Stock trading can seem like a daunting task for newcomers—especially teenagers learning about it for the first time.
But you’ll be glad to know: It doesn’t have to be.
In general, the earlier you start investing, the better. Investing during your teenage years builds valuable habits, maximizes the potential of compound interest, and can even earn you more through tax advantages if done via a retirement account like a Roth IRA.
That said, stock trading for teens isn’t going to be exactly like trading when you’re an adult. Investing money as a kid involves different rules than someone who doesn’t start investing until later in life. So in addition to learning how to invest, it’s important to understand how minors can legally invest, and what types of investing apps allow teens to trade stocks.
Let’s talk about stock trading for teens. We’ll cover a few definitional basics, rules, and the best places to start your journey in investing. After all: The more you know now, the fewer “learning opportunities” (read: mistakes) you’ll make along the way!
What Is the Stock Market?
The stock market is a place where buyers and sellers come together to trade shares in publicly traded companies with one another.
Stock markets essentially act like auctions. Potential buyers name the highest price they’re willing to pay (called “the bid”) and potential sellers name the lowest price they will accept (“the ask”).
When you want to purchase stock in a company, you set your bid price by placing an order on an exchange through a stock broker. This broker finds another person interested in selling at a price you wish to pay, or closely matching your bid to their ask.
Once the market finds two or more parties interested in filling a trade at the agreed-upon price, the brokers deliver the shares and cash proceeds to the respective accounts.
The actual execution of the trade price takes place between the bid and ask prices.
Neither the buyer nor the seller receives the full amount of money paid or received in the transaction because the brokers capture a tiny portion through the spread between the bid and ask prices.
Think of this bid-ask spread as a price of admission. It’s used to pay online discount brokers and the market exchange for facilitating the transaction. While often small with respect to the single transaction, taken across the entirety of the volume of shares traded on a daily basis, it amounts to serious money.
Many free stock trading apps monetize this trading volume through a system called “payment for order flow,” or PFOF. You can learn a little more about that from the links below.
Can You Trade Stocks If You’re Younger Than 18?
If you wonder whether teens under 18 can trade stocks, the answer is yes, you can invest as a minor … with an asterisk or two.
While you can start investing while you’re a teenager, it can only be done via certain types of investment accounts. Teenagers can actually trade stocks and other investments themselves via:
- a joint brokerage account (you co-own the account with your parent or guardian)
- a regular brokerage account that you have permission to use (your parent or guardian will own the account)
Then there are a couple other types of accounts where an adult invests on behalf of a teenager:
- a custodial account (your parent or guardian invests on your behalf)
- a custodial Roth IRA (your parent or guardian invests on your behalf; when you withdraw in retirement, those withdrawals are tax-free)
For teenagers who have an interest in selecting individual stocks, ETFs, or mutual funds, consider opening a Fidelity® Youth Account or one of the other top investing apps for teens. The best stock apps will be loaded with features, and some will even provide bonuses, such as earning free stocks for signing up.
We cover our top teen stock investing account, the Fidelity Youth Account, below.
Related: How Old Do You Have to Be to Buy Stocks?
Fidelity® Youth Account ($50 bonus for teens, $100 bonus for parents)
- Available: Sign up here
- Price: No account fees, no account minimum, no trading commissions
- Promotion: Teens get $50 on Fidelity® when they open an account; parents get $100 when they fund a new account
Is your teen interested in jumpstarting their financial future? Do you want them to build smart money habits along the way?
Of course you do! Learning early about saving, spending and investing can pay off big when you start on the right foot. And one tool that can help your teen get that jump is the Fidelity® Youth Account—a brokerage account owned by teens 13 to 17 that’s designed to help them start their investing journey. They can use their own brokerage account to start their investing journey by trading most U.S. stocks, exchange-traded funds (ETFs), and Fidelity mutual funds.
