10 Best Investments for Teenagers in 2024 | Moneytology

Giving teenagers a head start in investing can have a lasting impact on their financial future. But with so many options available, it can be overwhelming to know where to begin. That’s why I’m here to help narrow down the best investments for teenagers!

When considering investment options for teenagers, it’s important to look for choices that offer growth potential, low fees, and align with their financial goals. Here are some top investment options that are perfect for teenagers:

Key Takeaways:

• Consider investment platforms like Fidelity Youth Account, M1 Finance Account, Acorns Early Account, Vanguard, Axos Bank, Stockpile Account, Ally Invest Account, and E*TRADE.
• Parents can open custodial accounts for their teens, allowing them to invest and manage funds with proper oversight.
• Savings accounts, certificates of deposit, and funds are all viable options for teenagers to start building their investment portfolio.
• ETFs and mutual funds offer a diversified approach to investing for young investors.
• It’s crucial for teenagers to seek guidance from parents or financial professionals to understand the risks and benefits of each investment option.

Fidelity Youth Account

The Fidelity Youth Account is an excellent teenage investment opportunity designed specifically for teens between the ages of 13 and 17. This brokerage account offers a range of features and benefits that cater to the financial needs and goals of young investors.

With the Fidelity Youth Account, teenagers have the flexibility to spend, save, and invest their money. They can easily access their funds with an ATM card, making it convenient and hassle-free to manage their finances.

Opening a Fidelity Youth Account is simple and straightforward. Parents who have a Fidelity brokerage account can easily open an account for their teen. There are no monthly fees or minimum balance requirements, making it accessible for teenagers at any level of financial means.

One of the standout features of the Fidelity Youth Account is the ability to invest with as little as $1 by buying fractional shares. This means that even small amounts of money can be put to work in the market, allowing teens to begin building their investment portfolios early on.

Parents also have complete oversight of their teen’s transactions and investments, providing peace of mind and an opportunity to guide their children in making smart financial decisions.

Benefits of the Fidelity Youth Account:

• No monthly fees or minimum balance requirements
• Ability to invest with as little as $1 by buying fractional shares
• Easy access to funds with an ATM card
• Complete oversight for parents

Overall, the Fidelity Youth Account offers a fantastic avenue for teenage investment opportunities. It empowers teenagers to develop financial literacy, build wealth at an early age, and set a strong foundation for their financial future.

Pros	Cons
Low account fees	No access to all investment options
Ability to invest with as little as $1	Parents need a Fidelity brokerage account to open the account
Complete oversight and guidance for parents	Only available for teens between 13 and 17 years old

M1 Finance Account

When it comes to investment advice for teenagers, the M1 Finance Account is a popular choice for young investors. This brokerage account offers a unique cash account for investing, providing an opportunity for teens to start their investment journey.

To be eligible for an M1 custodial account, teenagers must have parents who already possess an M1 Plus account. This allows parents to have control over the account until the teen reaches maturity, which varies by state. Once the teen becomes mature, they gain full control of the account and can utilize the funds as they see fit.

The M1 Finance Account offers several features that make it an attractive option for young investors. Here are some key highlights:

• Easy-to-use Platform: The M1 Finance platform is designed to be user-friendly, making it accessible for teenagers to navigate and manage their investments.
• Fractional Shares: With M1 Finance, teens can invest with as little as $1 by buying fractional shares. This allows them to diversify their portfolio and invest in multiple stocks or funds, even with limited funds.
• Investment Control: While parents have control over the account until the teen reaches maturity, the M1 Finance Account still provides an avenue for teenagers to learn about investing and make informed investment decisions once they take over the account.

Testimonials

“The M1 Finance Account has been a great tool for teaching my teenager about investing. The user-friendly platform and fractional shares feature make it easy for them to get started and build their portfolio.”
– Parent User

“I love having control over my investment decisions with the M1 Finance Account. It has allowed me to start investing early and learn valuable financial skills.”
– Teenage Investor

Pros and Cons of the M1 Finance Account

Pros	Cons
Easy-to-use platform	Requires parents to have an M1 Plus account
Fractional shares	Parental control until teen reaches maturity
Opportunity for teenagers to learn about investing	Investment decisions limited until teen takes over the account

Acorns Early Account

If you’re looking for a simple and accessible way for your teenager to start building their investment portfolio, the Acorns Early Account is an excellent option. By subscribing to the Acorns Family account, parents can easily open a UGMA/UTMA account for their child with just $5.

