New Schwab Account Lets Kids Buy and Sell Stocks. Here’s the Way.
If your teen is eager to invest in Nvidia and Nintendo, the new Schwab Teen Investor account may be for you.
The youth account, launched on March 26 by investment company Charles Schwab, is designed for joint ownership by young children and their parents or guardians.
In the past, minor investors who wanted to own shares often had to pay for custodial accounts, opened and managed by parents on behalf of the minor.
With savings accounts, “the baby is really a passenger,” said Jonathan Craig, chief investment officer at Charles Schwab. “This is a true shared account, where the child and parent have separate login credentials.”
Americans Are Investing Smaller
America’s youth are showing a growing interest in investing, and at a younger age.
The average Gen-Z investor started investing at age 19, according to Schwab’s 2024 study, while the average millennial started at age 25, and Gen-Xers at age 32.
“We’ve seen higher engagement from Gen Z than from previous generations during that time,” Craig said. It helps, he said, that investing “has never been easier, and it’s never been cheaper.”
Children born since 2010, the only Generation Alpha, seem to be ready to start investing even earlier.
Schwab research data shows that 70% of young people are serious about investing, while three quarters of parents believe it is “very important” that young people learn to invest.
The national financial literacy goal has encouraged many states to teach about money and investing in schools. Thirty-nine states now require students to take a finance course before graduating from high school.
The government’s “Trump Accounts” program offers $1,000 in seed money for savings accounts for children born between 2025 and 2028: an infant IRA. Trump accounts are open to minors born before 2025, but without seed money.
Schwab Youth Account Offers Freedom, But Also Guardrails
The Schwab youth account has no minimum initial deposit, no opening or maintenance fees, and no commissions for online trading of listed stocks. A teenager can access cash in an account with a debit card and fund the account with direct deposit.
Wall Street’s One Credo advises investing in what you know. It’s no surprise that young investors are more interested in the more familiar sectors. Here are their top areas of interest, according to Schwab research:
- Artificial intelligence (cited by 34% of teenagers)
- Video games (28%)
- Social media (26%)
- Cryptocurrency and blockchain (26%)
- Food and drinks (22%)
- Music (22%)
Young Schwab investors can pick their own stocks or choose investment themes, which include stocks in areas such as online gaming and social media.
Schwab will offer young investors access to financial information videos and other resources, as well as 24/7 support from Schwab investment professionals. Juniors who complete a financial course shortly after opening their accounts will receive $50 in shares of Schwab’s fractional stock.
Accounts will include monitoring lines. The youth will have unrestricted power to trade stocks, bonds and many ETFs and mutual funds. Youngsters will not have access to risky investments such as margin and option trading and leveraged ETFs. They can buy shares in a crypto ETF, but not the actual cryptocurrency.
The parent has full access to the teen’s account and “can be as involved as they want,” Craig said.
Another Option: Fidelity Youth Account
Teens looking for their own investment accounts have at least one other option: the Fidelity Teen Account.
A Fidelity Youth Account is a merchant account held by the youth, rather than a joint account with parents. It allows young people to invest in Fidelity mutual funds, many US stocks and other ETFs, among other options.
Parents or guardians open a Fidelity Youth Account on behalf of the youth. To do so, they must have an existing Fidelity account. After that, parents can review statements and activities and may close the youth’s account at any time.
This article first appeared in USA TODAY: New Schwab account lets kids buy and sell stocks. Here is the way.
Reporting by Daniel de Visé, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
