can u do stocks under 18? A Guide

Can You Invest in Stocks Under 18?

can u do stocks under 18 is a common question for parents and teens. The short answer: can u do stocks under 18 — not usually in a standard adult brokerage account alone — but there are several legal and practical ways for minors to own and learn about stocks, including custodial accounts, teen-owned accounts set up with parental oversight, Roth IRAs for working minors, and education-focused vehicles like 529 plans.

This guide explains why starting early matters, the legal framework, the main account types, what minors can actually buy, step-by-step setup, tax and reporting basics, common risks, teaching tips, how accounts transition at majority, and where to learn more. It also references recent market context to show the investing backdrop. Throughout, Bitget tools and Bitget Wallet are suggested where appropriate for custody, education, and demo purposes while keeping all recommendations neutral and informational.

Background and Why It Matters

Time is one of the most powerful advantages a young investor can have. Asking can u do stocks under 18 is the first step toward harnessing long-term compounding, learning good saving and investing habits, and building financial confidence.

• Time horizon and compounding: Starting even small amounts early can produce outsized lifetime gains because of compound growth.
• Financial literacy: Practical investing experience teaches risk, diversification, taxes, and record keeping.
• Industry trends: Many brokerages and fintech platforms now offer teen-focused accounts or custody solutions designed for ages roughly 13 to 17, improving access and education.

As of 2026-01-21, per Benzinga reporting, markets were mixed: the Russell 2000 hit a new all-time high, while the Nasdaq fell 0.66%, the S&P 500 fell 0.38%, and the Dow fell 0.29%. That market choppiness underlines why education and long-term perspective matter before trading. Examples from Benzinga show how individual stocks and sectors can diverge; learning to invest safely under adult supervision reduces the risk of emotional trading.

Legal and Regulatory Framework

Most brokerages require account holders to be legal adults. That means minors cannot generally open a standard retail brokerage account in their own name without a parent or guardian. Instead, custodial structures or supervised youth accounts are used.

Key legal points:

• Age of majority varies: In the US, most states set majority at 18, but some jurisdictions use 21. This affects when custodial account assets transfer to the beneficiary.
• Custodial fiduciary duties: A parent or custodian has a fiduciary duty to manage the account for the child's benefit. Assets are owned by the minor but controlled by the custodian until transfer.
• Securities regulation: Trades inside custodial accounts remain subject to general securities laws and brokerage terms; minors do not have exemptions from standard regulation just because of age.

Age thresholds and jurisdictional differences

The age at which a minor gains full control over custodial assets depends on state law and the specific custodial statute: UGMA or UTMA. Some states allow transfers at 18, others at 21, and some permit extension to 25 under UTMA if specified. Always check your state statute or ask a licensed advisor to confirm the applicable rules for your situation.

Main Account Types for Minors

When people ask can u do stocks under 18, they really are asking which account options enable minors to own investments lawfully and safely. The main account types are custodial accounts (UGMA/UTMA), custodial Roth IRAs for minors with earned income, 529 education accounts, and modern teen-owned brokerage or youth accounts.

Custodial Accounts (UGMA / UTMA)

Custodial accounts are the most common path for minors to own stocks.

• What they are: UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act) allow an adult to hold securities and other assets on behalf of a minor.
• Control: The adult custodian manages investments until the child reaches the age set by state law, at which point the assets transfer irrevocably to the beneficiary.
• Ownership: Assets in UGMA/UTMA belong to the minor from the time of the gift; the custodian must manage them in the child’s best interest.
• Uses and restrictions: Custodial funds can be used for the child’s benefit broadly; they are not limited to education.
• Tax basics: Minor’s investment income may be subject to special tax rules (kiddie tax). The first small amount of unearned income is often tax-free or taxed at the child’s rate, then taxed at parents’ rate above threshold levels; rules change over time and require checking current IRS guidance.

Advantages: flexibility in use, ability to invest in a broad set of securities, and simplicity for parents.