With the Acorns Early Account, parents have the flexibility to set up recurring deposits or manually transfer funds to their child’s account. This makes it easy to consistently contribute to their investment portfolio, ensuring long-term growth.

When your child reaches maturity, you have the option to transfer the funds from their Acorns Early Account to the Acorns Invest account. This provides them with a seamless transition to managing their investments independently, allowing them to continue growing their portfolio.

One of the great features of the Acorns Early Account is the ability to receive direct deposits and contributions from family and friends. This opens up opportunities for your child to receive gifts or even earn money from part-time jobs, all of which can be invested directly into their Acorns account.

Acorns Early Account
Minimum Initial Deposit	$5
Deposit Options	Recurring deposits, manual transfers
Transfer Options	To Acorns Invest account upon reaching maturity
Additional Contributions	Direct deposits, contributions from family and friends

The Acorns Early Account is a fantastic tool for introducing your teenager to the world of investing. It not only provides them with a solid foundation for their financial future, but it also encourages positive saving and investment habits from an early age. With low minimum deposit requirements and convenient transfer options, the Acorns Early Account makes it easy for teenagers to start and grow their investment portfolio.

So why wait? Open an Acorns Early Account today and set your teenager on a path to financial success!

Vanguard: Smart Investments for Teenagers

Vanguard offers a custodial account called UGMA/UGTA account that provides an excellent opportunity for parents and relatives to gift money and assets to teenagers. With this account, young investors can explore a wide range of investment options, including stocks, bonds, ETFs, and mutual funds, helping them build a diversified portfolio for their future.

Parents play a crucial role in managing the Vanguard custodial account until the teen reaches maturity. During this time, parents can monitor the account’s progress, make investment decisions, and ensure the investments align with the teen’s goals and risk tolerance. This guidance and oversight help teenagers gain valuable experience and knowledge about the world of investing.

Once the teen reaches maturity, they can take full control of the Vanguard account. This transition empowers them to make their investment decisions and continue building their financial future. It’s an exciting milestone that allows teenagers to apply what they have learned and make independent choices based on their evolving financial aspirations.

Self-Directed Account or Robo-Advisor Service

When opening a Vanguard custodial account, parents can choose between two options: a self-directed account or a robo-advisor service.

The self-directed account provides teenagers with complete control and freedom to manage their investments actively. It is an opportunity to develop critical financial skills, learn about market trends, and make investment decisions based on personal research and analysis.

If teenagers prefer a more hands-off approach, the robo-advisor service is an excellent choice. Vanguard’s robo-advisor simplifies the investment process by leveraging advanced algorithms to manage the portfolio. With this service, teenagers can benefit from professional guidance and have their investments automatically rebalanced according to their risk tolerance and investment goals.

Both options offer unique benefits, empowering teenagers to make smart investment choices that align with their financial aspirations and level of involvement.

Investment Options	Risk Level	Management Fees
Stocks	High	Low
Bonds	Moderate	Low
ETFs	Moderate	Low
Mutual Funds	Low to High	Low

Note: The risk level may vary depending on specific investments within each category.

By offering a range of investment options and account management choices, Vanguard ensures that teenagers have the necessary tools and resources to make smart investment decisions that align with their goals and aspirations.

“Vanguard provides young investors with a custodial account that allows them to explore different investment options, including stocks, bonds, ETFs, and mutual funds. This account empowers teenagers to take control of their financial future and make independent investment decisions as they reach maturity.”

Investing with Vanguard not only provides teenagers with valuable financial skills but also lays the foundation for long-term wealth accumulation. With the right guidance and knowledge, young investors can seize opportunities, mitigate risks, and build a successful investment portfolio. Vanguard’s commitment to empowering teenagers through its custodial account makes it an excellent choice for smart investments.

Axos Bank

When it comes to teenage money management, Axos Bank offers a fantastic option with their First Checking Account. Although it may not be an investment per se, this account is a great way for teenagers to learn how to manage their money responsibly while also earning interest. Available for teens aged 13 to 17, the First Checking Account comes with numerous benefits that make it an attractive choice for young savers.

