I’m sure you’ve thought about it at least once. You look at the stock market and watch the returns created in the last few decades. You say: “Wow! If only I invested $100 10, 20, 30 years ago, I’d now have over five figures!”
Imagine it’s your tenth birthday, and someone gives you $100 as a gift. That’s a lot of money for a kid. Anyway, you’d probably spend it quickly and not even remember about it.
What if instead, you could have put those $100 in stocks? I know it’s unthinkable for most kids to show interest in finance. But just imagine: by the time you turn 18, those bucks will have turned into something bigger.
Big enough to pay for college, rent, or any debt you owe. How liberating is that? That’s the power of long term investment. You don’t need much knowledge to succeed in the stock market other than common sense and a lot of patience.
The question is, how can you invest in stocks if you’re not an adult?
How Old Do You Have to Be to Invest in Stocks?
You need to be 18 years old to do stocks and other money management activities independently (21 years old in some states plus exceptions).
But that does NOT mean you can’t start sooner. You shouldn’t wait until you reach that age to do so.
You can always open a custodial account. This means you sign under someone else’s name, someone who does qualify, such as your parents.
It’s not the same as having the freedom to do it on your own. But if your parents see your interest in learning to make money, it shouldn’t be hard to get their permission. And if you can’t, you can always find other adults you trust.
Anyway, the 18-year-old limit is there for a reason. Because for most teenagers, their priority is to learn as much as possible. You’re not going to earn much until you learn the basics of finance.
When you first receive money as an 18-year old for the first time, it’s surprisingly easy to blow it all. Here’s what you MUST learn before you even touch a stock, or it will cost you the few savings you have:
- Learn about the common beginner mistakes when trading (and how to avoid them)
- Train with a trading simulator, or convince your parents to lend you a small amount
- Learn about the different types of investments and how they work
- Educate about the many security scams, such as the pump-and-dump and the reversed pump and dump.
Keep in mind that some exchanges will not require you to provide personal information. Binance and Bitmex, for example, don’t have KYC requirements. So you just need to fund your account with a bank account or PayPal, and you’re ready to trade. No age requirements.