The financial landscape has evolved significantly, and investing is no longer reserved for adults. Today, numerous apps cater to the aspirations of young investors, allowing them to dip their toes into the world of stocks, bonds, and even cryptocurrencies. Whether driven by a desire to save for college, make money for a new gadget, or simply seeking financial literacy, many teenagers are exploring investment options. But since most young people are under 18 and might not have access to traditional investment platforms, the question remains: what apps allow you to invest under 18?
In this comprehensive guide, we’ll delve into the various apps and platforms available for young investors, along with insights on the importance of early investment. We will focus on the specific requirements and features of each app, helping you to make an informed decision.
The Importance of Investing Early
Investing at a young age can set the foundation for a secure financial future. Here are a few reasons why early investment is vital:
1. Time Value of Money
The concept of the time value of money is crucial when it comes to investing. The earlier you begin investing, the more time your money has to grow. Thanks to the power of compound interest, even small contributions made at a young age can lead to significant amounts over the years.
2. Financial Literacy
Learning to invest teaches teenagers essential skills, including budgeting, risk assessment, and critical thinking. Engaging with the financial world early on instills a sense of responsibility and awareness about money management.
3. Building Wealth
By starting to invest early, young individuals can accumulate wealth that may help them attain future goals—whether it’s paying for college, purchasing a car, or even saving for a home.
Apps That Allow You to Invest Under 18
While investing as a minor presents challenges, several apps have taken steps to include younger audiences. Here’s a curated list of reliable platforms that allow individuals under 18 to start their investing journey:
1. Robinhood
Overview
Robinhood is known for its commission-free trading and user-friendly interface. While the app primarily caters to adults, minors can invest through a custodial account if a parent or guardian opens the account on their behalf.
Key Features
- Commission-Free Trades: Robinhood allows users to trade stocks without paying commissions, which is a major advantage for young investors.
- Access to Cryptocurrencies: The platform also supports trading in cryptocurrencies, allowing minors to diversify their investment portfolio.
Who Can Use It?
To use Robinhood as a minor, a parent must create a custodial account. This means that the parent manages the account until the minor reaches adulthood (often 18 or 21, depending on state laws).
2. Webull
Overview
Webull is another increasingly popular trading platform that allows users to trade commission-free. Like Robinhood, it permits trading through a custodial account for users under 18.
Key Features
- Advanced Trading Tools: Webull is often recognized for its sophisticated charts and detailed market analyses, ideal for investors wanting more than the basics.
- Paper Trading: This feature allows users to practice trading with virtual funds, enabling young investors to learn without any financial risks.
Who Can Use It?
Similar to Robinhood, Webull requires parents to open a custodial account for minors.
3. Acorns
Overview
Acorns introduces a unique approach by rounding up purchases to the nearest dollar and investing the spare change. This “micro-investing” model is simple and accessible for young investors.
Key Features
- Easy to Get Started: Users can simply link their bank accounts and begin investing with as little as $5.
- Education Centric: Acorns provides a wealth of educational resources, which can be excellent for younger users who want to learn about investing.
Who Can Use It?
While Acorns requires a parent or guardian to open a custodial account for users under 18, it is widely recognized as a great way for young people to start investing.
4. Stockpile
Overview
Stockpile differentiates itself by enabling users to purchase fractional shares of stocks. This feature makes it financially easier for young people to invest in their favorite companies, even with a limited budget.
Key Features
- Gift Cards: Stockpile allows users to buy gift cards for stocks, making it appealing for young investors who may receive stock as gifts.
- Fractional Shares: With stocks sometimes costing hundreds of dollars, fractional shares allow teens to invest small amounts in expensive stocks.
Who Can Use It?
Minors can invest using Stockpile with a custodial account set up by a parent or legal guardian.
5. Stash
Overview
Stash not only allows users to invest in stocks and ETFs but also educates them about the market and money management.
Key Features
- Personalized Investment Plans: Stash offers tailored investment suggestions based on individual goals and risk tolerance.
- Learn While You Earn: The app comes with educational content that helps users understand how to invest wisely.
Who Can Use It?
To use Stash, minors need to have a custodial account established by an adult.
Things to Consider When Investing Under 18
Before diving into the world of investing, there are several factors that young investors should keep in mind:
1. Parental Guidance
Having a parent or guardian involved in the process is not just a requirement for custodial accounts; it can also be beneficial. Parental guidance can provide young investors with insights and knowledge from experienced adults.
2. Education is Key
It’s crucial for young investors to educate themselves before making investment decisions. Many platforms provide free educational resources, allowing young people to understand market trends, investment strategies, and basic financial principles.