Trade-offs: assets become the child’s property at majority, which may affect college aid calculations and future control.

Custodial Roth IRA (Roth IRA for kids)

A custodial Roth IRA is a powerful way for working minors to start retirement savings early.

• Eligibility: The child must have earned income (wages from a job or self-employment income). Contributions cannot exceed earned income for the year and must also respect IRS Roth IRA limits.
• Tax advantages: Contributions are post-tax, and qualified withdrawals are tax-free; earnings grow tax-free if rules are followed.
• Account control: An adult typically opens and manages the custodial Roth until the minor reaches the age of majority, at which point control passes to the child.
• Contribution limits: Annual Roth contribution limits are set by the IRS and may change yearly; contributions cannot exceed the minor’s earned income or the IRS cap.

Roth IRAs encourage long-horizon investing and compound growth and are best for long-term retirement savings rather than short-term goals.

529 College Savings Plans

529 plans are education-focused investment accounts opened by adults (often parents or grandparents) for a minor’s future education expenses.

• Tax treatment: Earnings grow tax-deferred, and qualified withdrawals used for eligible education expenses are tax-free at the federal level, and often at the state level.
• Investment choices: Usually limited to a menu of age-based or static portfolios; less flexible than custodial brokerage accounts.
• Financial aid: 529 assets are treated differently than custodial assets for financial aid calculations and often have more favorable treatment.

529s are best when the money is specifically intended for education.

Teen-owned Brokerage Accounts / Youth Accounts

Modern brokerages and financial fintechs have introduced teen or youth accounts that let teens 13 to 17 trade within limits while giving parents oversight.

• How they work: A parent or guardian opens the account and links it to their own; the teen has a login and can propose trades, learn to research, and sometimes place orders that require parental approval (platform dependent).
• Typical restrictions: No margin, no options trading, many disallow crypto and penny stocks, and some limit mutual fund types or fixed-income products.
• Examples of features: Educational content, spending controls, allowance automation, and approval workflows.
• Differences vs custodial accounts: Teen accounts often emphasize learning and controls and may allow a teen to exercise more active involvement while still under parental supervision. Custodial accounts are legally owned by the child, while teen accounts sometimes are structured to keep legal ownership with custodian depending on provider.

When deciding between custodial and teen-owned accounts, consider ownership, control, tax implications, and educational value.

What Minors Can Actually Invest In

Depending on the platform and account type, minors can invest in many common asset types:

• US-listed stocks: Widely available in custodial accounts and many teen accounts.
• ETFs: Low-cost diversified ETFs are often permitted and recommended for beginners.
• Mutual funds: Available on many brokerages, though some youth accounts restrict certain funds.
• Fractional shares: Many platforms offer fractional shares to allow small-dollar investing in expensive stocks.
• REITs and some bond funds: Available depending on platform.

Typical prohibitions or limits in youth-focused accounts include:

• Options trading: Generally disallowed for minors.
• Margin and leverage: Disallowed.
• Certain mutual funds or fixed-income products: Platform-dependent.
• Cryptocurrency: Many teen accounts restrict crypto, though a custodian could choose a platform that permits crypto in a custodial account; Bitget Wallet and Bitget products are positioned for crypto-savvy families that want custody and education tools.

How to Get Started (Step-by-step)

If you or your family are asking can u do stocks under 18 and want to begin safely, follow these steps.

1. Set goals and learn first

   • Define why you are investing: long-term growth, college, retirement practice, or learning.
   • Start with education: basic investing concepts, diversification, risk tolerance, and taxes.
   • Use demo accounts or paper trading to practice before using real money.

2. Choose the right account type

   • Custodial account if the goal is broad ownership and flexible use.
   • Custodial Roth IRA if the minor has earned income and the goal is retirement savings.
   • 529 if the goal is education and tax-efficient withdrawals for school.
   • Teen-owned brokerage if your priority is supervised learning and controlled trading.