The First Checking Account from Axos Bank provides a competitive interest rate of 0.25%. This means that as teens deposit their money into the account, it will grow over time thanks to accrued interest. It’s an excellent opportunity for teenagers to witness the power of compounding and understand the importance of saving.

What sets Axos Bank apart is its commitment to providing a user-friendly experience without any unnecessary fees. The First Checking Account has no monthly maintenance or overdraft fees, eliminating potential financial burdens for teens and their parents. Additionally, the account offers safeguards such as cash and debit card limits, instilling responsible spending habits from an early age.

Another advantage of the First Checking Account is that it comes with ATM fee reimbursements. This means that teenagers can make withdrawals from ATMs without worrying about incurring fees, giving them convenient access to their funds whenever they need them.

To summarize, Axos Bank’s First Checking Account is an excellent tool for teenage money management. It promotes financial literacy, encourages responsible spending, and provides the opportunity for teens to earn interest on their savings. Its user-friendly features, lack of fees, and ATM fee reimbursements make it an attractive choice for young savers.

Stockpile Account

When it comes to investment ideas for teens, the Stockpile Account is an excellent option. This investment app allows kids and parents to embark on their investment journey together, creating a bonding experience and a valuable learning opportunity for teens.

With a Stockpile Account, kids have their own log-in and can create their own portfolios. They can explore different stocks, ETFs, and even cryptocurrencies. The app offers the unique feature of fractional shares, allowing teens to invest in high-cost stocks with small amounts of money.

One of the key benefits of the Stockpile Account is that parents have the final say in approving trades. This provides a level of control and guidance to ensure responsible investing. At the same time, it empowers teens to explore the world of investing and develop their financial literacy.

Friends and family can also contribute to a teen’s Stockpile Account by purchasing gift cards specifically designed for investment purposes. This allows loved ones to support a teen’s financial journey and encourage their interest in investing.

To open a Stockpile Account, a membership is required, which costs $4.99 per month. The membership includes one adult membership and up to 5 kids’ accounts, making it a cost-effective option for families. The monthly fee covers access to the app’s features, educational resources, and support.

By investing in a Stockpile Account, teens can develop crucial financial skills, learn about the stock market, and potentially grow their money over time. It’s a great way for young investors to start their investment journey with the guidance and support of their parents.

Ally Invest Account: Youth Investment Strategies

When it comes to investing for your children, Ally Invest offers a range of options to help you pave the way for their financial future. With Ally Invest custodial accounts, parents have the opportunity to buy stocks on behalf of their kids until they reach maturity, which varies by state. Once your child reaches maturity, they gain full control over the account and can make decisions regarding their investments.

Ally Invest provides two options for managing your child’s investment portfolio:

1. Self-directed: Take a hands-on approach and actively manage your child’s portfolio. Engage in research and make investment decisions based on your own expertise and insights.
2. Robo-advisor: Opt for a more hands-off approach by utilizing Ally Invest’s robo-advisor services. Let the technology-driven algorithms handle the management and optimization of your child’s portfolio.

This level of flexibility allows you to tailor your investment strategy to your child’s needs and goals as they grow older. Whether you prefer to take charge or let technology guide your decisions, Ally Invest provides the tools and resources to support your youth investment strategy.

Remember, investing involves risks, and it’s always important to consult with financial professionals or do thorough research before making any investment decisions for your child.

Advantages of Ally Invest Account	Considerations
Flexible investment options	Investment performance is subject to market fluctuations
Opportunity to start investing at a young age	Parents have control until the child reaches maturity
Ability to adjust investment strategy as the child grows older	Investment returns are not guaranteed
Access to self-directed or robo-advisor services	Investing involves risks and requires careful consideration

E*TRADE

When it comes to teenage money management, E*TRADE offers a custodial account that provides an ideal solution. This account is designed for parents or other adults to control until their teens come of age, allowing them to oversee and manage the account with ease. With no contribution limitations or commission fees for trades, E*TRADE ensures a seamless investment experience for parents and their teenagers.

