SENSE INSIDER Personal Finance, Smart Investing & Budgeting Tips
Most adults wish someone had taught them about investing when they were young. If you’re a teenager reading this right now, you already have the most powerful investing advantage that exists: time.
Here’s a number worth thinking about. If a 16-year-old invests $1,000 today and earns an average annual return of 8%, that money grows to roughly $21,700 by age 65. If they wait until 30 to start, that same $1,000 only becomes about $8,500. Same money. Completely different outcome. That gap is what compound interest does, and it works best when you give it decades to run.
The question most teens run into isn’t whether to invest. It’s how. What accounts can you actually open? What’s the youngest age you can invest? Do you need your parents involved? And what do you even buy with $10?
This guide answers all of it. You’ll learn exactly how to invest under 18, what accounts are available to you in the US, UK, Canada, and Australia, which apps are worth using, and how to build real wealth starting with whatever you have right now.
How Old Do You Have to Be to Invest?
Let’s get the legal part out of the way first, because this is where a lot of teens get confused.
In the United States: You must be 18 to open a standard brokerage account on your own. However, teenagers of any age can invest through a custodial account, which is opened and managed by a parent or guardian on your behalf. The most common types are UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act) accounts. Some brokerages like Fidelity also offer dedicated teen accounts for ages 13 to 17.
In the United Kingdom: Minors under 18 cannot open a standard Stocks and Shares ISA, but a parent or guardian can open a Junior ISA (JISA) on their behalf. These allow up to £9,000 per tax year and transfer to the child’s control at age 18.
In Canada: The minimum age to open a self-directed brokerage account is 18 in most provinces (19 in British Columbia, Nova Scotia, and New Brunswick). Before that, a parent can open a custodial account or invest through a Registered Education Savings Plan (RESP) on a child’s behalf.
In Australia: You generally need to be 18 to open a brokerage account independently. A parent or guardian can open a custodial account before that age. Some platforms like CommSec Pocket have lowered barriers for younger investors, but parental involvement is still required for minors.
So what’s the youngest age you can invest? Technically, from birth through accounts controlled by an adult. But as a teen, you can be directly involved in managing custodial accounts with your parent’s help, and at 13 or older in the US, you may qualify for a dedicated teen brokerage account.
What Is a Custodial Account and How Does It Work?
A custodial account is the most common way for anyone under 18 to start investing. Here’s the simple version of how it works.
A parent, grandparent, or guardian opens the account in your name with themselves listed as the custodian. They control the account legally until you reach adulthood (typically 18 or 21 depending on the state or country). But here’s the thing that the money is yours. They’re just the legal caretaker until you’re old enough to take over.
In the US, custodial accounts through UGMA or UTMA allow you to hold stocks, ETFs, mutual funds, and even some bonds. There’s no contribution limit, though large gifts may have tax implications for the person contributing.
Tax Considerations for Custodial Accounts
One thing worth knowing: custodial account earnings can be subject to what’s sometimes called the “kiddie tax” in the US. Unearned income above a certain threshold (currently around $2,500 for 2025) gets taxed at the parent’s rate. This generally only becomes relevant once your account has grown significantly, but it’s worth mentioning upfront.
For most teens just starting out with small amounts, taxes won’t be an issue at all. But as your account grows, this is something to revisit with a parent or tax professional.
The Best Investment Accounts for Teens
1. Fidelity Youth Account (US — Ages 13–17)
Fidelity offers one of the best dedicated teen investing options in the market right now. Their Youth Account is opened with a parent’s help, but it gives teens direct control and you can research and trade stocks, ETFs, and mutual funds yourself. There are no account fees and no minimum balance, which makes it genuinely accessible.
One standout feature: fractional shares. You can buy a fraction of a single share of Apple, Amazon, or any other company for as little as $1. This is a game-changer for teens who don’t have hundreds of dollars to buy a full share.
2. Schwab One Custodial Account (US)
Charles Schwab’s custodial offering has no minimum balance and no account fees. Parents open it, but teens can be hands-on with investment decisions. Schwab also offers fractional shares and a solid selection of commission-free ETFs.
3. Greenlight + Invest (US — Ages 13+)
Greenlight is a debit card and financial literacy app for teens that added an investing feature. It lets teens buy fractional shares with parental approval built into the flow. It’s one of the most parent-friendly options, with controls that let adults approve each trade before it executes. There’s a monthly fee (starting around $4.99 for the basic plan), so it’s best for families who want tight oversight alongside investing.
