the federal securities rules are consistent, state statutes determine when custodial assets legally transfer to the minor.

Because of these constraints, alternatives (custodial accounts, custodial Roth IRAs, 529 plans, and specialized teen accounts) are the common, lawful routes by which a youth gains exposure to stocks and securities.

Age of Majority and State Variations

The age at which custodial assets transfer from the custodian to the beneficiary varies by state. Many states set the age of majority at 18, but others set it at 21 or allow a range (for example, transfer at 18 unless the custodian elects to delay until 21). That means parents and guardians should check the custodial law in their state when opening a UGMA or UTMA account.

Why this matters:

• Control: A custodian controls trading, withdrawals, and tax reporting until the minor reaches the state-defined age of majority.
• Timing of transfer: When the child becomes an adult for custodial-law purposes, the custodian must transfer control and ownership of the assets. The child can then use funds for any purpose.
• Estate and gift implications: State rules also affect gift-tax considerations and how custodial assets are treated in estate planning.

Always confirm the local law or consult a qualified attorney when sizable gifts or trust arrangements are involved.

Main Account Types That Let Minors Invest

Below are the primary legal vehicles parents and minors use to invest in stocks and securities.

Custodial Brokerage Accounts (UGMA / UTMA)

UGMA and UTMA custodial accounts are the most widely used vehicle for transferring financial assets to minors while giving adults the legal authority to manage them.

Core features:

• Ownership: The assets are legally owned by the minor but managed by a custodian (usually a parent or guardian) until the minor reaches the age of majority as defined by state law.
• Flexibility: Custodial accounts permit a wide range of investments — common stocks, ETFs, many mutual funds, and bonds — subject to brokerage product limits.
• Use: Funds can be used for the benefit of the child (education, medical, living expenses, etc.), but the custodian must act in the child’s best interest.
• Transfer: When the child reaches the age of majority, control must be transferred; the child becomes the account holder with full discretion.

Pros and cons:

• Pros: Simple to open, flexible investing, can accept gifts from family and friends.
• Cons: Assets are considered the child’s property for financial-aid calculations, and the child can use funds for any purpose once of age.

Custodial Roth IRA

A custodial Roth IRA allows a minor with earned income (from a part-time job, self-employment, or summer work) to contribute to a retirement account under a custodian's oversight.

Key points:

• Eligibility: Contributions cannot exceed the minor’s earned income for the year (or the IRS annual Roth limit, whichever is lower).
• Tax advantages: Roth IRAs grow tax-free and qualified withdrawals in retirement are tax-free, making early contributions especially powerful because of compounding.
• Withdrawals: Contributions (but not earnings) can generally be withdrawn penalty-free at any time; withdrawing earnings before retirement may be subject to taxes and penalties unless an exception applies.
• Long-term benefit: Starting a Roth IRA early harnesses decades of tax-advantaged growth and is often recommended for teens with earned income.

529 College Savings Plans and 529 Investment Options

529 plans are tax-advantaged accounts designed for education savings. An adult usually opens and controls the account while naming a beneficiary (the child).

Highlights:

• Tax treatment: Earnings grow tax-deferred and withdrawals for qualified education expenses are federal tax-free (and often state tax-free).
• Investment options: Plans provide age-based allocations and other portfolio choices (index funds, active strategies). While not as flexible for general investing, 529s are excellent for education goals.
• Control: The account owner — typically a parent — retains control and can change the beneficiary subject to plan rules.

Teen/Youth Brokerage Accounts (Teen-owned with Parental Oversight)

In recent years many brokerages introduced teen or youth accounts (designed for ages roughly 13–17) that let a minor have an account in their name with parental enrollment and oversight.

Common features:

• Account in the minor’s name, but a parent co-owns or supervises and must accept terms.
• Trading limitations: Many teen programs restrict margin trading, options, IPO participation, and sometimes cryptocurrency trading.
• Education-focused features: Interactive learning tools, practice trading, and parental controls that approve trades.

These accounts bridge the gap between learning and real trading while preserving necessary adult consent and risk controls.

Custodial Trusts and Other Legal Structures

For complex family situations or large gifts, trusts may be used instead of simple custodial accounts. Examples include:

• Special needs trusts: Preserve government benefits while providing for a disabled beneficiary.
• Family trusts: Structured for tax planning and asset protection with terms that define investment rules and distributions.
• Trusts often have more sophisticated legal and tax implications and usually require an attorney to draft and administer.

How Minors Can Invest Practically (Steps to Start)

For parents and teens wondering can u buy stocks under 18 from a practical standpoint, here are step-by-step actions.