Contributions made by parents to the E*TRADE custodial account are tax-free up to a certain limit, providing additional financial benefits for families. This account serves as an excellent tool for planning and preparing for the teen’s financial future. It allows parents and teenagers to work together in building a solid investment portfolio that aligns with their goals and aspirations.

As the teenager matures, they can gradually take over the account, gaining more control, decision-making power, and financial independence. This transition ensures that teenagers develop a strong understanding of investment strategies and the responsibility that accompanies managing their own money.

To summarize, E*TRADE offers a comprehensive custodial account for parents and teenagers to collaborate on teenage money management. With its user-friendly platform, extensive investment options, and tax-free contributions, E*TRADE empowers teenagers to take charge of their financial future and build a solid foundation for long-term wealth.

Savings Accounts

When it comes to teenage money management, savings accounts can be a great starting point for financial growth. Whether owned by the teen or opened as a custodial or joint account with parents, savings accounts offer a conservative investment option that allows teenagers to save and earn interest on their funds.

An excellent choice for young savers is the High Yield Savings Account offered by online banks. These accounts typically provide higher interest rates compared to traditional banks and often come with no monthly maintenance fees. By choosing this type of savings account, teenagers can maximize their savings and watch their money grow steadily.

For those looking to save specifically for college expenses, a 529 College Savings Account is an ideal choice. This type of account comes with tax advantages for families saving towards their child’s higher education. By utilizing a 529 College Savings Account, teenagers can prepare financially for their future educational endeavors.

Certificates of Deposit (CDs)

In addition to other teenage investment options, Certificates of Deposit (CDs) are a popular choice for teens looking to grow their money. While not technically investments, CDs offer a safe and reliable way to earn interest on funds. CDs have fixed terms and pay interest over the term, providing a predictable return on investment.

When it comes to CDs, the longer the term, the more interest can be earned. Therefore, it’s important for teens to carefully consider their financial goals and timeline before committing to a CD. It’s recommended that teenagers only choose CDs if they are sure they won’t need the money before the CD matures. Early withdrawals may result in penalties or loss of earned interest.

The Benefits of Certificates of Deposit (CDs)

There are several benefits to investing in CDs as part of a teenage investment portfolio:

1. Low Risk: CDs are considered low-risk investments as they are backed by banks and credit unions. This means that even in the event of a bank failure, the FDIC (Federal Deposit Insurance Corporation) insures deposits up to $250,000 per depositor, providing added security.
2. Guaranteed Returns: Unlike other investments that are subject to market fluctuations, CDs offer a fixed interest rate for the duration of the term. This guarantees a specific return on investment.
3. Flexibility: CDs come in various terms, allowing teenage investors to choose the one that best aligns with their financial goals. Terms can range from a few months to several years, providing flexibility in terms of duration and access to funds.

While CDs may not offer the high returns of riskier investments, they provide stability and a reliable way for teenagers to grow their money over time. They also serve as an excellent introduction to the concept of investing and the importance of long-term financial planning.

Comparing Certificate of Deposit (CD) Rates

To make an informed decision, it’s essential for teens to compare CD rates offered by different banks or credit unions. The interest rate offered for CDs can vary depending on the financial institution and the length of the term. By comparing rates, teenage investors can maximize their earnings and find the best possible CD for their investment portfolio.

Financial Institution	Term	Interest Rate
ABC Bank	12 months	1.5%
XYZ Credit Union	24 months	2.0%
DEF Savings	36 months	2.5%
GHI Bank	48 months	3.0%

Note: The above rates are for illustrative purposes only and may not reflect current market rates. It’s recommended to check with individual financial institutions for the most up-to-date information.

By comparing CD rates, teens can choose the option that offers the best return on investment. It’s important to consider both the interest rate and the duration of the term to make an informed decision.

In summary, Certificates of Deposit (CDs) provide a low-risk investment option for teenage investors. While not the most lucrative choice, CDs offer a predictable return on investment and can be an integral part of a diversified teenage investment portfolio. By comparing rates and carefully considering their financial goals, teens can make smart decisions when it comes to incorporating CDs into their investment strategy.

