If your teenage child is itching to invest in Nvidia and Nintendo, the new Schwab Teen Investor account may be for you.
The teen account, unveiled on March 26 by investment firm Charles Schwab, is designed for joint ownership by teenage children and their parents or guardians.
In the past, underage investors who wanted to own stocks typically had to settle for custodial accounts, opened and managed by parents in a minor’s name.
With custodial accounts, “the child is really a passenger,” said Jonathan Craig, head of retail investing at Charles Schwab. “This is a true joint account, where the child and the parent have separate login credentials.”
Americans Are Investing at Younger Ages
Young Americans are showing a rising interest in investing, and at increasingly younger ages.
The average Gen-Z investor started investing at age 19, according to a 2024 Schwab survey, while the typical millennial started at 25, and Gen-Xers at 32.
“We’ve definitely seen higher engagement from Gen Z than from earlier generations at that age,” Craig said. It helps, he said, that investing “has never been easier, and it’s never been less expensive.”
Children born since 2010, the cutoff for Generation Alpha, seem poised to start investing even earlier.
Schwab survey data shows 70% of teens are keen on investing, while three-quarters of parents believe it’s “very important” for teens to learn how to invest.
A national push for financial literacy has prompted more states to teach about money and investing in school. Thirty-nine states now require students to take a course in personal finance before high school graduation.
The federal “Trump Accounts” program offers $1,000 in seed money for savings accounts for children born between 2025 and 2028: an IRA for newborns. Trump Accounts are also open to minor children born before 2025, but without the seed money.
Schwab Teen Account Offers Freedom, but Also Guardrails
The Schwab teen account has no minimum initial deposit, no opening or maintenance fees, and no commissions on online trades of listed stocks. A teen can access cash in the account with a debit card and fund the account through direct deposit.
One Wall Street credo advises investing in what you know. Not surprisingly, teen investors are most interested in sectors that ring familiar. Here are their top areas of interest, according to Schwab research:
- Artificial intelligence (cited by 34% of teens)
- Video games (28%)
- Social media (26%)
- Cryptocurrency and blockchain (26%)
- Food and drink (22%)
- Music (22%)
Schwab teen investors can pick their own stocks or select investment themes, featuring stocks in such areas as online gaming and social networking.
Schwab will offer teen investors access to financial literacy videos and other resources, and 24/7 support from Schwab investment professionals. Teens who complete a financial education course shortly after opening their accounts will get $50 in fractional stock shares from Schwab.
The accounts will include some guardrails. Teens will have unfettered ability to trade stocks, bonds and most ETFs and mutual funds. Teens will not have access to riskier investments such as margin and option trading and leveraged ETFs. They can buy shares in a crypto ETF, but not actual cryptocurrency.
A parent has full access to a teen account and “can be as involved as they want,” Craig said.
Another Option: The Fidelity Youth Account
Teens who want their own investing accounts have at least one other option: The Fidelity Youth Account.
The Fidelity Youth Account is a teen-owned brokerage account, rather than a joint account with parents. It allows teens to invest in Fidelity mutual funds, most U.S. stocks and some ETFs, among other options.
Parents or guardians open the Fidelity Youth Account on behalf of the teen. To do so, they must have an existing Fidelity account. After that, parents may review statements and transactions and may close the teen account at any time.
This article originally appeared on USA TODAY: New Schwab account lets kids buy and sell stocks. Here’s how.
Reporting by Daniel de Visé, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