4. Junior ISA (UK)
For UK readers, a Junior ISA is the gold standard for investing for teens. Any growth inside a Junior ISA is completely tax-free. The annual limit is £9,000, and the account transfers to the teen’s sole control on their 18th birthday. Both stocks and cash versions exist — the stocks and shares Junior ISA is the better choice for long-term growth potential.
5. RESP (Canada)
Canada’s Registered Education Savings Plan isn’t a standard investment account, but it’s worth knowing about. Parents open it for children, and the government adds a 20% grant on the first $2,500 contributed each year (up to $500 annually through the Canada Education Savings Grant). If you’re planning to attend post-secondary education, this is free money that’s hard to beat.
What Should Teenagers Actually Invest In?
Opening an account is the first step. Knowing what to put in it is the second. Here are the most practical options for teen investors, starting with the lowest-risk and easiest to understand.
Index Funds and ETFs
If you only take one piece of investing advice from this entire article, make it this: index funds are your best friend as a beginning investor.
An index fund (or ETF — exchange-traded fund) is a collection of hundreds or thousands of stocks bundled together. Instead of betting on one company doing well, you’re betting on the entire market doing well over time. Historically, broad market index funds tracking the S&P 500 have returned around 10% per year on average over long periods.
Popular options include:
- VTI — Vanguard Total Stock Market ETF
- VOO — Vanguard S&P 500 ETF
- FSKAX — Fidelity Total Market Index Fund (no minimum, great for beginners)
- FXAIX — Fidelity 500 Index Fund
These require almost no ongoing management. You buy and hold. That’s really it. For a teenager with a 40+ year investing horizon, this strategy has historically outperformed most active stock-picking strategies.
Individual Stocks
Buying individual stocks — shares of a single company like Apple, Nike, or Tesla — can be exciting and educational. Researching a company and then watching your investment grow is genuinely engaging in a way that index funds aren’t.
The downside is risk. A single company can drop dramatically in a short time. As a starting point, most financial advisors recommend keeping individual stocks to a small percentage of your portfolio (say, 10–20%) while keeping the rest in diversified index funds.
That said, buying one share of a company you understand and believe in is a fantastic way to learn. Many teens start by buying stock in companies they already use — think Apple if you have an iPhone, or a gaming company they know well.
High-Yield Savings Accounts (Not Quite Investing, But Important)
Before you invest anything, it helps to have a small emergency fund in a high-yield savings account. These aren’t investments in the traditional sense, but rates in 2025 and 2026 have been strong enough (often 4–5% APY) that keeping a few hundred dollars in one is genuinely smart. It protects you from having to sell investments at a bad time if you need cash.
How to Actually Start Investing as a Teen: A Step-by-Step Guide
Here’s the practical roadmap, from zero to having an actual investment account.
- Have an honest conversation with your parents or guardian. You need their involvement to open any account if you’re under 18. Walk them through what you want to do and why. Most parents are impressed when a teenager brings up investing seriously.
- Decide how much you want to start with. There’s no minimum required for most custodial accounts or teen brokerage accounts. $10 works. $50 is great. The amount matters far less than the habit.
- Before you invest, make sure you have some money set aside. Even $50–$100 in a savings account means you won’t need to sell investments if something unexpected comes up.
- Open an account. In the US, the Fidelity Youth Account is an excellent starting point for teens 13 and up. In the UK, ask a parent to open a Junior ISA. In Canada or Australia, talk to your parents about a custodial account at a major bank or brokerage.
- Make your first purchase. Consider starting with a simple, low-cost index ETF like VTI or VOO. Buy one share, or even a fraction of a share if fractional shares are available.
- Set up automatic contributions if possible. Even $10 or $20 per month on autopilot, redirected from part-time job earnings or birthday money, builds the habit that matters most.
- Keep learning. Check your account periodically, but try not to react to short-term market swings. The biggest mistake new investors make is selling during a dip out of panic.
Pro Tip: If you’re looking for ways to earn money to invest in the first place, check out our guide to side hustles for high schoolers at senseinsider.com — it covers realistic, teen-friendly ways to earn $100–$500+ per month, which you can then funnel directly into your investment account.
Common Investing Mistakes Teenagers Make (And How to Avoid Them)
Chasing Hot Stocks or Trends
Social media makes it incredibly easy to get swept up in hype around a particular stock, cryptocurrency, or “can’t lose” investment. More often than not, by the time something is trending on TikTok or Reddit, the big move has already happened. Stick to fundamentals: buy diversified index funds and good companies you understand.