Custodial Accounts

When it comes to investing for teenagers, custodial accounts can be a valuable option. These accounts are owned by parents or guardians but are designed to benefit the child. There are two main types of custodial accounts: Roth IRAs and Uniform Transfers to Minors Account/Uniform Gifts to Minor Account (UTMA/UGMA) accounts.

Roth IRAs are a great way for parents to help their teens save for retirement. Contributions to a Roth IRA are made with after-tax dollars, meaning the earnings can grow tax-free and withdrawals in retirement are also tax-free. This can provide a significant advantage to young investors, as they have many years for their investments to grow.

UTMA/UGMA accounts, on the other hand, offer a wider range of investment options. These accounts can include cash, stocks, bonds, mutual funds, and ETFs, giving teenagers the opportunity to build a diversified investment portfolio. The assets in a UTMA/UGMA account are owned by the child and can be used for any purpose that benefits them.

With both Roth IRAs and UTMA/UGMA accounts, parents have the ability to guide and oversee their teen’s investments until they reach a specific age of maturity. This allows parents to teach their children about investing while still maintaining control and ensuring responsible decision-making.

Overall, custodial accounts are a powerful tool for teenagers to start investing and building wealth for their future. These accounts provide both parents and teens with the flexibility and control necessary to navigate the world of investing.

Funds

When it comes to teenage investment opportunities, funds are a great option that offers diversification and lower fees compared to individual stocks. There are three popular types of funds that teenagers can consider: index funds, mutual funds, and exchange-traded funds (ETFs).

Index funds: These funds are designed to track specific indexes, such as the S&P 500. They offer a simple way for teenagers to invest in a wide range of companies without having to choose individual stocks. Index funds are passively managed, meaning they aim to replicate the performance of the index they track rather than making active investment decisions.

Mutual funds: Unlike index funds, mutual funds are actively managed by investment professionals. These professionals analyze the market and make investment decisions on behalf of the fund. Mutual funds can provide teenagers with the opportunity to benefit from the expertise of experienced managers. However, they may come with higher fees compared to index funds.

Exchange-traded funds (ETFs): ETFs are similar to index funds in that they aim to track specific indexes. However, ETFs can be bought and sold on stock exchanges throughout the trading day, just like individual stocks. This provides teenagers with the flexibility to react to market movements more quickly if they choose.

Investing in funds allows teenagers to start building their investment portfolio without the risk of relying solely on individual stocks. With diversification and lower fees, funds can be a smart choice for teenagers looking to grow their wealth over the long term.

Fund Type	Description
Index funds	Passively managed funds that track specific indexes, providing broad market exposure.
Mutual funds	Actively managed funds where investment professionals make decisions on behalf of the fund.
Exchange-traded funds (ETFs)	Funds that can be bought and sold on stock exchanges throughout the trading day.

ETFs vs Mutual Funds: Which Is Best?

When it comes to investing for teenagers, both ETFs and mutual funds offer advantages to consider. ETFs (Exchange-Traded Funds) are generally passively managed index funds. They offer lower fees and the flexibility to be bought and sold on stock exchanges. On the other hand, mutual funds can be actively managed or passively managed index funds, each with its own benefits.

ETFs:

• Passively managed index funds.
• Lower fees compared to many mutual funds.
• Can be bought and sold on stock exchanges throughout the trading day.

Mutual Funds:

• Can be actively or passively managed.
• May have specific minimum investment requirements.
• Have trading limitations, typically allowing transactions only at the end of the trading day.

It’s essential to understand that both options have their pros and cons. ETFs offer the advantage of low fees and the ability to trade throughout the day. On the other hand, mutual funds may have minimum investment requirements and more limited trading options, but they can offer tailored strategies and professional management.

“ETFs provide the flexibility of stock-like trading, while mutual funds may have a more hands-off approach with professional management options.”

Ultimately, the choice between ETFs and mutual funds for teenage investors will depend on their specific goals, risk tolerance, and preferences. It’s always a good idea to research and consult with a financial advisor or investment professional to determine which option aligns with their needs.

Conclusion

Investing at a young age can set teenagers up for financial success in the future. As young investors, it’s essential for teenagers to explore the best investment options that align with their financial goals and risk tolerance. Luckily, there are various investment options available for teenagers, ranging from custodial accounts to savings accounts, certificates of deposit, and funds.