3. Pick a brokerage or platform that supports minors

   • Look for custodial account capability or a dedicated youth product.
   • Check fees, minimums, educational resources, and customer support.
   • Where crypto access is desired, consider Bitget Wallet for custody and Bitget features for educational exposure while noting platform rules.

4. Open and fund the account

   • An adult will typically open the account and provide identification, Social Security or tax ID numbers, and other paperwork.
   • Fund via transfer, gift, or earned income for Roth IRA contributions.

5. Choose an investment plan and start small

   • Beginners should favor diversified ETFs and low-cost index funds.
   • Fractional shares let minors buy portions of expensive stocks.
   • Limit initial amounts to what the family can afford to lose while the teen learns.

6. Monitor and teach

   • Review statements together, discuss why certain trades were made, and emphasize long-term thinking.
   • Use Bitget educational tools or simulated trading until confidence builds.

Taxes and Reporting

Taxes for minor-owned accounts can be more complex than for adult accounts. Key points to keep in mind:

• Kiddie tax: Unearned income above specified thresholds may be taxed at the parents' marginal rate rather than the child’s. Thresholds and calculations change, so check current IRS guidance.
• Custodial account reporting: Investment income and capital gains may require tax filings for the child, and sometimes may be reported on the parent's return depending on amounts and local rules.
• Roth IRA: Contributions are after-tax, qualified withdrawals are tax-free; Roth rules apply even for custodial Roths.
• Capital gains and dividends: Gains and income inside custodial accounts are taxable; keep records of cost basis and transactions.

Always consult a tax professional for specific situations and current limits, since tax law changes and state differences apply.

Risks, Limitations and Consumer Protections

Investing always involves risk, and minors should learn to manage it safely.

• Investment risk: Stocks and ETFs can lose value; teach loss limits and diversification.
• High-risk products: Avoid penny stocks, high-leverage products, and speculative schemes.
• Platform protections: Many brokerages are members of SIPC which provides limited protection against broker failure for securities accounts; check provider disclosures and protections.
• Parental fiduciary duty: Custodians must act in the child’s best interest; misuse of funds can have legal consequences.
• Education controls: Many youth accounts include parental approvals, trading limits, and educational nudges to prevent risky behavior.

Advantages of Investing Young

There are clear benefits to starting early:

• Longer compounding horizon: More time generally means more growth potential.
• Habit formation: Saving and investing become habits when started early.
• Lower-dollar experimentation: Fractional shares let teens experiment with small stakes.
• Educational value: Real investing teaches budgeting, decision-making, and record keeping.

Best Practices and Teaching Tips

• Start with education: Use low-cost index ETFs and practice portfolios first.
• Keep amounts modest: Limit exposure while learning.
• Focus on diversification: One or two diversified ETFs beat concentrated bets for beginners.
• Use paper trading: Let teens learn without risking actual money.
• Discuss fees and taxes: Teach kids how costs eat into returns and how taxes work.
• Be a coach, not just a controller: Let the teen make decisions while guiding them.
• Avoid gamification traps: Many apps make trading feel like gaming; emphasize real risks.

Encourage use of reputable tools for learning. Bitget provides educational content and demo features that families can use to introduce trading basics in a controlled way.

Transition When the Minor Reaches Majority

When the child reaches the age of majority under local law, control generally shifts:

• Custodial accounts: Assets become the sole property of the beneficiary; the custodian loses legal control.
• Teen-owned accounts: Platforms often convert youth accounts to standard brokerage accounts and remove parental oversight.
• Preparation: Review account holdings, tax records, cost basis, and any outstanding orders well before the transfer so the new adult account holder is ready to manage investments responsibly.

Families should plan for this transition, discussing goals and how control will change.

Frequently Asked Questions

Q: can u do stocks under 18 on your own?

A: Generally no. Standard brokerage accounts require account holders to be legal adults. However, teen-focused programs exist that a parent or guardian must open and supervise. For legal ownership, custodial accounts are used.