Investing Money You Can’t Afford to Lose
Markets go down. Sometimes significantly. If you invest money that you need for something specific in the next year or two like tuition, a car, an important purchase and the market drops 20%, you’re in a tough spot. Only invest money with a long time horizon, ideally five or more years.
Checking the Account Obsessively
This one sounds minor, but it genuinely matters. Investors who check their portfolios daily tend to make more emotional decisions like buying at peaks and selling at lows. Set a reminder to check your account once a month at most. Let compounding do its work quietly in the background.
Ignoring Fees
Small fees compound too — and not in your favor. A fund with a 1% annual expense ratio costs you significantly more over decades than one with a 0.03% expense ratio, which is typical for major index ETFs like VTI. Always check the expense ratio before buying any fund.
The Power of Starting Young: Real Numbers
Let’s look at some concrete scenarios to make the compounding math real.
Scenario 1 — $25/month starting at 16: Assuming an 8% average annual return, investing just $25 per month from age 16 to 65 results in approximately $115,000 by retirement. Total amount invested: $14,700. The rest — over $100,000 — is pure compound growth.
Scenario 2 — $100 one-time investment at 16: $100 invested at 16 with no additional contributions, earning 8% annually, grows to roughly $4,690 by age 65. That’s $4,590 earned on a single hundred-dollar investment.
Scenario 3 — Waiting until 25: If that same $25/month starts at 25 instead of 16, the ending value drops to approximately $78,000. Starting 9 years later costs over $37,000 in long-term wealth — from the same monthly contribution.
The math consistently points to the same conclusion: starting at 16 is better than starting at 18. Starting at 18 is better than starting at 25. Every year matters more than most people realize.
Once you start earning and investing, it’s also worth thinking about how your financial habits will evolve as you get older. Our article on 25 realistic ways for teens to make money is a great companion read if you’re still figuring out how to generate income before you can invest.
Frequently Asked Questions About Investing for Teens
Can a 13-year-old invest in stocks?
Yes, with parental involvement. In the US, Fidelity’s Youth Account is available to 13–17 year-olds with a parent or guardian as the joint account holder. Teens can research and place trades themselves, but the parent oversees the account. Through custodial accounts, technically any age works and it’s the adult who controls the account legally.
How much money do I need to start investing as a teenager?
Many platforms now offer accounts with no minimum balance and fractional shares, meaning you can start with as little as $1. A more practical starting point is $10–$50, which allows you to buy a fractional share of most major ETFs. The amount you start with is much less important than starting the habit early.
What is the best investing app for teenagers?
In the US, the Fidelity Youth Account is widely considered the best option and it’s free, has fractional shares, strong educational resources, and gives teens genuine control under parental oversight. Greenlight is a strong alternative for families who want built-in parental controls on each trade. In the UK, a Junior ISA through a reputable provider like Vanguard UK offers excellent low-cost index investing for minors.
Is cryptocurrency a good investment for teens?
Crypto is highly speculative and volatile so prices can drop 50%, 70%, or more in a short time. While it’s not off-limits to learn about, most financial educators recommend that beginners especially young ones who stick to diversified index ETFs as the foundation of any portfolio. If crypto interests you, consider keeping it to a very small portion (5% or less) of what you invest, only after you’ve established a core index fund position.
Do I have to pay taxes on investment earnings as a teenager?
In the US, it depends on how much you earn. The first roughly $1,300 of unearned income (dividends, capital gains) is generally tax-free for dependents in 2025. The next $1,300 is taxed at the child’s rate, and amounts above that threshold are taxed at the parent’s rate. Most teens just starting out won’t hit these thresholds. In the UK, growth inside a Junior ISA is fully tax-free. In Canada, investment income in a custodial account is attributed to the parent. Always check with a tax professional for advice specific to your situation.
Start Where You Are, With What You Have
You don’t need $1,000, a finance degree, or a parent who works on Wall Street to start investing as a teenager. You need a small amount of money, a parent willing to help open an account, and the patience to let time do most of the work.
The teens who start at 16 with $50 in a Fidelity Youth Account buying fractional shares of an S&P 500 ETF aren’t doing anything extraordinary. But they’re giving themselves a financial head start that most adults wish they’d had.
Pick one account type that fits your country and situation. Talk to your parents this week. Make one small first investment. Then set it to automatic and come back to it in a month. That’s genuinely all it takes to begin.
