Teens

Robinhood Account Under 18? Ways to Invest as a Teen

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.

5 min read
November 13, 2022
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.

Key Points

  1. The legal minimum age to start investing with most apps and services is 18
  2. To legally invest under the age of 18, you need to set up a custodial account with parent approval
  3. Learning to invest early on, with the safety net and support of a parent, helps a teen become financially literate before adulthood
  4. Apps like Bloom let families sign up, granting safety controls for parents and learning materials plus real investing access for American teens 13-17.

1) Custodial Accounts and Investing 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.

What are custodial accounts?

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.

Does Robinhood have custodial accounts?

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.

2) Why Helping Your Child Invest is Important

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.

Financial Security Allows for More Freedom Down the Line

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."

Making Financial Literacy Fun

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.

Learn with a Safety Net, Before the Stakes Get Real

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.

But why not just save? Isn’t it safer?

Let’s take a look at both ends of the spectrum, and then the sweet spot.

Risky

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.

Low Risk

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.

The Sweet Spot

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.

3) What Makes Bloom Unique

In addition to offering a top tier, premium investing experience for families, we also educate our teens on the basics of financial literacy.

Education

Any teen on Bloom has access to 60+ education modules, financial literacy content co-created with Ivy League Professors and free learning simulators.

Parental Safety Controls

Parents on Bloom get to monitor their teen’s education progress and set custom safety controls.

Fractional Investing

On Bloom, thanks to fractional investing, you can purchase stocks and crypto with as little as $1.

4) How to Invest under 18 with Bloom

As a parent
  1. Head to https://parents.joinbloom.co
  2. Sign up and create an account
  3. Verify your identity and invite your teen!
  4. Deposit funds for your teen
  5. Done! Now you can set custom controls and monitor your teen’s education progress
As a teen
  1. Download Bloom from the app store (https://joinbloom.co/app)
  2. Create an account with your phone #
  3. Invite your parent
  4. As your parent sets up the custodial account, earn Oinks for learning about stocks or play with the investing simulator.
  5. Done! Start investing with funds deposited by your parent, or yourself.

Media Contact

Allan for Bloom

allan@joinbloom.co

Related Articles

Is Bloom Investing Legit?

Is Bloom Investing Legit?

Weighing the legitimacy of Bloom, the investing and financial literacy app for teens under 18, across 10 key factors.

November 29, 2022
Is Bloom a Good Investment App?

Is Bloom a Good Investment App?

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.

November 28, 2022
10 Ways Any Kid Can Be a Young Entrepreneur

10 Ways Any Kid Can Be a Young Entrepreneur

Your kids can pursue their interests if they have some financial stability. Here are 10 jobs and small business anyone under 18 can easily start.

November 7, 2022
How To Save Money for Children's Futures

How To Save Money for Children's Futures

Whether you have kids or not, saving money is no easy task. Here is how to be intentional about savings and how to stick to a budget.

November 5, 2022
How do I Invest if I'm Not 18 or An Adult Yet?

How do I Invest if I'm Not 18 or An Adult Yet?

To invest before you turn 18, or reach adulthood, try looking into custodial accounts! Make sure to pickup these four key investing principles and understand the pro's and con's of investing early on.

November 5, 2022
10 Tips to Raise A Successful Child

10 Tips to Raise A Successful Child

Help your teen take small steps towards whatever goals they wish to achieve. Here are 10 tips for raising a successful, confident and curious teen.

October 25, 2022
At What Age Can You Start Investing? 13 and Here's How

At What Age Can You Start Investing? 13 and Here's How

In the United States, you must be at least 13 years old to invest in stocks through a custodial account. Let's talk about the basics of the stock market and exactly how to start investing under the age of 18.

October 19, 2022
Can You Invest as a Teenager?

Can You Invest as a Teenager?

The answer is YES! Today we’ll talk about the importance of investing and financial literacy, how to learn and how to get started.

October 19, 2022
5 Tips to Set Your Child up for Financial Success

5 Tips to Set Your Child up for Financial Success

Here's how you can promote financial success to your teen by passing down the correct and simple financial lessons.

July 11, 2022
How to Get Investment Money Without A Job

How to Get Investment Money Without A Job

Stock competitions with $10k+ in prizes, entrepreneurship grants from $15k-$275k and how to prep for your financial future without a job.

March 24, 2022
Is Investing Worth It As A Teen? Yes & Here’s Why

Is Investing Worth It As A Teen? Yes & Here’s Why

You may have wondered if "investing is only for the rich" or if "investing is something to do after 18". Today, we'll debunk both myths.

February 23, 2022
Dangers of Day Trading And Penny Stocks

Dangers of Day Trading And Penny Stocks

Dangerous endeavors of day trading and penny stocks, when investing becomes gambling, and how to loose your money 70% of the time.

January 15, 2022
10 Stock Categories For Young Investors

10 Stock Categories For Young Investors

10 ways to categorize stocks and 3 ones young investors should look out for. Young investors are time rich but cash poor so it's important to find stocks that compliment a teen investor's needs.

December 22, 2021
2 Teen Finance Misconceptions

2 Teen Finance Misconceptions

A quick primer on what you need to know as a teen trying to build wealth & top 3 misconceptions and misunderstandings.

September 23, 2021