## How to Invest in Stocks Underage
Investing in stocks can be a great way to grow your wealth over time, but it can be difficult to know where to start, especially if you’re underage. However, there are a few ways that you can get started investing in stocks even if you’re not yet 18 years old.
### 1. Open a custodial account
One of the most common ways for minors to invest in stocks is through a custodial account. A custodial account is a brokerage account that is opened in the name of a minor child, but is controlled by a parent or guardian. The adult custodian is responsible for managing the account and making investment decisions on behalf of the child.
There are a few different types of custodial accounts available, so it’s important to choose one that is right for your needs. Some custodial accounts allow the child to take control of the account when they reach a certain age, while others allow the custodian to maintain control until the child is 18 years old.
### 2. Invest through a UTMA or UGMA account
Another option for investing in stocks underage is through a Uniform Transfer to Minors Act (UTMA) or Uniform Gift to Minors Act (UGMA) account. These accounts are similar to custodial accounts, but they are not controlled by a parent or guardian. Instead, the assets in the account are transferred to the child when they reach a certain age, typically 18 or 21 years old.
UTMA and UGMA accounts can be a good option for parents who want to give their children a head start on investing, but who do not want to give them full control of the account until they are older.
### 3. Invest through a 529 plan
529 plans are tax-advantaged savings plans that can be used to save for college expenses. However, 529 plans can also be used to invest in stocks, bonds, and other investments. If you open a 529 plan for your child, you can invest the money in a variety of different ways, including stocks.
529 plans offer a number of benefits, including tax-free growth and tax-free withdrawals when the money is used for qualified education expenses. However, it’s important to note that there are some restrictions on how 529 plans can be used. For example, the money in a 529 plan cannot be used to pay for K-12 education expenses.
### 4. Invest through a trust
A trust is a legal document that allows you to transfer assets to someone else. Trusts can be used for a variety of purposes, including investing in stocks. If you create a trust for your child, you can transfer stocks or other assets to the trust. The trustee will then manage the assets on behalf of the child.
Trusts can be a good option for parents who want to give their children a significant amount of money, but who want to maintain some control over how the money is invested. Trusts can also be used to protect assets from creditors and other claims.
### 5. Invest with a parent or guardian
If you are not yet 18 years old, you can also invest in stocks with the help of a parent or guardian. Your parent or guardian can open a brokerage account in their own name and add you as a joint owner. This will allow you to invest in stocks with their guidance and support.
Investing with a parent or guardian can be a good way to learn about investing and to get started building your own portfolio. However, it’s important to remember that your parent or guardian will have control over the account and will be responsible for making all investment decisions.
### Tips for investing in stocks underage
If you are considering investing in stocks underage, here are a few tips to keep in mind:
* **Start small.** Don’t invest more money than you can afford to lose.
* **Diversify your portfolio.** Don’t put all of your eggs in one basket. Invest in a variety of different stocks to reduce your risk.
* **Do your research.** Before you invest in any stock, be sure to do your research and understand the company.
* **Get help from a financial advisor.** If you are not sure how to invest in stocks, consider getting help from a financial advisor. A financial advisor can help you create a portfolio that meets your individual needs and goals.
Investing in stocks can be a great way to grow your wealth over time. However, it’s important to remember that investing involves risk. Before you invest, be sure to do your research and understand the risks involved.