Your teen will also get a free debit card with no subscription fees, no account fees, no minimum balances, and no domestic ATM fees. And they can use this free debit card for teens4 to manage their cash and spend it whenever they need.
And as for building smart money habits? You and your teen can access Fidelity’s Dedicated Youth Learning Center, which is packed with materials developed specifically to help teens develop good financial habits.
Controls Parents Want and Need
A parent or guardian must have or open a brokerage account with Fidelity® to open a Fidelity® Youth Account. For new Fidelity® customers, opening an account is easy, and there are no minimums and no account fees.
Parents and guardians have plenty of tools they can use to monitor their teen’s activity: They have online account access, can follow monthly statements and trade confirmations, and can view debit card transactions made in the account.
To make it even easier, you can set up alerts to notify you of trades, transactions, and cash management activity, keeping you firmly in the loop on actions your teen takes across the Fidelity® Youth Account’s suite of products.
If your teen has an interest in learning about investing and taking their first steps toward building their financial journey, you should consider opening a Fidelity® Youth Account. The account comes custom-built for their needs, which will help them become financially independent and start investing for their future.
Read more in our Fidelity Youth Account review.
- Your teen will get a $50 reward once they download the Fidelity mobile app and activate their Youth Account².
- No monthly fees or account minimums³.
- They can invest in stocks for as little as $1 with fractional shares.
- Your teen can learn to save and spend smarter with their own debit card with no domestic ATM fees⁴.
- Teens can link their account to mobile payment apps like Venmo and PayPal⁵.
- Parents can set up alerts and monitor their teen's account activity online, and through statements, trade confirmations and debit card transactions.
- Dedicated Youth Learning Center to help jumpstart your teen’s financial learning and build better money habits.
- No monthly account fees
- Signup offer available to new users
- Comprehensive financial suite for teens
- Parent must be a Fidelity account holder
- Account balance doesn't accumulate interest
- No chore or allowance system
Related: Best Online Jobs for Teens to Make Money While at Home
Why Investing Young Is So Important
Some of the wealthiest people in the world built their fortunes by investing in stocks—and starting from an early age. Perhaps most famously, Warren Buffett began investing in his teens and now has tens of billions of dollars in personal wealth.
He started young and developed his wealth building habits from his early years.
Minors should learn how to invest as a teenager because they bring a unique perspective no other investor older than them can. For example, you are a consumer who sees new offerings and what potential they have.
In my case, I saw the growth and rise of online retailers like Amazon and Shopify, social media giants like Facebook and Twitter, major tech companies like Alphabet, Apple and Netflix as well as auto manufacturers like Tesla or even cryptocurrencies like Bitcoin.
Because you have dialed in interests with hyper focus on them, you might know about the next great companies entering the market because you interact with them on a regular basis.
Choosing to follow through on your projections by investing in these companies’ stocks might show you the power of conviction and even the satisfaction of aligning your money with your interests.
What Is Stock Trading for Teens?
Stocks act as some of the best investments for teenagers because they tend to provide a long-term focus on growth and higher returns.
They carry higher risks traditionally than investments like bonds, but young investors can tolerate this volatility due to their long investment horizons.
Starting to invest as early as possible makes complete sense as the practice relies on building sustainable habits to last a lifetime.
This means taking time to research stocks, vet different index funds, understand how companies make money and much more. Though, these efforts don’t always fixate on the long-term orientation of investing I tend to favor.
Today’s news headlines rarely take into account long-term views, meaning the most reliable purpose for investing sustainably to build wealth gets lost in the news cycle.
Instead, companies like GameStop, cryptocurrencies like Dogecoin or newfangled investment vehicles like SPACs steal the limelight.
While these might be the source of some people who turn money into more money in great quantities, it rarely pans out that way for the retail investor following the herd to take advantage of some passing craze.
My personal investing style might also be the most boring: investing in low-cost index funds to let your wealth compound in a diversified portfolio over many, many years.