It’s crucial for teenagers to understand the risks and benefits associated with each investment option. Seeking guidance from parents or financial professionals can help young investors make informed decisions and navigate the world of investments with confidence. By starting early and making smart investment choices, teenagers can lay the foundation for a strong financial future.

Whether teenagers opt for a custodial account managed by their parents, a savings account offering high interest rates, a certificate of deposit that earns interest, or the diversification offered by funds, the key is to begin investing and learning about the financial markets. Taking the initiative to engage with personal finances at a young age can have a significant impact in the long run, enabling teenagers to develop valuable financial skills and grow their wealth.

Investing for teenagers is an opportunity to learn about money management, build wealth, and establish good financial habits early on. By staying informed, seeking guidance, and making thoughtful investment decisions, teenagers can become financially savvy individuals prepared for a successful and prosperous future.

FAQ

What are the best investments for teenagers?

The best investments for teenagers are the ones that help them reach their financial goals. Some popular options include Fidelity Youth Account, M1 Finance Account, Acorns Early Account, Vanguard, Axos Bank, Stockpile Account, Ally Invest Account, and E*TRADE.

What is Fidelity Youth Account?

Fidelity Youth Account is a brokerage account designed for teens between the ages of 13 and 17. It allows teens to spend, save, and invest with an ATM card for easy access to their funds. Parents have complete oversight of their teen’s transactions and investments.

What is M1 Finance Account?

M1 Finance Account is another brokerage account that teens can have if their parents have one. Parents must have an M1 Plus account for their children to be eligible for an M1 custodial account. The account is a cash account for investing, and parents control the account until the teen reaches maturity age.

What is Acorns Early Account?

Acorns Early Account is a UGMA/UTMA account that parents can open if they subscribe to the Acorns Family account. It only requires to open an account, and parents can set up recurring deposits or manually transfer funds to the child’s account.

What is Vanguard?

Vanguard offers a custodial account called UGMA/UGTA account for parents and relatives to gift money and assets to teens. The account offers various investment options, including stocks, bonds, ETFs, and mutual funds.

What is Axos Bank?

Axos Bank offers a teen checking account called First Checking Account, which pays an interest of 0.25%. While it’s not technically an investment, it allows teenagers to learn to manage money while earning interest.

What is Stockpile Account?

Stockpile Account is an investment app that allows kids and parents to invest together. Parents have the final say in approving trades, but kids have their own log-in and can create their own portfolios.

What is Ally Invest Account?

Ally Invest offers custodial accounts that parents can open for their kids. The investment strategy can be adjusted as the child grows older and their financial goals change.

What is E*TRADE?

E*TRADE offers a custodial account for parents to control until their teens come of age. Parents or other adults can own and manage the account with no contribution limitations or commission fees for trades.

What are the options for savings accounts?

Savings accounts are a conservative way for teens to invest. They can be owned by either the teen or the parents as a custodial or joint account. High Yield Savings Accounts offered by online banks are a popular option, as they typically offer higher interest rates than traditional banks.

What are Certificates of Deposit (CDs)?

Certificates of Deposit (CDs) are not technically investments, but they earn interest that helps grow teens’ money. CDs have fixed terms and pay interest over the term.

What are Custodial Accounts?

Custodial accounts are accounts owned by parents or guardians but benefit the child. Custodial accounts can be Roth IRAs or Uniform Transfers to Minors Account/Uniform Gifts to Minor Account (UTMA/UGMA).

What are Funds?

Funds are a great way for teens to start investing without the risk of individual stocks. Index funds, mutual funds, and exchange-traded funds (ETFs) are popular options. Funds offer diversification and lower fees compared to individual stocks.

What is the difference between ETFs and Mutual Funds?

ETFs and mutual funds both offer advantages for young investors. ETFs are generally passively managed index funds, offering lower fees and the flexibility to be bought and sold on stock exchanges. Mutual funds can be actively managed or passively managed index funds, but they have unique advantages such as minimum investment requirements and trading limitations.

Our Friends

• https://financhill.com/blog/investing/top-etfs-for-young-investors
• https://millennialmoney.com/best-investments-for-teenagers/
• https://www.investopedia.com/investing-for-teens-7111843