1. Define your goals: Is the money for long-term retirement, college, learning to trade, or general savings? Goal determines account type.
2. Choose account type: Custodial UGMA/UTMA for flexible saving, custodial Roth IRA for retirement (if the minor has earned income), 529 for college, or a teen brokerage for hands-on learning.
3. Select a broker or platform: Look for custodial account support, low minimums, educational resources, parental controls, and protections (SIPC for brokerage accounts). If you plan to use Web3 wallets for tokenized securities or blockchain-native assets, consider Bitget Wallet for custody and access to Bitget educational features.
4. Gather documentation: Social Security numbers for both adult and minor, IDs for the custodian, proof of minor’s earned income for Roth IRA, and beneficiary information for 529s.
5. Open the account: Complete the broker's custodial or teen-account application with the adult as custodian and the child as beneficiary or minor account holder.
6. Fund the account: Start small if desired—allowances, earnings, gifts, or transfers can seed the account. Many modern platforms allow fractional shares, enabling investment with small amounts.
7. Learn and review: Use the broker’s educational materials, set a simple plan (diversification, low-cost index funds), and involve the minor in regular portfolio reviews.

Funding Sources and Minimums

Minors can fund accounts through:

• Earned income (for Roth IRAs).
• Allowances and small savings.
• Gifts from parents, grandparents, and relatives.
• Transfers from other custodial accounts.

Minimums have become low: many platforms allow zero or very small minimums and fractional shares, which make starting with modest balances practical.

Investment Options and Restrictions for Minor Accounts

What minors can hold depends on the account type and broker rules. Typical permitted investments include stocks, ETFs, and many mutual funds. Common restrictions across custodial and teen accounts:

• No margin borrowing.
• No options trading or complex derivatives for most teen/custodial setups.
• Limited or no access to certain alternative products (private placements, many IPO allocations).
• Crypto rules vary — custodial accounts often restrict cryptocurrency; teen brokerage programs commonly disallow it.

When crypto exposure is desired in a family financial plan, families may use custodial accounts for tokenized ETFs where permitted, or use a Web3 wallet (Bitget Wallet is recommended if you choose Bitget product suite). Because crypto custody and securities classification are rapidly evolving, verify platform terms and regulatory status before buying crypto on behalf of a minor.

Taxes and Reporting

Taxation depends on account type and the child's income from investments.

Custodial Accounts:

• Investment income (dividends, interest, capital gains) is taxed in the child's name up to certain thresholds.
• The “kiddie tax” rules can apply: above a set amount, a child’s unearned income may be taxed at the parent’s marginal tax rate.
• The custodian is usually responsible for reporting and may need to file a tax return for the child if income exceeds reporting thresholds.

Custodial Roth IRA:

• Contributions are made with after-tax dollars; qualified withdrawals are tax-free.
• Earnings withdrawn before retirement may incur taxes and penalties unless exceptions apply.

529 Plans:

• Earnings grow tax-deferred and are tax-free when used for qualified education expenses; non-qualified withdrawals may incur taxes and penalties on earnings.

Recordkeeping and reporting are the custodian’s responsibility. When in doubt, consult a tax professional: this guide is informational and not tax advice.

Parental Roles, Controls and Fiduciary Responsibilities

Adults acting as custodians have legal responsibilities:

• Duty of loyalty: They must manage the account solely for the child’s benefit.
• Investment decisions: The custodian decides holdings and may involve the child for educational purposes, but must always prioritize the child’s financial interests.
• Recordkeeping: Maintain clear records of contributions, gifts, income, and expenses for tax and future transfer.
• Financial aid implications: Assets in the child’s name (UGMA/UTMA) are treated differently than parental assets for college financial-aid formulas. Typically, custodial assets can reduce need-based aid more than parent-owned 529s.

When a custodian is unsure about investment decisions, they should seek licensed financial or legal guidance, especially for large portfolios or trust structures.

Risks, Benefits, and Financial Education

Benefits of starting early:

• Time in market: Compounding returns over decades can be powerful.
• Financial literacy: Hands-on experience builds money-management skills.
• Tax advantages: Custodial Roth IRAs and 529 plans offer tax-efficient growth.

Risks and pitfalls:

• Market risk: Investments can decline in value; minors are not immune to losses.
• Misuse of funds: Once custodial assets transfer at majority, the child may spend them unwisely.
• Behavioral mistakes: Short-term trading and emotional reactions can erode returns.

Recommendations:

• Focus on diversified, low-cost funds for most long-term goals.
• Use simulated or paper trading first if the goal is education.
• Provide age-appropriate financial education: budgeting, fundamentals of stocks and bonds, and the importance of diversification.

Market Trends and Platforms for Young Investors

As of Jan 21, 2026, market activity remained mixed. As reported by Benzinga/Barchart, the Russell 2000 recently reached a new all-time high while large-cap indices showed weakness: the Nasdaq closed down 0.66%, the S&P 500 closed down 0.38%, and the Dow Jones Industrial Average closed down 0.29% (As of Jan 21, 2026, per Benzinga/Barchart). Crypto markets continued to search for a bottom and precious metals showed elevated price pressure at current levels.

Industry trends affecting young investors:

• Fintech and robo-advisors have expanded teen-focused offerings with parental controls and educational tools.
• Fractional shares and zero-commission trading make investing accessible with small amounts.
• Rising interest in AI and tech themes has created sector concentration risks; diversification remains important.

