At What Age Can You Invest in Stocks?
Wondering when you can start investing in stocks? Explore the different ways to invest at any age, from youth to adulthood.
Investing in the stock market offers a pathway to financial growth and wealth building. Understanding age requirements is a straightforward starting point. The ability to directly invest in stocks is determined by an individual’s age, with different avenues available for minors and adults.
Legal Age Requirements for Direct Investment
The legal age at which an individual can independently invest in stocks is tied to the age of majority, which is generally 18 years old in most parts of the United States. In some states, this age can be 19 or 21. This age threshold is significant because it is when an individual is legally recognized as an adult and gains the capacity to enter into binding contracts.
Brokerage firms require individuals to be of legal age to open and manage their own investment accounts. This ensures account holders can legally agree to the terms and conditions. Reaching the age of majority allows individuals to directly engage with the stock market by opening accounts in their own name and making independent investment decisions.
Investing for Minors (Custodial Accounts)
For individuals who have not yet reached the age of majority, investing in stocks is possible through custodial accounts, specifically Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts. These accounts provide a legal framework for an adult, the custodian, to manage assets on behalf of a minor beneficiary. The assets are irrevocably owned by the minor, though the custodian retains control over investment decisions until the minor reaches a specified age.
UGMA and UTMA accounts differ in the types of assets they can hold. UGMA accounts are limited to financial assets such as cash, stocks, bonds, and mutual funds. UTMA accounts offer broader flexibility, allowing for assets like real estate and intellectual property, in addition to financial assets. Most states have adopted both acts.
To establish a custodial account, specific information and documentation are required for both the custodian and the minor beneficiary. This includes:
- Full legal name
- Current address
- Social Security Number
- Date of birth
Details regarding the initial funding of the account, such as the deposit amount and its source, are also typically requested. Brokerage firms provide the necessary forms for opening these accounts, which can often be obtained from their websites or by contacting their customer service. Completing these forms involves accurately inputting the gathered personal and financial details.
Contributions to custodial accounts are considered irrevocable gifts to the minor. While there are no contribution limits, amounts exceeding the annual gift tax exclusion (e.g., $19,000 for individuals in 2025, or $38,000 for married couples filing jointly) may be subject to gift tax implications for the donor.
Earnings within a custodial account are generally taxed to the minor. However, the “kiddie tax” rules apply to unearned income above certain thresholds. For 2025, the first $1,350 of a child’s unearned income is tax-free, the next $1,350 is taxed at the child’s rate, and any unearned income exceeding $2,700 is taxed at the higher trust and estate rates.
Transitioning to Adult Accounts
When a minor beneficiary of a custodial account reaches the age of majority, assets must be transferred into an account solely owned by the now-adult individual. This “termination age” typically ranges from 18 to 21, but in some states, it can extend up to 25 years, depending on state law.
The transfer process begins by contacting the brokerage firm where the custodial account is held. The firm provides instructions and required documentation, often including proof of the beneficiary’s age, such as a government-issued identification or birth certificate.
Transfer documents must be completed and signed by the former minor, and sometimes by the custodian. Once processed, control and ownership of the assets transfer from the custodian to the now-adult beneficiary.
After the transfer, the individual gains full legal control over the assets. They can establish a new individual brokerage account, transfer assets into an existing personal account, or explore other investment vehicles suitable for an adult, such as retirement accounts. The former minor is then responsible for managing investments and any associated tax obligations.