3. Start Small, Think Big
Young investors should consider starting with a small amount of money while they learn. The goal is to develop good habits over time, rather than trying to make a lot of money right away.
4. Understand Risks and Rewards
Investment comes with inherent risks. Understanding these risks and diversifying investments can help mitigate potential losses. Investors should always be aware that returns are never guaranteed.
5. Long-Term Mindset
Investing is often more about patience than quick wins. A long-term approach can yield more substantial returns as compared to attempting to time the market or make speculative trades.
Final Thoughts
Investing under 18 has never been more accessible thanks to innovative apps designed for young individuals. By leveraging the platforms discussed above, teenagers can take the primary steps toward becoming financially wise adults. With the right tools and mindset, young investors can harness the power of compounding and start laying the groundwork for a secure financial future.
Whether you choose Robinhood, Webull, Acorns, Stockpile, or Stash—remember that the journey of investing is not just about building wealth but also about gaining financial literacy and understanding the importance of responsible money management. Now is the perfect time to embark on that journey!
What are the best investment apps for teens?
The best investment apps for teens typically include platforms like Robinhood, Acorns, and Stash. These apps are designed to be user-friendly and provide educational resources tailored for younger audiences. Robinhood allows users to trade stocks and ETFs commission-free, making it an attractive option for beginners looking to invest in the market directly. Acorns and Stash, on the other hand, focus on automated investing and fractional shares, enabling young investors to start with smaller amounts of money.
Each app has its unique features, so it’s essential for teens to explore them and find one that aligns with their financial goals. Some apps, like Greenlight, also offer debit cards and budgeting tools, which can help young investors manage their spending while learning about investing. Ultimately, the best choice depends on individual preferences and investing aspirations.
Is it legal for minors to invest in the stock market?
Yes, minors can invest in the stock market, but they typically need a custodial account managed by an adult. A custodial account allows a parent or guardian to control the account until the minor reaches the age of majority, which is usually 18 or 21, depending on the state. This structure enables younger investors to learn about investing and begin building wealth under adult supervision.
Many investment apps cater to minors by providing options for custodial accounts. This ensures compliance with legal regulations while allowing young investors to participate in the stock market. Parents should research and choose an app that offers clear guidance on how to set up and manage these accounts responsibly.
What is the minimum age to start investing in an app?
The minimum age to start investing using most investment apps is typically 18 years old, as this is the legal age of adulthood in many regions. However, many apps offer custodial account options that allow minors, often starting at age 13, to invest with parental consent. This means that teens can begin to learn and engage in investing practices before they reach adulthood.
It’s essential for young investors to be aware of the specific age requirements for each app. Parents can play a crucial role in guiding their children through the investment process and ensuring they understand the rules and responsibilities associated with investing at a young age.
How can teens learn about investing through these apps?
Many investment apps offer educational resources aimed at helping teens learn about investing. These resources may include articles, videos, tutorials, and interactive tools that teach young users about the stock market, different investment strategies, and the importance of diversification. Some apps even gamify the learning experience, turning investing concepts into engaging challenges.
Additionally, parents and guardians can support teens by discussing investment topics, encouraging them to track their portfolios, and helping them set realistic investment goals. By leveraging the educational features of these apps alongside parental guidance, teens can gain valuable insights into managing their finances and making informed investment decisions.
Are there any risks involved in investing at a young age?
Yes, investing at a young age comes with inherent risks, similar to investing at any age. The stock market can be volatile, and there’s always a possibility of losing money, particularly if the investments are not researched or diversified properly. Additionally, young investors may not have the same experience or knowledge as seasoned investors, making them more susceptible to emotional decision-making during market fluctuations.
However, learning to invest at a young age can also provide valuable lessons about risk management and financial literacy. Encouraging teens to start with small amounts of money and gradually build their investment knowledge can help mitigate these risks. With proper education, guidance, and a focus on long-term goals, young investors can develop a healthy understanding of risk and momentum as they navigate the investment landscape.
Can teens also invest in cryptocurrencies using these apps?
Some investment apps have begun to offer access to cryptocurrencies, allowing young investors to explore this growing sector. However, it’s important to note that even when minors have a custodial account, the availability of cryptocurrency investing may vary from one app to another. Parents should check whether their chosen investment app includes options for trading cryptocurrencies and what the associated risks entail.
Investing in cryptocurrencies can be particularly volatile and risky compared to traditional stocks. While it can be an exciting way for teens to learn about digital assets, they should approach it with caution and thorough research. Engaging in discussions about the nature of cryptocurrencies, market trends, and secure trading practices can help young investors make informed choices while navigating this innovative yet unpredictable market.