Robinhood does not offer custodial accounts, so you cannot invest with Robinhood if you are under 18. Let's explore ways to invest under 18.
Young people have always found it challenging to begin investing. The minimum age requirement for many investment applications is 18. But as we all know, learning and investing early on will benefit you in the long term. A youngster will have a head start in paving the road to financial freedom if they begin to develop a foundation in finance at an early age.
A custodial account lets children from 13-17 invest with a sponsor’s approval. A sponsor can be any 18+ US citizen, most often a parent or relative of the young investor!
Custodial accounts operate just like an adult brokerage account. There is no contribution limit. You can also invest in a variety of investment assets from stocks, ETFs, mutual funds and even real estate!
Custodial accounts are a flexible way to invest. Once the teen reaches 18 or 21, depending on the state, the ownership of the account will transfer to the teen.
There is no limit to how much a custodian can put in the account at any stage and an individual can contribute up to $15,000 ($30,000 for a married couple) to an account without incurring the gift tax.
Investing early with a custodial account lets young investors learn, take risks and familiarize themselves with the markets with the safety net and support of their parents.
With apps like Bloom, parents can closely monitor their teen’s success and learning.
The short answer: NO.
Custodial accounts are not offered by Robinhood or many other similar applications. Investment platforms like Public, robo-advisors like Wealthfront and Betterment, as well as free investing choices like Robinhood are only available to adults.
Investing as a teen under a parent’s name is illegal. Investing money under someone else’s name is illegal unless you have a brokerage license. Why take the illegal road, when you can invest safely and legally as a teen with an app like Bloom?
For adults, there are countless options, but for kids, it’s a different story. The barrier to entry is significant, but the advantages to investing early are clear. The freedom to invest whatever you chose and withdraw when you would like, is a typical feature of a custodial account. Bloom accounts give you extra peace of mind due to freedom of withdrawals and deposits, parent controls and safety locks on high risk stocks.
Things are as uncertain as ever in the world we currently live in. Being financially stable is more important than ever, especially with the student loan crisis showing no signs of abating. We now have to set aside money for two days of rain while preparing for the occasional storm.
We put our kids first and adore them more than anything. No matter what job path they choose, having financial security is crucial if we want children to achieve in all facets of life. We all know that discussing money is rarely enjoyable, and it may be challenging to teach your children about "portfolio diversification" or "stock splits."
When you answer a child's query about stocks in overly complex financial language, their eager smile usually disappears. Custodial accounts have a role in this. You will hold a child's attention if they are involved in what they are learning and can see, for instance, that their $10 has increased to $15. They learn by doing, and being able to tangibly observe how their money might increase will provide them the chance to educate.
You have done a fantastic job as a parent laying the groundwork for financial success if your child turns 18 and has already accumulated years of investment experience and knowledge.
The only difference between an 18-24 year old and a teenager under 18, is that one lives on their own with bills to pay, and the other still lives under the safety net and protection of their parents.
Teach your child to take practical risks when they have a clear support system and no real bills to pay. Helping your teen learn now, gives them an advantage before the stakes become real.
Let’s take a look at both ends of the spectrum, and then the sweet spot.
Investing carries a certain amount of risk; how much depends on your time frame and objectives. Alternative ways to generate money through financial products like options are made possible by trading platforms like Robinhood. Options certainly provide a chance to gain money, but the danger of losing it is considerably higher, and many young people make the error of starting to trade items they do not completely comprehend.
Savings accounts fall on the opposite end of the spectrum. Although they are quite secure and provide a rate of return, the rate is so low that it could be worthwhile considering alternatives. The national average interest rate is 0.06% as of August 2020, while some larger banks are giving rates as low as 0.01%. Diversifying your portfolio is crucial for safe investing, especially in volatile market conditions.
Longterm investing and practical choices can reduce risk. This is the sweet spot, and the kind of investing that goes into your longterm retirement accounts.
Bloom teaches kids the importance of diversification, a core concept allowing them to reduce risk and make smart investing decisions. For example, the S&P 500 is an index/ETF that tracks the Top 500 US Companies in the stock market. Its 10% average annual return places it in the low risk category, making it a common choice for beginner investors.
In addition to offering a top tier, premium investing experience for families, we also educate our teens on the basics of financial literacy.
Any teen on Bloom has access to 60+ education modules, financial literacy content co-created with Ivy League Professors and free learning simulators.
Parents on Bloom get to monitor their teen’s education progress and set custom safety controls.
On Bloom, thanks to fractional investing, you can purchase stocks and crypto with as little as $1.
Allan for Bloom
Weighing the legitimacy of Bloom, the investing and financial literacy app for teens under 18, across 10 key factors.
Bloom has the latest investing features, unique parent controls for safe investing, crypto, stocks & ETFs, and the also SIPC/FDIC insures your securities up to $500,000 and cash up to $250,000.
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