However, many teens consider index funds less exciting than individual stocks and want to own shares of companies they know and love.
Should Teenage Investing Include Individual Stocks?
If you choose to start investing in individual stocks, try to stick to blue-chip stocks. Blue-chip stocks come from established, well-known companies that are generally more stable.
Blue-chip stocks might not represent the best choice for aggressive growth, but they do offer a steadier return than other types of stock investments.
Larger companies carry less risk in general because there is already too much money at stake to risk doing something drastically different that could tank your share value–and their company as well!
When using a long-term mentality for investing in the best stocks for kids, you can see your account balance grow over time without worrying about the latest tweet from Elon Musk and how it’ll affect any number of investments filling the news headlines.
Investing in individual shares can be an exciting way to increase your wealth and build up appreciating assets over time; however, it’s important to know what you’re getting into before diving right in without any knowledge or understanding.
Consider subscribing to a stock picking service that has performed well over many years and developed a sound track record and investment vetting process.
These can easily cut down your investable selection of stocks to focus only on ones that have passed numerous quality criteria from highly-regarded and well-respected stock advisor websites and services.
Once you get these stock selections, and you have done some research on trading practices, you might consider starting to invest.
Make sure this active type of investment strategy suits you and then start investing now while you still have years to earn money and save ahead of you.
You might also consider investing in index funds like VTI to see how these investments perform in comparison. If nothing else, it’ll build instant diversification in your portfolio through an all-in-one type of investment.
Related: 13 Best Stock & Investment Newsletters to Capture Inbox Alpha
6 Apps That Show How Teenagers Can Invest in the Stock Market
The stock market can be a tricky place. It can be really rewarding if you choose wisely and your stocks go up – or devastatingly disappointing if they don’t. That doesn’t mean investing as a minor is off limits though!
In fact, investing can be as simple as buying one index fund and letting it sit idle. Though, that’s not always what a teenager wants to save up for and buy.
That’s where individual stock trading for teens comes in! You can still invest for the long-term, meaning without a lot of the risk that comes associated with day-trading, but you can choose stocks individually and see how they perform over time.
It’s also less time consuming than day-trading because you only buy and sell the companies you like when it suits your needs. That way you don’t have to worry about being glued to your computer screen all day wondering what stocks to buy.
By beginning with small amounts of money, teenagers can learn how to trade stocks in their portfolio before serious amounts of money get put at risk.
There are a few ways to trade individual stocks as a teen without being too risky and still making it fun:
You can open custodial accounts through apps like M1 Finance to trade along with parents or family members. This will let you learn how to trade stocks as a teen under close supervision.
Likewise, you can trade exchange-traded funds (ETFs) like passively-managed index funds to diversify your portfolio with a single purchase.
You can also invest in actively-managed exchange-traded funds which come managed by professionals who have more experience investing than you do.
You can also open up low-cost investing apps for beginners to show you how to invest in diversified investments from the start and build a substantial account balance over the years.
Some apps geared toward teenagers learning to invest include:
|App||App Store Rating + Best For||Fees||Promotions|
|☆ 4.7 / 5|
Automated investing in the background into diversified investments; Round-Ups
|$3/mo.-$5/mo.||$10 sign up bonus when making first deposit at account opening|
|☆ 4.8 / 5|
Teaching investing fundamentals with guidance from parents; allows individual and index fund investing
|$9.98/mo.||First month free|
|☆ 4.7 / 5|
Everyday people looking to start managing their finances
|$3/mo.-$9/mo.||$5 stock bonus for making a deposit of $5 or more|
|☆ 4.7 / 5|
Fee-free active trading and automated investing, Custodial IRAs
|$0 trading or automated investing; $125/yr. on M1 Plus subscription for custodial account||3 months of M1 Plus for free ($31.25 value)|
|☆ 4.7 / 5|
Age-based investments in custodial investment account
|☆ 4.4 / 5|
Simple gifting and investing in a UGMA account for reasonable fees
|$2.95/mo. for one child, $4.95/mo. for families with 2+ children||$15 for opening an account|
|*Apple App Store Rating as of Oct. 31, 2022|
1. Acorns ($10 bonus)
- Available: Sign up here
- Price: Acorns Personal: $3/mo. Acorns Family: $5/mo.
