How Old Do You Have to Be To Buy Shares?

At a young age, one can quickly feel the need for money. Financing a project or a vehicle to facilitate mobility, building up savings: are you searching for the means to earn more money? One of the very popular ways to build up your savings for the future is becoming a stock market shareholder. But these questions arise here: how old do you have to be to buy shares? How to start investing your money when you are young? What is the minimum age to buy securities? What to think about before starting? Keep reading to find out more on this topic.

How Old Do You Have to Be To Buy Shares? – Key Takeaways

• How old do you have to be to buy shares
• Types of custodial investments account for underaged
• Jointly Owned Brokerage Account
• Custodial Account
• Custodial Roth IRA
• Why invest in stocks for your kids?
• Tips for buying shares for your children
• The other types of investment options to consider for kids

How old do you have to be to buy shares?

How do you invest your money and open a brokerage account market when you are young?

Anyone can invest in the stock market and open an account on an investment platform these days. But one of the most important limits set by law to buy stocks is age. For the youngest, this age limit can be circumvented under one condition: the responsibility of the parents.

But how old do you have to be to buy shares? In most countries, the legal age to invest in the stock market is 18 years, which is the age of the majority. Because to invest in the stock market, it is mandatory to have a bank account. However, no minor can open a bank account in his name. Some accounts may be opened, but they will always be the responsibility of the parents. Here is our financial advice regarding investing when you are underaged.

How to invest in the stock market before the majority?

Now that we have answered the question of how old you have to be to buy shares, let’s see the possibilities for investing when you’re a minor. The two main ways are

either by obtaining the approval of parents to manage stock market shares to have the legal capacity to make a “handover”;

Or by managing the stock market account of parents, with their authorization.

In both cases, the adolescent remains under the responsibility of the parents. It is, therefore, up to them to choose whether their child is responsible enough, at their age, to manage stock market transactions, whether for their accounts or theirs.

Types of custodial accounts for underaged

Junior ISA

If you are underaged, parents can open the Junior ISA long-term saving account on your behalf. Regarding investment decisions, you can make them at the age of 16. However, you cannot fully control the account and your funds until you are 18 years old. You can invest money in a wide range of shares with this account. You have the opportunity to invest in individual shares or investment funds. Moreover, no need to pay income tax on earned interest.

Jointly Owned Brokerage Account

An individual brokerage account is a standard account opened in one person’s name. On the other hand, a jointly owned account enables two or several people to own the account and the available assets. Spouses usually share jointly owned accounts. But there is the option for them to share the account’s ownership with other family members who share the same financial goals. If a child disposes of a joint account, they can intervene in the decision-making process regarding personal finance management, and buying and selling shares, for example. A plethora of investing apps suitable for kids offer the option of opening this type of account.

Custodial Account

A custodial account represents an account that an adult maintains for another person, usually a child. Many parents open a custodial brokerage account to invest for their teens.

Importantly, custodial accounts can hold various assets like stocks, bonds, insurance contracts, etc.

Custodial Roth IRA

IRA or otherwise called an individual retirement account, is ideal for those doing some babysitting, summer jobs, or earning money from tutoring classes. The earned money from these lucrative activities can be invested in an IRA account. By investing in an IRA, you are contributing to your retirement savings in a tax-free manner.

Why invest in shares for your kids?

Having your kids growing up rimes with more expanses and requires a wise approach when it comes to investments for their future. Buying a first car, going to college, and getting married all require substantial amounts of money. Suppose you start investing on their behalf while they are little kids. The money will have a lot of years to grow. Grown money could positively impact their personal finances for the rest of their lives.

The importance of diversification when investing in shares

Every successful investor’s rule of the tomb is never to invest only in one asset. Diversifying your investments is crucial for limiting the risks. If you invest in only one or two shares and these drop to zero, you lose all your investment capital.

But if you invest in several index funds or mutual funds pools, you are hedging your portfolio from the adversities of significant price drops in the value of your assets. Mutual funds allow you to expose yourself to real estate, bonds, or other types of assets. It’s not unusual for successful investors to invest their money in hundreds of shares and various assets.

If some of these assets perform badly, you will make it out with the other assets that perform more than well. In that way, you avoid risk, and the impact of the shares that perform badly is completely eliminated.

What should you think about before making investment decisions?

Calculating your savings, setting financial goals, and becoming aware of the risks: it is very important, regardless of age, to think about a certain number of things before embarking on stock market investments.

Calculate your available savings

As with any financial investment, whether you are a teenager, young adult, or older, the first thing to do is to calculate your available savings. In most families, money has been set aside over birthdays to allow young people to get a good start in life. Once they are of age, these savings belong to them. So it’s up to them to decide what they want to do with it. Playing this money on the stock market can be a very good way to grow it.

Only to start, it is important to think small and estimate the big expenses to come. Succeeding in the stock market takes time, and investing all your savings there can block the young person in their future projects.

Determine objectives

The stock market represents a good place to start making your money grow. But if you wish to make pocket money easily, it’s not the appropriate one. If a young person wants to earn several hundred euros in just a few weeks with fairly low savings, investing in the stock market is not the best solution.

This could be disappointing to hear, but the stock market requires time, patience, risk-taking, and knowledge. Investing in the stock market when you are a beginner is not easy. The neo-trader will therefore have to learn and, above all, set goals through the right questions:

Does he/she want to become a shareholder to pay for part of the end of his studies?

Does he/she want to help his parents finance his future car?

Is it a contribution to a future real estate investment?

Know the risks

The stock market can be addictive and risky. Before even starting, it is important to be aware of the dangers it entails. It is for this reason that stock market shares are regulated for minors. Once again, maturity takes precedence, and it is up to the parents of minors to judge it.

How Old Do You Have to Be To Buy Shares?- Conclusion

 

Now that you know how old you need to be to buy shares and everything related to investment for the underaged, it’s time to take action. Uncertainty is the core variable of today’s living. They can help you decrease this level of uncertainty.

But the possibilities that various investment modalities offer are amazing. We recommend you inform yourself in detail regarding the best shares to invest in and all the available account options we presented in this article. Choose what fits you best and secure the future of your dearest ones by making wise investment decisions.

Even the smallest contributions will make a difference if you start early. Finally, starting investing for your children is a part of common sense. And additionally, you will have a great opportunity to financially literate your kids and include your kids in the decision-making process. In that way, they will be able to develop the spirit of responsibility when it comes to money management.