How Old Do You Have to Be to Buy Stocks?

Investing in the stock market is a common financial goal, offering opportunities for wealth accumulation over time, but it involves specific legal and regulatory considerations. Age is a primary factor determining an individual’s ability to invest in stocks. Understanding these age-related requirements is essential for anyone considering entering the investment landscape.

Minimum Age to Buy Stocks

In the United States, the legal age to independently purchase stocks is typically 18 years old. This aligns with the age of majority in most states, granting individuals full legal rights and responsibilities. The ability to enter into legally binding agreements, or contractual capacity, is a fundamental requirement for opening a brokerage account and executing trades. Without this capacity, contracts entered into by minors are generally considered voidable, meaning they can be legally canceled by the minor. Brokerage firms require account holders to possess this legal capability to ensure investment agreements are enforceable.

This age requirement protects younger individuals from potentially unfavorable financial decisions, as minors may lack the mature judgment for complex financial commitments. While the age of majority is 18 in most states, a few states, such as Alabama and Nebraska, set it at 19, and Mississippi at 21. This framework ensures individuals can comprehend the risks and rewards of stock market participation before investing directly.

Investing for Individuals Under Age 18

Individuals under the age of majority can still invest in stocks through custodial accounts. The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) are common types. An adult, often a parent or grandparent, acts as the custodian, managing assets for the minor beneficiary until they reach the age of majority or a specified age in their state. The minor irrevocably owns the assets, but the custodian controls investment decisions and withdrawals for the minor’s benefit.

A key distinction between UGMA and UTMA accounts is the types of assets they can hold. UGMA accounts are generally limited to financial assets like cash, stocks, bonds, and mutual funds. UTMA accounts offer broader flexibility, allowing for physical assets such as real estate, artwork, and intellectual property, in addition to financial securities. UGMA accounts are available in all 50 states, while UTMA accounts have been adopted by most states. The age at which the minor gains full control of the assets varies by state, typically ranging from 18 to 25 years old.

Income generated within UGMA and UTMA accounts is generally taxed to the minor, potentially at a lower rate than the custodian’s. However, this income is subject to “kiddie tax” rules, designed to prevent higher-income individuals from shifting investment income to children to avoid taxes. 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 unearned income exceeding $2,700 is taxed at higher trust and estate rates (10% to 37%). Contributions to these accounts are also subject to annual gift tax exclusion limits, which for 2025 allow up to $19,000 per person ($38,000 for married couples filing jointly) without incurring gift tax.

General Brokerage Account Requirements

Once the age requirement is met, either by reaching the age of majority or through a custodial arrangement, opening a brokerage account involves several general requirements. Brokerage firms require specific documentation to verify identity and financial standing. This includes a full legal name, current address, and a Social Security Number (SSN) or Individual Tax Identification Number (ITIN). A government-issued identification, such as a driver’s license or passport, is also necessary.

Brokerage firms also request financial details, including employment status, annual income, and estimated net worth. This information helps the firm assess investment goals and risk tolerance, ensuring recommended investments are suitable. This “suitability” requirement, often guided by FINRA regulations, mandates brokers have a reasonable basis to believe a recommendation is appropriate for a customer’s profile. Finally, bank account details (name, routing, and account number) are needed to link the brokerage account for funding and withdrawals. Many online brokerages offer streamlined applications, often completed quickly, with some requiring no minimum initial deposit.