Can 13 Year Olds Invest in Stocks?

Can 13 year olds invest in stocks? Short answer: not directly in a standard brokerage account, but minors can gain exposure through custodial accounts, youth/teen accounts, and country‑specific veh...

2025-12-25 16:00:00

By Nexus Link

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Can 13 Year Olds Invest in Stocks?

Can 13 year olds invest in stocks? Short answer: a 13‑year‑old cannot typically open or manage a standard brokerage account alone, but there are several legal and practical ways for a 13‑year‑old to gain exposure to U.S. equities and other investments under adult supervision. This article explains the options — custodial accounts, teen/youth accounts, Junior ISAs (in the UK), custodial Roth IRAs (when earned income exists), and other vehicles — plus taxes, transfer of control at majority, platform examples, risks, and best practices for parents and teens.

Key takeaways

Minors generally cannot open a standard brokerage account by themselves; the common route is a custodial account (UGMA/UTMA) or a teen/youth account opened by an adult.
"Can 13 year olds invest in stocks" is answered practically: yes, but only with adult oversight or via accounts that place ownership or control in an adult until the minor reaches majority.
Custodial accounts give the minor beneficial ownership; parents/custodians manage assets until age of majority (usually 18 or 21 depending on state/country).
Junior ISAs and similar national products exist outside the U.S. and have their own rules and tax advantages.
Tax rules matter: custodial account earnings may be taxed to the child but can trigger the "kiddie tax"; custodial Roth IRAs require earned income.
Teen/youth platforms may restrict asset classes (often excluding margin, options, and crypto) and add parental oversight tools.

Legal and regulatory background

Most jurisdictions require an investor to be an adult to open a standard brokerage account. In the U.S., federal securities laws and broker rules expect account holders to have legal capacity, which minors typically do not. State age‑of‑majority rules (commonly 18, sometimes 21) determine when a minor attains legal control.

The legal distinction to remember is ownership versus control. In many custodial structures, the minor is the beneficial owner of assets, but control—meaning the ability to trade or withdraw—is with the custodian until the minor reaches the state‑specified age of majority.

As of 2026-01-17, according to the U.S. Securities and Exchange Commission and IRS guidance, custodial accounts such as UGMA and UTMA remain the standard U.S. vehicle for holding securities for minors under adult management. For the UK, HM Revenue Customs continues to recognize Junior ISAs as tax‑efficient accounts for children.

Account types that let minors invest

Custodial accounts (UGMA / UTMA)

Custodial accounts under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) are common in the U.S. An adult custodian opens the account and manages it for the benefit of the minor. Key points:

Ownership: Assets are legally owned by the minor, held in custodian's name for the child.
Control: The custodian controls trades and distributions until the minor reaches the state age of majority (often 18 or 21).
Asset flexibility: UTMA accounts may allow a broader range of assets (real estate, certain collectibles) compared with UGMA, which is typically limited to financial assets.
Uses: Saving for college, gifts from relatives, long‑term investing.

Custodial accounts answer many parents’ first question of "can 13 year olds invest in stocks" by enabling ownership while preserving adult control.

Custodial Roth IRA (earned‑income requirement)

A custodial Roth IRA can be opened if the minor has earned income (from part‑time jobs, self‑employment, or other qualifying sources).

Contributions: Limited to the lesser of the minor’s earned income for the year or the annual Roth IRA contribution limit.
Tax advantages: Roth growth is tax‑free on qualified withdrawals; contributions (not earnings) can be withdrawn penalty‑free.
Custodian role: An adult custodian opens and manages the IRA until the child reaches majority; the account must follow IRA rules.

This vehicle is powerful for teens who earn income and want to begin retirement savings early.

Junior ISAs and equivalents (UK and other countries)

In the UK, a Junior Stocks Shares ISA allows parents or guardians to open a tax‑efficient investment account for a child. Features:

Tax benefits: Income and gains within the Junior ISA are tax‑free.
Control and access: Parents/guardians control the account until the child reaches 18, when the Junior ISA converts to an adult ISA.
Limits: Annual contribution limits apply and are set by government policy.

Other countries have similar products with country‑specific rules and age thresholds.

Youth/teen investment accounts (teen‑owned brokerage products)

Some brokerages offer teen or youth accounts designed to give teens access to trading with parental onboarding.

Ownership/control models: Some teen accounts create accounts in the teen’s name with parental oversight or joint permissioning; others function like custodial accounts.
Features: Education tools, parental controls, instant alerts, fractional shares, and sometimes debit cards linked to teen balances.
Limitations: These products frequently restrict margin, options, IPO access, and often exclude cryptocurrencies.

