Can Teens Invest at Fidelity?
Short answer
Yes, teens can invest at Fidelity, but they need a parent or guardian to open a custodial account for them. This allows teens to learn about investing with real money, while an adult manages the account until the teen reaches legal age. It’s a great way to start building financial knowledge and savings early.
What is investing at Fidelity for teens?
Investing at Fidelity means putting your money into stocks, bonds, mutual funds, or other financial products offered by Fidelity Investments. As a teen, you can’t open a regular investment account on your own because you are under 18. Instead, a parent or guardian opens a custodial account on your behalf. This account belongs to you but is managed by the adult until you reach the age of majority, which is usually 18 or 21 depending on your state. With this account, you can buy and sell investments, learn how the stock market works, and watch your money grow over time.
A custodial account at Fidelity works like a regular account but has special rules to protect minors. The adult custodian controls the account but uses the money only to benefit you. When you turn 18 or 21, the account ownership transfers fully to you.
How does a custodial account work with a real example?
Imagine you’re 15 and want to start investing. Your parent opens a Fidelity custodial account in your name but acts as the custodian. You give them $100 to invest. The parent logs into the account and buys shares of a mutual fund that invests in many companies.
Over time, the value of the fund goes up and down. If after one year, your $100 has grown to $110, you have earned $10 in gains. You can choose to reinvest those gains or withdraw money with your custodian’s help. When you turn 18 or 21, depending on your state, the account legally becomes yours to manage without adult supervision.
This setup teaches you how stock markets work, lets you make investment choices with guidance, and helps you save money for future goals like college or a car.
Why should teens consider investing early at Fidelity?
Starting to invest as a teen gives you a head start on building wealth and understanding money. The earlier you begin, the more time your investments have to grow through compounding — where your earnings generate their own earnings. Even small amounts invested regularly can add up significantly over time.
Learning to invest responsibly builds important skills like patience, research, and decision-making. It also helps you get comfortable with financial tools while protected by an adult’s oversight. Fidelity offers educational resources and tools designed for beginners, making it easier to understand what you’re doing.
Plus, investing early can help you save for long-term goals such as college tuition, a car, or starting a business. Managing your own money also boosts confidence and independence.
What are some related terms teens should know to avoid confusion?
- Custodial account: An investment account managed by an adult for a minor until they reach legal age.
- Roth IRA for minors: A retirement account some teens can start with earned income, but it’s different from a custodial brokerage account.
- Joint account: An account shared by two or more people, not typically used by minors for investing.
- Brokerage account: A general account for buying and selling investments, but usually not available to minors without a custodian.
- Savings account: A bank account for saving money that earns interest but isn’t an investment.
Understanding these terms helps you know exactly what type of account you’re using and what rules apply. For example, a custodial account at Fidelity is a brokerage account controlled by a custodian, not just a savings account.
What steps should a teen take to start investing at Fidelity?
- Talk to a parent or guardian: Explain your interest in investing and ask them to open a custodial account with Fidelity.
- Gather necessary information: You will need your Social Security number and basic personal details to set up the account.
- Open the custodial account: The adult custodian will complete Fidelity’s application process online or by phone.
- Fund the account: You or your parent can deposit money to start investing. There might be minimum deposit requirements.
- Choose investments: Start with simple options like mutual funds or exchange-traded funds (ETFs) to diversify your money.
- Use Fidelity’s tools and resources: Explore their educational materials to understand investing basics and track your portfolio.
- Practice patience and learning: Investing involves ups and downs — use this time to learn how markets work and make informed decisions.
How can teens stay safe and responsible when investing?
Investing involves risks including losing money. Teens should never invest money they might need soon or that they can’t afford to lose. Always get help from a trusted adult before making big decisions. Avoid risky investments that promise quick profits or sound too good to be true.
Set clear goals for your investing — like saving for college or a car — and research the companies or funds before buying. Use educational resources from Fidelity and other reputable sources to understand terms and strategies. Keep track of your portfolio regularly but avoid checking it obsessively, which can lead to emotional decisions.
What else can teens do to build smart money habits alongside investing?
Investing is one part of managing money well. Along with investing at Fidelity, teens should:
- Save regularly in a savings account for emergencies or short-term goals.
- Create a budget to track income and expenses.
- Learn about credit and how to build good credit history responsibly.
- Avoid debt and understand how loans and interest work.
- Ask questions and seek advice from parents, teachers, or financial mentors.
These habits build a strong foundation for financial independence and success in adulthood.
For more on how teens can start investing and understand the rules, see Can you invest as a teenager? and Investing rules and regulations for teens.
Frequently asked questions
Can a teen open an investment account alone at Fidelity?
No, teens under 18 cannot open a regular investment account alone. They need a parent or guardian to open a custodial account on their behalf, which the adult manages until the teen reaches legal age.
What kind of investments can teens buy in a Fidelity custodial account?
Teens can invest in stocks, bonds, mutual funds, ETFs, and other options available on Fidelity’s platform. Starting with mutual funds or ETFs can spread risk and simplify investing.
When does a teen gain full control of their Fidelity custodial account?
Control transfers to the teen when they reach the age of majority, typically 18 or 21 depending on the state, at which point they can manage the account without adult supervision.
Are there risks to investing as a teen?
Yes, investing involves risk, including the possibility of losing money. It’s important to invest money you don’t need immediately and to learn before making investment decisions.
Can a teen contribute to a Roth IRA at Fidelity?
Teens can contribute to a Roth IRA if they have earned income, but this is separate from a custodial brokerage account. Roth IRAs have specific rules and are meant for retirement savings.
How much money do I need to start investing at Fidelity as a teen?
The minimum amount to open a Fidelity custodial account can vary. Sometimes you can start with as little as $50 or $100, but checking Fidelity’s current requirements is best.