Teen Investing 101: How to Start Building Wealth Before 18

Investing in the stock market is one of the smartest financial decisions you can make, and the earlier you start, the better. While it might seem like something only adults do, teens under 18 can absolutely get involved in investing and start building wealth for the future. By investing at a young age, you benefit from compound interest, gain financial literacy, and set yourself up for long-term success. 

(S&P 500 stock market index growth over the last year)

Why start investing as a teen? Well, the earlier you invest, the more time your money has to grow. Due to compounded growth, even small investments can turn into significant sums over time. A Finance and Investing teacher and sponsor of the Investing Club at my high school said his biggest piece of advice to students is, “Teens have time on their side. The more time you give investments, the higher the likelihood that you will profit. While you might not see benefits at 16 or 17 years old, by your 20s or 30s you will see great returns”. 

His advice highlights the importance of learning about investing and starting young. Additionally, investing teaches you how the economy works, how businesses operate, and how to manage money wisely. Also consider that starting early helps you gain financial independence and build wealth for future goals, like college, buying a car, or even retiring early. 

Investing in the stock market may feel daunting due to the seemingly infinite amount of possible options. However, as a young investor, it’s best to start with companies you understand and believe in. Look for well-known brands or companies like Apple, Amazon, or Nike that are household names. These companies are known as blue-chip stocks in the stock market due to their strong track record of solid performance. 

Also consider investing in growth stocks. These are companies that are innovating and expanding quickly, such as Tesla or Nvidia. Read more about the rising success of Nvidia in Nvidia: The Tech Stock Set for Explosive Growth in 2025. Lastly, another strong option is Index Funds & ETFS. These are collections of stocks that reduce risks by diversifying your investments. Popular ones include S&P 500 ETF (SPY) and Vanguard Total Stock Market ETF (VTI). 

How can you invest in the stock market as a teen? Since you're under 18, you can’t open a brokerage account on your own. But don’t worry-there are still plenty of ways to get started.

(AI generated image by software FLUX.1)

Custodial Brokerage Accounts

A custodial brokerage account is one of the best ways for teens to start investing, and it’s the option I use personally to invest. These accounts are opened by a parent or guardian on behalf of a minor. The adult then manages the account until the teen reaches the “age of majority” (typically 18 or 21, depending on the state). At that point, the teen gains full ownership of the account and its profits.

Best Custodial Account Options:

Fidelity Youth Account (Learn more)

✅ No account fees or minimum balance
✅ Teen control
✅ Access to stocks, ETFs, and mutual funds
❌ Only available for ages 13-17
❌ Less parental control

Vanguard UGMA/UTMA Custodial Account (Learn more)

✅ Access to low-cost Vanguard index funds
✅ Strong long-term options
✅ No monthly fees
❌ High minimums
❌ Limited stock trading options

Charles Schwab Custodial Account (Learn more)

✅ No account minimums
✅ Commission-free trades
✅ Strong educational resources
❌ Investment selection may be overwhelming for beginners

How to Set Up a Custodial Brokerage Account:

1. Choose a Brokerage: Select one of the custodial account providers above.
2. Parent/Guardian Opens the Account: Since teens under 18 cannot open accounts themselves, a parent/guardian will need to provide their personal details.
3. Fund the Account: The adult can deposit money into the account or the teen can contribute their own earnings.
4. Choose Investments: Once the account is funded, you can start investing in stocks, ETFs, or mutual funds.
5. Monitor & Learn: While the parent oversees the account, the teen can still be involved in making investment decisions and tracking progress.

When the teen reaches the legal age in their state (usually 18 of 21, they take full control of the account.

Investing Apps with Parental Controls

If you prefer an app-based approach, many platforms allow teens to invest with parental supervision.

Best Investing Apps for Teens:

Greenlight (Learn more)

✅ Easy to use
✅ Good for financial literacy
✅ Integrates with a debit card
❌ Monthly fees required

Stockpile (Learn more)

✅ No monthly fees
✅ Fractional share investing (buying part of a share)
❌ Limited investment options compared to full brokerage accounts.

How to Set Up an Investing App Account:

1. A parent signs up for an account with the app of your choice
2. The parent deposits money into the account
3. Teens can research and invest in stocks and ETFs within the app
4. Parents review and approve investments.

Custodial Roth IRA for Teens

A Custodial Roth IRA is a great option for teens who have earned income from a job like babysitting, tutoring, or working part-time. 

Best Custodial Roth IRA options:

Fidelity Roth IRA for Kids (Learn more)

Vanguard Custodial Roth IRA (Learn more)

Charles Schwab Custodial Roth IRA (Learn more)

Pros and Cons:

✅ Grows tax-free for retirement
✅ Can withdraw contributions penalty-free at any time
❌ Cannot withdraw earnings before age 59 and a half without penalty
❌ Requires earned income to contribute

How to Set Up a Custodial Roth IRA:

1. You must have a source of income such as a job
2. Choose a Provider: Popular choices include those listed above
3. Parent Opens the Account: A parent/guardian must open the account and act as the account custodian
4. Fund the Account: You can contribute up to the amount you earn in a year and your parent can contribute up to that amount (max $7,000 as of 2024)
5. Choose Investments: Once the account is funded, you can begin investing in stocks, index funds, etc.
6. Let It Grow: Investments in a Roth IRA grow tax-free, making it a great long-term investment

(AI generated image by software FLUX.1)

Investing Through a Parent’s Account

If your parent/guardian already invests, they might allow you to pick some stocks in their portfolio to learn how investing works. 

How to Invest Through a Parent’s Account:

1. Talk to You Parents: Ask if they’re willing to let you help choose some investments.
2. Learn Together: Work with them to research companies' funds.
3. Track Progress: Watch how your investments perform over time.
4. Transition to Your Own Account: If you are interested, once you turn 18, you can open your own brokerage account and continue investing on your own.

Pros and Cons:

✅ Easy way to start learning without needing your own account
✅ Parents can guide investment decisions
✅ No legal limitations on account ownership
❌ You won’t have legal control over investments
❌ No direct tax benefits for the teen

Invest!

Investing as a teen may seem challenging, but custodial accounts, investing apps, and parental support, make it easier than ever to get started. I personally use a Vanguard Custodial Account to invest and have seen a 10% total gain from my stocks in less than a year. The key is to begin early, stay consistent, and think long-term. Your future self will thank you for making smart financial decisions today. So, what are you waiting for? Start investing now and take control of your financial future. 

(Growth of my investment portfolio from Jun 2024 - Feb 2025)