Can a 17-Year-Old Invest in Stocks? Yes, Here’s How They Can Start Building Wealth Early!

Hey there! I’ve been researching teen investing lately and wanted to share what I found about whether 17-year-olds can invest in stocks. The short answer is YES – but with a little help from parents or guardians. Let’s dive into how teens can start building their financial future even before they’re legally adults!

The Age Requirement for Investing: What You Need to Know

So here’s the deal – to open a regular brokerage account on your own you need to be at least 18 years old. This is a legal requirement across most brokerages like Fidelity Charles Schwab, and E*TRADE. But don’t worry! If you’re 17 (or even younger), you still have options to start investing with some adult supervision.

The most common way for 17-year-olds to invest is through a custodial account These accounts are specifically designed for minors and are managed by an adult until the teen reaches the age of majority (usually 18 or 21, depending on your state).

Why Teens Should Start Investing ASAP

Before we get into the “how,” let’s talk about WHY teens should consider investing early Trust me, I wish I had started at 17 instead of waiting until my mid-20s!

The Power of Compound Interest

Starting early gives young investors an incredible advantage – time. When you invest young, you have decades for your money to grow and compound. Check out this mind-blowing example:

If you start investing $500 per year from age 13 through 19, then $1,000 per year from age 20-24, and finally $3,000 annually from 25 until retirement at 67 (assuming a 7% average annual return), you’d end up with substantially more money than someone who only starts investing $3,000 annually at age 25.

This is because compound interest is basically magical – your earnings generate their own earnings over time!

Learning Financial Skills Early

Getting into investing as a teen also helps you:

• Understand how the economy works
• Learn to make informed financial decisions
• Develop saving habits that will last a lifetime
• Gain confidence with money management
• Have a head start on financial independence

How Can a 17-Year-Old Invest in Stocks?

Let’s get practical! Here are the main ways a 17-year-old can start investing:

1. Custodial Accounts (UGMA/UTMA)

The most common way for teens to invest is through custodial accounts under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA).

How it works:

• A parent/guardian opens and manages the account
• The money legally belongs to the minor
• The adult has control until the teen reaches the age of majority (18-21 depending on state)
• At that point, control transfers automatically to the young adult

Most major brokerages offer these accounts with minimal or no fees. The adult can help the teen make investment decisions, but ultimately the custodian has the legal responsibility for managing the account.

2. Custodial Roth IRA

If you’re a 17-year-old with earned income from a job (even babysitting or mowing lawns counts!), a Custodial Roth IRA is an amazing option.

Benefits include:

• Tax-free growth potential
• Contributions can be withdrawn anytime without penalties
• After 5 years, certain withdrawals may qualify for tax advantages
• Not counted as a student-owned asset for financial aid purposes

The key requirement is that the teen must have earned income, and contributions can’t exceed what they earned that year (up to the annual contribution limit).

3. Fidelity Youth Account

Fidelity offers a special account called the Fidelity Youth Account for teens ages 13-17. It’s unique because:

• The teen actually owns and manages the account (making investment decisions)
• The parent/guardian has transparency and monitoring capabilities
• It includes a debit card with no ATM fees in the US
• No subscription or account fees
• At 18, it converts to a standard brokerage account

This is a great option for parents who want to give their teens more independence while still maintaining some oversight.

Steps for a 17-Year-Old to Start Investing

Ready to get started? Here’s your roadmap:

1. Have a conversation with your parent/guardian about your interest in investing

2. Choose the right type of account based on your goals and situation

3. Select a brokerage – Popular options include Fidelity, Charles Schwab, and E*TRADE

4. Open the account – The adult will need to provide their information and yours

5. Fund the account – Decide how much to start with (many accounts have no minimums)

6. Choose investments – Consider starting with:

   • Index funds or ETFs for instant diversification
   • Stocks of companies you understand and use
   • Target-date funds if saving for a long-term goal

7. Learn and adjust – Use resources from your brokerage to continue learning

What Can Teens Invest In?

Once the account is set up, what should a 17-year-old actually invest in? Here are some options:

Stocks

Buying individual stocks gives you partial ownership in specific companies. Teens often connect best with companies they know and use, like tech or retail brands they interact with regularly.

Funds

• Index funds: These track market indexes like the S&P 500 and provide instant diversification
• ETFs (Exchange-Traded Funds): Similar to index funds but trade like stocks
• Mutual funds: Professionally managed collections of investments

Funds are great for beginners because they spread risk across many different investments.

Bonds

Generally safer than stocks but with lower returns, bonds are essentially loans to companies or governments that pay interest.

Other Investments

Certificates of deposit (CDs), cryptocurrency, and other assets may be available depending on the type of account.

Understanding the Risks

It’s super important for teens to understand that investing always comes with risk. You might lose money, especially in the short term. But historically, over long periods, the stock market has trended upward.

The risk-reward tradeoff is especially favorable for young investors because:

1. They have time to recover from market downturns
2. They can afford to be more aggressive with their investments
3. They’re investing for decades, not months or years

Real-World Advice for Teen Investors

As someone who wishes they’d started earlier, here’s my advice for 17-year-olds looking to invest:

• Start small – Even $50 a month can grow significantly over decades
• Be consistent – Regular investments build wealth better than trying to time the market
• Do your research – Understand what you’re investing in
• Think long-term – Don’t panic during market fluctuations
• Reinvest dividends – This accelerates your compound growth
• Keep learning – Financial education is an ongoing process

FAQ About Teen Investing

Is it illegal for a 17-year-old to invest?

Nope! It’s completely legal for minors to invest, they just need adult supervision through a custodial account until they turn 18.

How much money should a teen start investing with?

There’s no “right” amount – whatever you can consistently contribute is great. Many accounts have no minimum requirements.

Will investing affect college financial aid?

Assets in a student’s name (including custodial accounts) can impact financial aid more than parent-owned assets. However, Roth IRAs aren’t currently counted in financial aid calculations.

Can a teen lose all their money investing?

While total loss is unlikely with diversified investments, the market does fluctuate and losses are possible. This is why diversification and a long-term mindset are important.

Conclusion

So can a 17-year-old invest in stocks? Absolutely! While teens can’t open their own brokerage accounts until they’re 18, custodial accounts provide an excellent pathway to start building wealth early.

The most significant advantage teens have is TIME – that precious resource that makes compound interest work its magic. By starting at 17 (or even earlier), you’re giving your money decades to grow, which can literally translate to hundreds of thousands of dollars in difference by retirement age.

If you’re a teen reading this – talk to your parents about getting started! If you’re a parent – consider helping your teen begin this journey toward financial literacy and independence. It’s one of the most valuable gifts you can give them.

Have you started investing as a teen or helped your teenager invest? I’d love to hear about your experience in the comments below!