Acorns is the signature app loved by Millennials and Gen-Zers because it allows users to start with very small amounts of money and grow their balance into larger figures through “Round-Ups.” Round-Ups are small purchases that you make with your linked Visa debit card through the Acorns app.
For example, if you purchase a coffee for $2.60 on a linked credit card, Acorns automatically rounds this charge up to $3.00 and puts the 40-cent difference aside. Once those Round-Ups reach at least $5, they can be transferred to your Acorns account to be invested.
Learn more in our Acorns review.
- In under 5 minutes, Acorns allows you to get investment accounts for you and your family, plus retirement, checking, ways to earn more money, and grow your knowledge.
- Famous for investing spare change automatically through Round-ups, this all-in-one financial app helps younger generations start investing earlier.
- Invest in expert-built portfolios made up of diversified ETFs.
- Special offer: Get $10 to start*.
- Robo-advisor with affordable fees (on larger portfolios)
- Fixed fee model
- High fixed fees for small balances
- No self-directed investing options
- Limited investment selections
2. Greenlight App
- Available: Sign up here
- Price: Free 1-month trial, then $9.98/mo. for Greenlight Max
Greenlight Max is an investment account for kids that comes paired with a debit card and bank account.
It’s easy to use and can double as a savings account and banking apps for teens. The investing app will teach the basics of investing, how to invest in stocks and ETFs, and more.
It works best if parents are involved in the process because it requires linked brokerage accounts from custodian banks or brokerages.
The all-in-one plan teaches them important financial skills like money management and investing fundamentals—with real money, real stocks and real-life lessons.
You can use the investing feature to:
- Start investing with as little as $1 in your account
- Buy fractional shares of companies you admire (say, kid-friendly stocks)
- No trading commissions beyond the monthly subscription fee
- Teens can only invest in U.S.-listed stocks and ETFs that have either a market capitalization over $1 billion or a three-month average daily dollar volume of more than $500,000
- Parents must approve every trade directly in the app.
Consider opening a Greenlight Card + Max account to start investing in a joint investment account as a teenager today. Each account supports up to five kids.
Greenlight currently offers a free one-month trial so you can see whether it really is one of the best investments for kids and, more importantly, meets all of your needs.
Read more in our Greenlight Card review.
- Greenlight offers flexible parental controls for each child and real-time notifications of each transaction.
- Greenlight is the only debit card letting you choose the exact stores where kids can spend on the card.
- Parents can use this app to teach them how to invest with a brokerage account through Greenlight Max and Greenlight Infinity plans
- Best-in-class parental controls (can prohibit specific stores)
- Can add brokerage account to invest in stocks
- Intuitive Parent and Kid apps
- Competitive cash back and interest rates
- High price points
- No cash reload options
- No parent / child lending
3. EarlyBird ($15 Bonus)
- Available: Sign up here
- Price: $2.95/mo. for one child, $4.95/mo. for families with 2+ children
EarlyBird is a mobile app that allows parents and guardians to set up a UGMA account to gift money for investments to their children.
This app provides a convenient and inexpensive way to gift money to a child, with funds available to go toward any expenses which benefit the child.
Do family and friends want to provide a gift, but think money is too impersonal? With EarlyBird, they can record a video to go along with their financial contribution, personalizing these moments which last a lifetime. And if you’d like to give but the recipient doesn’t have an EarlyBird account, you can text them a link from the app to the recipient’s phone number.