These teen accounts address the practical question of "can 13 year olds invest in stocks" by allowing teen involvement while respecting legal constraints.

Joint accounts and custodial alternatives

A joint account (parent and child as co‑owners) is sometimes used, but joint ownership can have legal and tax consequences and may not be appropriate for minors in all jurisdictions.

Other hybrid offerings include bank‑linked teen apps and debit cards with investment features. These can introduce investing concepts with low dollar exposure and strong parental controls.

Brokerages, platforms and teen‑focused products (examples)

Broker types that provide solutions for minors include:

Traditional brokerage firms offering UGMA/UTMA custodial accounts and custodial Roth IRAs. These platforms provide a full range of stocks, ETFs, and mutual funds, subject to custodial rules.
Teen‑focused apps and services with simplified onboarding, educational content, and parental controls. These platforms often emphasize learning over advanced trading.
Robo‑advisors and managed products offering custodial or child‑dedicated accounts with automated, diversified portfolios.

Platform restrictions are common: no margin, no leverage, limited options trading, and many teen products exclude cryptocurrency trading. For users interested in Web3 products or wallets, Bitget Wallet is a recommended option for secure self‑custody tools, while Bitget exchange offers broader product sets for eligible adult users; however, crypto access is typically not available to teen investment accounts.

Note: product features, availability, and age requirements vary by provider and jurisdiction. Always confirm current terms directly with your chosen platform.

What minors can (and cannot) invest in

Permitted investments in custodial and teen accounts commonly include:

Individual U.S. stocks and many international equities (depending on broker).
Exchange‑traded funds (ETFs) and many mutual funds.
Fractional shares on platforms that support them, enabling small‑dollar investing.

Typical prohibitions and limits:

Margin trading and borrowing against securities are usually not allowed for minors.
Options, futures, and other complex derivatives are generally restricted.
IPO participation and certain private placements may be unavailable.
Many teen or youth accounts exclude cryptocurrency trading.

When asking "can 13 year olds invest in stocks", parents should check specific product rules about asset classes, fractional shares, and trade approvals.

How to open and manage an account (step‑by‑step)

Choose the account type that fits your goals (custodial UGMA/UTMA, custodial Roth IRA if the teen has earned income, Junior ISA if in the UK, or a teen/youth product).
Select a broker or platform that supports the chosen account type. Compare fees, available investments, educational resources, and parental controls.
Gather required documentation: child’s Social Security/Tax ID, parent/custodian ID, and proof of address. For a custodial Roth IRA, document the teen’s earned income.
Adult opens the account and completes onboarding. For teen‑owned products, parents typically provide consent and link their accounts.
Fund the account using transfers, gifts, or direct deposits. For custodial accounts, family and friends can gift contributions.
Choose investments consistent with the child’s time horizon and risk tolerance. Consider starting with diversified ETFs or target‑date funds.
Monitor performance, teach the child about portfolio concepts, and gradually increase decision‑making responsibility.

Platform specifics may include parent approval of trades, two‑factor authentication, app setup for teens, and notification preferences.

Tax considerations and reporting

Custodial accounts:

Income and capital gains generated in a custodial account are taxable. Generally, investment income is reported on the child’s tax return.
The "kiddie tax" rules may apply: unearned income above certain thresholds can be taxed at the parent’s rate, preventing tax avoidance by shifting income to children.
Brokers often issue tax forms (1099s) in the child’s name; parents should keep accurate records.

Custodial Roth IRAs:

Contributions must come from earned income. Annual contribution limits and rules mirrored from adult Roth IRAs apply.
Qualified distributions of earnings are tax‑free under Roth rules, following standard Roth provisions.

Other tax‑efficient options:

529 college savings plans provide tax benefits for education expenses but have different rules around withdrawals and investment options.
Junior ISAs in the UK remain tax‑free on income and gains for UK residents.

As of 2026-01-17, according to IRS guidance, parents should consider both immediate tax reporting and potential long‑term tax implications (including effects on financial aid formulas), and consult a tax professional for complex situations.

Transfer of control and ownership at majority

When a minor reaches the age of majority (state/country dependent), custodial account control transfers to the former minor.

In the U.S., custodial account assets become fully the child’s property at the age specified by state law (often 18 or 21).
For Junior ISAs in the UK, control shifts at age 18 and the account seamlessly converts to an adult ISA.
Platforms usually require updated identity documentation and an account conversion process.