Platforms and resources:

• Many mainstream brokers now offer custodial accounts or teen programs with learning modules. If you plan to integrate Web3 features or multi-asset custody, consider Bitget and Bitget Wallet for unified access and educational resources designed for newcomers to blockchain-based assets.

Alternatives to Direct Stock Investing

If direct stock ownership is not the right fit, consider these alternatives:

• U.S. Savings Bonds: Low risk, predictable returns for education or long-term goals.
• Certificates of Deposit (CDs): Bank-backed, fixed-rate returns for short- to medium-term goals.
• Custodial ETFs or index funds: Broad market exposure with low costs.
• Robo-advisor custodial offerings: Automatic diversification and rebalancing under adult supervision.
• ABLE accounts: Tax-advantaged savings for individuals with disabilities.
• 529 plans: Education-focused, tax-advantaged savings with age-based investing.

Frequently Asked Questions (FAQ)

Q: can u buy stocks under 18 on your own? A: Generally no — minors rarely can open standard brokerage accounts without adult consent. Instead, use custodial accounts, teen programs, custodial Roth IRAs (if the minor has earned income), or 529s. The specific path depends on state law and broker policies.

Q: can u buy stocks under 18 if you are 16? A: You cannot usually open an independent adult brokerage account at 16. However, you can invest using a custodial UGMA/UTMA, a custodial Roth IRA if you have earned income, or a teen brokerage account that allows parental oversight.

Q: What happens to custodial accounts at 18 or 21? A: At the age of majority defined by state law (commonly 18 or sometimes 21), the custodian must transfer control and ownership of the custodial account to the former minor. The new adult can then manage or withdraw funds for any purpose.

Q: Can minors hold cryptocurrencies? A: Crypto rules vary by platform. Many custodial and teen brokerage accounts restrict or prohibit crypto trading. If crypto exposure is desired, families may use a parent-controlled account or a Web3 wallet solution like Bitget Wallet; verify platform terms and local regulations first.

Q: How are taxes handled for a minor’s investment income? A: Investment income in custodial accounts is reported in the child’s name up to IRS thresholds; the kiddie tax rules may tax unearned income above certain amounts at the parent’s tax rate. Custodial Roth IRAs and 529s have distinct tax treatments. Consult a tax advisor for specifics.

Considerations When Choosing a Brokerage or Platform

When evaluating a brokerage for custodial or teen investing, weigh:

• Fees and commission structure.
• Minimums and fractional-share availability.
• Educational content and tools designed for teens.
• Parental controls, approval workflows, and custodial features.
• Product availability and restrictions (options, margin, crypto access).
• Custody and insurance protections (e.g., SIPC) and bank FDIC coverage for cash sweeps.
• Ease of account transfer when the child reaches majority.

If you plan to integrate blockchain features or on-chain assets, consider Bitget Wallet for custody and Bitget’s educational resources; ensure the platform’s terms align with your risk tolerance and regulatory comfort.

Legal, Tax, and Financial Advice — When to Consult Professionals

Seek professional guidance when:

• Large gifts are being made that could trigger gift-tax issues.
• Trusts or special needs planning are required.
• You need tailored tax planning for custodial accounts or Roth IRAs.
• You face complex estate-planning questions.

An estate attorney, CPA, or certified financial planner can provide fiduciary-grade advice tailored to your family’s legal jurisdiction and financial profile.

References and Further Reading

As of Jan 21, 2026, market context and weekly data referenced above came from Benzinga and Barchart market summaries (As of Jan 21, 2026, per Benzinga/Barchart). For authoritative and updated information about custodial accounts and youth investing, consult broker help pages and well-known financial education resources such as Investopedia, Bankrate, Fidelity’s learning center, Motley Fool, TeenVestor, and TIME coverage of youth finance. For Bitget product details (custody, wallet features, and educational center), consult Bitget’s official documentation and Bitget Wallet materials.

See Also

• Custodial Accounts (UGMA/UTMA)
• Roth IRA for Minors
• 529 Plan
• Kiddie Tax
• Financial Education for Teens

Notes on Scope and Limitations

This article focuses on U.S.-centric rules and common brokerage practices. Laws, tax rules, and available products differ internationally. This content is informational and not legal, tax, or investment advice. For personalized guidance, consult a licensed attorney, CPA, or fiduciary advisor in your jurisdiction.

Next Steps — Further Exploration and Resources

If you’re asking can u buy stocks under 18 and want to move from learning to action, start by clarifying your investment goal (education, retirement, or learning). Then evaluate custodial vs. teen-account options and gather the required documentation. Explore Bitget’s educational center and Bitget Wallet if you plan to include blockchain-based tools in a family investment strategy. For tax-specific questions, arrange a consultation with a tax professional.

Thank you for reading — explore more Bitget resources to learn how modern custody and educational tools can support safe, supervised investing for young people.