When opening an account to invest for your children, you can select from five different portfolios, ranging from conservative (100% bond ETFs) to aggressive (100% stock ETFs). All portfolios rely on diversified ETFs to achieve your investing aims, removing the complexity of conducting your own research or selecting specific investments.
When parents or guardians set up a new custodial investment account through EarlyBird, they must start with a $15/month recurring contribution minimum. However, you can change that recurring contribution amount higher or lower as your budget allows or necessitates.
Consider opening an EarlyBird account today and receive $15 to get you started after opening your account.
- EarlyBird empowers parents, family and friends to invest in the next generation through custodial accounts.
- Send and receive financial gifts to invest in children.
- Offers managed and auto-rebalanced portfolios of ETF-based investments based on the child's age, investment goals, time horizon, risk tolerance, and other factors.
- Receive $15 to invest by opening an account today.
4. Stash ($5 bonus)
- Available: Sign up here
- Price: Starts at $3/mo.
Stash is another all-in-one personal finance app geared toward helping every American start investing for the first time.
It caters toward beginners looking to get started on their financial journey and offers a large financial literacy library to learn about different finance topics.
Further, Stash offers their “Stock-Back” solution which allows users to earn stock on purchases made on their linked debit card. Over time, these additional stock contributions can build your portfolio.
Consider signing up for Stash if you’re looking for a simple investing and banking solution for teenagers. Stash grows with the user and makes your money work for you.
- Stash is a personal finance app that simplifies investing, making it easy and affordable for everyday Americans to build wealth and achieve their financial goals.
- Invest in stocks, ETFs, and cryptocurrency.
- Earn Stock-Back® rewards on every eligible debit card purchase.
- Special offer: If you sign up and make a $5 deposit, Stash will also provide a $5 sign-up bonus.
- Robo-advisor with self-directed investing capability
- Fractional shares
- Offers values-based investment options
- Get paid up to two days early when you direct deposit pay into your Stash account
- Charges monthly fee
- Smart Portfolios don't offer tax-loss harvesting
5. M1 Finance
- Available: Sign up here
- Price: Free trades, $125 subscription to M1 Plus required for custodial account
M1 Finance is an all-in-one personal finance solution that allows new investors to set up an account in seconds. If you want to invest as a teenager, you’ll need to apply for an M1 Plus subscription. The company has a limited time offer of the first three months for free ($31.25 value).
The service offers investors the ability to create Portfolio Pies, or a diversified portfolio that rebalances to help you achieve your money goals.
M1 Finance is a service designed for self-directed investors by offering flexible, customizable and automated financial solutions. The platform manages your money intelligently based on how you want, for free.
Consider signing up for an M1 Finance custodial account today.
- M1 Finance's Smart Money Management gives you choice and control of how you want to invest automatically, borrow, and spend your money—with available high-yield checking and low borrowing rates.
- Basic account includes an FDIC-insured checking account and an M1 Visa debit card.
- Upgrade to M1 Plus and unlock perks including 1% cash back, 4.50% APY, ATM reimbursements, and 0% international fees.
- Invest in stocks, ETFs, and cryptocurrencies.
- Special Promotion: Open an account and get 3 months free of M1 Plus* ($31.25 value).
- Robo-advisor with self-directed investing capability
- Attractive cash-back and APY opportunities with M1 Plus subscription
- Doesn't support mutual funds
- Doesn't allow trading throughout the trading day (1 trading window for Basic, 2 for M1 Plus)
- High cost for M1 Plus service tier
- Available: Sign up here
- Price: Core (one child): $2.99/mo. Plus (unlimited children): $5.98/mo.
UNest is a custodial account that allows parents to invest money for their kids for needs beyond just education but events like a new car, a wedding, vacation or anything else a minor might want some day.
UNest offers the UNest Investment Account for Kids through an app that makes it easy for families of all income levels and backgrounds to set up and manage savings and investment plans for their kids.
Account holders can receive bonuses for their children’s UNest accounts via partner offers from companies such as Disney, AT&T, Uber, DoorDash, Levi’s, etc., through the UNest partner program.