Parents should plan for the transfer: educate the young adult on responsibilities, tax reporting, and how to manage the newly controlled assets.

Benefits of starting early

Starting investing in the teenage years can provide several advantages:

Time and compounding: even small contributions benefit from decades of compound growth.
Financial literacy: practical experience builds knowledge about markets, diversification, and costs.
Habit formation: saving and investing early encourages disciplined financial behavior.
Low‑risk experimentation: custodial accounts allow supervised learning with controlled financial exposure.

These benefits directly answer parents’ and teens’ practical concerns when asking "can 13 year olds invest in stocks" — early, guided exposure can be educational and impactful.

Risks, limitations and parental responsibilities

Risks and limitations:

Market risk: investments can decline in value; parents should avoid exposing teens to imprudent risk.
Restricted asset classes: certain high‑risk instruments are unavailable to minors.
Misuse of funds: custodial assets are for the child’s benefit, and misappropriation by custodians is legally forbidden.

Parental responsibilities:

Duty of care: custodians should act in the best interest of the child, managing investments prudently.
Record keeping and tax reporting: parents must ensure compliance with tax law and reporting requirements.
Education and oversight: guiding investment decisions and teaching financial literacy are essential.

Custodians must avoid treating custodial funds as their own discretionary funds.

Education and best practices for teens

Teach the basics:

Diversification: explain why spreading risk across many assets matters.
Long‑term vs short‑term goals: differentiate retirement savings from college or spending goals.
Reading company reports: introduce basics of financial statements and earnings reports.
ETFs and index funds: recommend starting with broad ETFs to lower individual stock risk.

Recommended approaches:

Start with small amounts and simple, diversified instruments.
Use simulated trading or educational tools before placing real trades.
Involve teens in periodic reviews and decisions to build skills.

Resources:

Broker educational centers and tutorials.
Independent personal finance books and courses tailored for teens.
Nonprofit financial literacy organizations offering free curricula.

International considerations

Rules and available products vary widely outside the U.S.

UK: Junior Stocks Shares ISAs provide tax‑efficient investing for under‑18s with parental control until age 18.
Other countries: Many jurisdictions have custodial account equivalents with local nuances in permitted assets and ages of transfer.

If you are outside the U.S., consult local tax authorities and broker rules for accurate, jurisdiction‑specific guidance.

Frequently asked questions (FAQ)

Q: Can a 13‑year‑old trade stocks themselves?

A: In most jurisdictions, a 13‑year‑old cannot open or independently manage a standard brokerage account. However, through custodial or teen accounts, a 13‑year‑old can participate in decisions and place trades under adult oversight depending on the platform’s model.

Q: What is the difference between a custodial account and a teen‑owned youth account?

A: Custodial accounts (UGMA/UTMA) vest legal ownership in the child while giving control to the custodian until majority. Teen‑owned youth accounts may offer account structures where the teen is the named owner but parental consent, oversight, or approval is required. The exact rights and controls differ by product.

Q: Can minors invest in crypto?

A: Many teen investment products exclude cryptocurrencies. Where crypto is available, platforms generally restrict access to adults. For those exploring Web3 tools, Bitget Wallet offers self‑custody features for eligible users; crypto involvement for minors typically requires adult oversight and depends on platform age rules.

Q: Who pays taxes on earnings in a custodial account?

A: Investment income in a custodial account is typically reported in the child’s name and taxed accordingly. However, the "kiddie tax" rules can apply, taxing certain unearned income at the parent’s marginal rate above thresholds.

Q: What happens when the child turns 18 or reaches majority?

A: Control of custodial accounts transfers to the former minor once they reach the age of majority. The account may require conversion, and the new adult assumes full control and responsibility for tax reporting and future investments.

References and further reading

U.S. Internal Revenue Service guidance on custodial accounts and the kiddie tax. As of 2026-01-17, the IRS provides materials outlining taxation of minors and custodial accounts.
U.S. Securities and Exchange Commission investor guidance on custodial accounts and minors (SEC investor education pages). As of 2026-01-17, check SEC resources for custody and account opening rules.
HM Revenue Customs guidance on Junior ISAs (UK), including eligibility and contribution limits. As of 2026-01-17, HMRC continues to administer Junior ISA regulations.
Broker educational pages on custodial accounts, custodial Roth IRAs, and teen investing accounts.

Sources noted above are authoritative government and regulatory pages; readers should consult the current pages for up‑to‑date limits and rules.