Q: can u do stocks under 18 and trade crypto?

A: Most teen accounts restrict crypto. Custodial accounts could hold crypto if the custodian chooses a platform that supports crypto custody, and Bitget Wallet offers custody and educational tools for families exploring crypto with proper oversight.

Q: can u do stocks under 18 and open a Roth IRA?

A: Yes if the minor has earned income. Contributions cannot exceed earned income and are limited by IRS annual caps. An adult typically opens and manages the custodial Roth until majority.

Q: can u do stocks under 18 and use fractional shares?

A: Yes. Many custodial and youth-focused platforms offer fractional shares to let minors buy pieces of expensive stocks or build diversified portfolios with small amounts.

Q: Do gifts to custodial accounts affect financial aid?

A: Yes. Custodial assets are generally treated as the student’s assets for need-based financial aid, which can reduce aid eligibility more than assets held by parents in some cases. 529 plans often have different and more favorable treatment.

Examples of Platforms and Programs (Illustrative)

Many providers offer custodial accounts and youth programs. When selecting a platform, compare custody rules, permitted securities, parental controls, fees, and educational resources.

• Look for custodial account capability and youth products that support supervised learning.
• If exploring crypto or Web3 education, prefer Bitget Wallet and Bitget educational features for custody, simulated trading, and step-by-step onboarding.

Provider feature differences to check:

• Age limits and conversion rules at majority
• Permitted securities (stocks, ETFs, mutual funds, crypto)
• Parental controls and approval workflows
• Fees and minimums
• Educational content and demo tools

Market Context and Why Timing Matters

As families consider can u do stocks under 18, market environment can influence learning moments. As of 2026-01-21, per Benzinga, markets showed mixed performance: Russell 2000 reached a new all-time high while major indices such as Nasdaq (-0.66%), S&P 500 (-0.38%), and Dow (-0.29%) were weaker. Individual company examples illustrate the diversity of outcomes: DigitalOcean Holdings reported revenue of 229.63 million and earnings of 55.99 million in a recent quarter, while other companies showed varied sector-specific dynamics. These real-world examples are useful for teaching how fundamentals, sector trends, and macro events can affect stock performance.

Remember: these snapshots do not imply any recommendation or forecast. They illustrate the market complexity that young investors should learn to navigate.

References and Further Reading

Sources and types of materials to consult for more detail:

• Official brokerage help pages and youth account FAQs
• Greenlight guide on minor investing and custodial accounts
• TeenVestor beginner guides for youth investing
• Fidelity resources on youth accounts and custodial Roth IRAs
• Investopedia articles on investing for teens and custodial accounts
• Bankrate and Kiplinger articles on how teens can invest
• Boston Globe reporting on teen trading trends
• IRS publications on Roth IRA rules and kiddie tax
• Market reporting from Benzinga for market context (market movements and company data)

For crypto custody and wallet options, consider Bitget Wallet as an educational and custodial tool for families exploring crypto in a controlled manner. Verify platform terms and product limitations before acting.

See Also

• UGMA
• UTMA
• Roth IRA
• 529 plan
• Fractional shares
• Custodial accounts
• Kiddie tax
• Financial literacy for minors

Notes on Jurisdiction and Professional Advice

Laws, tax rules, and platform features vary by state and country and can change. This guide is informational and not a substitute for legal or tax advice. Consult a parent or guardian, and consider speaking to a licensed financial advisor or tax professional before opening accounts or making investment decisions.

Further steps: if you are ready to start learning hands-on, set up a demo or custodial practice account, explore Bitget educational resources and Bitget Wallet for custody and simulated crypto learning, and schedule a planning conversation with a trusted adult or advisor.

Further exploration and learning about can u do stocks under 18 will give teens a strong foundation for long-term financial wellbeing. Start small, prioritize education, and keep adult supervision involved until legal majority is reached.