UNest acts as a tax-advantaged investment account for kids. It allows them to save for an education, first car, house, wedding, or even for their financial security as an adult.
- Investment options - 5 options suited to your needs
- Taxes - <$2,200 of annual tax benefits and first $1,100 in earnings are tax-free
Related: How to Get Free Stocks for Signing Up: 15 Apps w/Free Shares
Can Teenagers Invest in a Custodial IRA?
A great option for teens to start investing is by opening a custodial Roth IRA (or traditional). This allows teenagers to invest money toward their retirement when they will likely start having earned income.
A custodial IRA is a special type of retirement investment account that you can set up for an underage person, especially for one who has earned income.
For Roth IRAs, unlike traditional IRAs, the investment contributions are not tax-deductible but will likely get hit with very low taxes because a teenager won’t earn as much money as they will later in life.
The teenager can use an app like M1 Finance to invest in index funds that the parents or family members buy for them with contributions to the account.
As the account balance grows and the teenager learns to follow along, they can understand how stock trading for teens can build serious wealth.
Why Parents Should Be Involved in Stock Trading for Teens
Stock trading is a risky endeavor if not handled correctly. Investments can quickly sour and turn bad.
In order to avoid disaster, parents should be involved in stock trading for teens. Otherwise, you’re likely to have a lot of gunslinging young investors ruining what otherwise could be a fantastic start in equities for teens.
By establishing defined guardrails and clear limits, teens can take that first step to learn a valuable skill early in life.
For one, minors shouldn’t be allowed to trade sophisticated assets like options, stock market futures, forwards, commodities, or anything with that level of risk profile.
Plain stocks and ETFs should suffice as learning is the primary goal, not unsuitable risk.
In recent history, apps like Robinhood captured headlines not for democratizing access to markets, but by doing so in far too flung a fashion.
In fact, one 20-year-old killed himself after seeing some alarming messaging in his app after making what seemed like an innocuous options trade on Amazon stock.
Certainly taken to the extreme, but this never should have happened with the easy access to trading options.
Individual stock trading for teens shouldn’t involve fast trading – especially not in volatile types of investments like options or cryptocurrencies – because that can quickly turn into capital losses.
But owning a handful of shares in a company you follow or admire is something else entirely.
It gives you skin in the game to learn about the company, the broader market and instill good money habits to build wealth.
Custodial Accounts with Safeguards are the Answer
Parents can help their teenagers start investing with a custodial investment account. It’s easy to start and can be a useful way to teach kids in a low-risk environment how to start investing.
There will likely be volatility, even in this environment. After all, it is the stock market and it indeed carries risk- no matter your investment choices.
However, learning how to deal with those swoons in the moment from parents or guardians can teach teens how to react and build these behaviors from an early age.
This is much better than filling with dreadful emotion when a stock tanks or filling with exhilaration when one rockets to the moon.
These types of emotion don’t relate to sustainable investing strategies- that’s gambling plain and simple.
Parents can use the above investing apps to track stocks and monitor portfolios of their teenagers’ investments while providing guidance.
As the account balance grows, so does the teenager’s understanding of how stock trading for teens works.
When they are ready to start investing on their own, parents should help them find a broker or advisor who understands this age group’s needs in terms of risk tolerance.
However, the apps highlighted above also grow with the investor, meeting their increasing needs with added features and functionality.
As they grow, they’ll get more comfortable with risk because they’ve seen it before through investing in a custodial account.
As a teen, stock trading allows you to keep score of your decisions with the possibility of feeling pain on the losses, but considerably less so because of the smaller investment account balance than an adult would have.
By placing the proper guardrails on investing young, parents can teach teenagers valuable life lessons. Left unchecked and you’re showing kids how to gamble, not how to invest in a secure financial future.
Terms and Conditions for Fidelity® Youth Account