Can a 14 year old invest? A practical guide for parents and teens
Use this as a practical, plain-language guide. It is aimed at parents, guardians, and teens who want an accurate starting point and a clear checklist. Where relevant, the article points to regulator pages and educator resources you should review before opening any account.
Quick answer: can a 14 year old invest?
Short explanation, how to start investing as a teenager
Short answer: yes, a 14 year old can invest, but not in the same legal way an adult does. In the U.S., minors generally cannot open a standard individual brokerage account and need a custodial option such as UGMA or UTMA, or, if they have qualifying earned income, a custodial Roth IRA; investor-education resources explain these pathways in practical detail Investor.gov custodial account guide.
That means a parent or guardian typically opens and manages the account on behalf of the child until state law says the child reaches the age of control, and IRS rules determine whether a custodial Roth IRA is available based on earned income IRS IRA contribution guidance.
Quick summary you can scan:
- Minors, including 14 year olds, use custodial accounts (UGMA/UTMA) for brokerage-style investing.
- A custodial Roth IRA is an option only when the teen has qualifying earned income and follows standard IRA contribution limits.
- Custodial accounts are controlled by the custodian until transfer age set by state law.
Read on for step-by-step instructions, tax basics, and a short checklist to go from learning to opening an account.
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If you want clear next steps, read the step-by-step sections below that explain account choices, paperwork, and simple starter investments so you and your teen can decide what to do next.
How custodial accounts work for minors
Custodian role and legal ownership
Custodial accounts under UGMA or UTMA are common ways to hold investments for minors; a custodian manages the assets while legal ownership is held for the child until state-defined majority age, so the account cannot be treated like the child’s standalone adult account FINRA overview of custodial accounts.
The custodian has a fiduciary duty to manage the assets for the benefit of the child and typically makes investment decisions, though many parents involve teens in choices as a learning exercise Cornell Law summary of UGMA and UTMA.
A 14 year old cannot open a standard individual brokerage account alone; they typically invest through a custodial account (UGMA or UTMA) opened and managed by a custodian, or a custodial Roth IRA when the teen has qualifying earned income. Families should check state age rules and IRS guidance before opening accounts.
How and when control transfers to the child
Control of custodial accounts passes to the child when they reach the age of majority as defined by state law; that age varies by state and commonly falls between 18 and 21, so families should confirm the rule that applies where they live before planning long-term use of the account Cornell Law summary of UGMA and UTMA.
Because control eventually transfers, parents should treat money in the account as the child’s asset, and consider how that ownership affects future decisions, such as college financial aid or early access to funds FINRA custodial account guidance.
Common question: when can a teen open a Roth IRA?
Earned income requirement
A teen can contribute to a Roth IRA only if they have qualifying earned income for the year; unpaid allowances or gift money do not count as earned income for IRA purposes, and the IRS requires documentation that the contributions do not exceed the teen’s earned income IRS IRA contribution guidance.
Typical qualifying sources include wages from part-time jobs and some types of self-employment income, but families should verify what counts for their situation and keep records the broker or tax preparer may ask for IRS IRA contribution guidance.
Contribution limits and documentation
Contributions to a custodial Roth IRA are subject to the normal annual IRA limits and cannot exceed the teen’s earned income for the year; brokers will usually ask for the teen’s Social Security number and proof of income when opening and funding the account IRS IRA contribution guidance.
Because rules and documentation needs can vary, parents should confirm broker requirements and retain pay stubs or simple ledgers for self-employment income so contributions are properly supported for tax purposes Investor.gov custodial account guide.
Legal and tax basics parents should know
Who legally owns the assets
Assets in a UGMA or UTMA are the legal property of the child, even though the custodian controls them until transfer age; that legal ownership matters for taxes and for how families plan to use the funds later FINRA custodial account overview.
Key tax issues to check
Investment earnings in custodial accounts can create tax obligations for the child, and significant investment income may be subject to the kiddie tax rules, so parents should track taxable events and consult IRS guidance when preparing tax filings IRS IRA and child tax guidance.
Keep records of transactions, dividends, and capital gains and check filing thresholds and the kiddie tax rules before deciding how hands-on to be with trading or withdrawals IRS IRA contribution guidance.
How to choose the right account: a simple decision framework
Decision factors to weigh
When choosing between a custodial brokerage account and a custodial Roth IRA, weigh these factors: whether the teen has earned income, the investment time horizon, tax consequences, state age-of-control rules, and how comfortable the custodian is with eventual transfer of control FINRA custodial account guidance.
If the teen has earned income and the goal is retirement savings, a custodial Roth IRA can be an efficient long-term choice; if the goal is flexible access or saving for near-term education expenses, a custodial brokerage account may be more appropriate IRS IRA contribution guidance.
Compare custodial brokerage versus custodial Roth IRA features and fit for your teen
Use this to guide a short family discussion
Quick checklist for parents and teens
Simple checklist items to run before opening an account: verify earned income eligibility, confirm your state age-of-control rule, review broker account requirements and fees, decide a time horizon, and agree on who will make investment decisions Investor.gov custodial account guide.
Keep the checklist brief, store supporting documents like pay stubs, and revisit the choices periodically as the teen’s goals and income change FINRA guidance on custodial accounts.
Step-by-step: opening and funding a custodial account
Documents and verification
You will likely need the child’s Social Security number, the custodian’s ID, and in the case of an IRA, proof of earned income; brokers vary in verification steps, so check the broker checklist before you start the application Investor.gov custodial account guide.
For a custodial Roth IRA, keep copies of pay stubs or a simple ledger if the teen did self-employed work and be prepared to show that contributions do not exceed earned income for the tax year IRS IRA contribution guidance.
Funding methods and gifting rules
Common funding methods include parental transfers, gifts from relatives, and payroll or employer deposits for earned income; gifts are typical for brokerage custodial accounts, while IRA contributions must come from the teen’s earned income Investor.gov custodial account guide.
Track large gifts for tax or reporting reasons and avoid treating gift money as earned income when considering Roth IRA contributions IRS IRA contribution guidance.
Choosing investments: simple starter options for teens
Why low-cost diversified funds are recommended
Education-focused investing guidance often favors low-cost, diversified ETFs or index funds for beginners because they reduce single-stock risk, keep fees low, and are easy to manage with a long-term approach Investor.gov guidance on simple investing, and if you prefer smaller platforms, see our roundup of best micro-investment apps for beginners T. Rowe Price parents and kids survey.
These options fit well when the goal is learning and steady growth, since frequent trading tends to increase costs and complexity without clear benefits for new investors T. Rowe Price parents and kids survey.
Sample fund types to consider
Beginner-friendly categories include broad total-market or S&P-style index funds, target-date funds for hands-off allocation, and broadly diversified ETFs; these categories focus on diversification rather than trying to pick winners Investor.gov investing basics.
Keep the approach simple: pick one or two diversified funds, set a regular contribution plan if possible, and review allocations periodically rather than trading frequently T. Rowe Price survey on youth investing trends.
How to talk to your teen about risk, time horizon, and goals
Age-appropriate conversations
Explain that young investors often have a long time horizon, which can allow a higher allocation to equities for growth, while short-term needs call for more conservative choices; use simple examples to show how volatility can affect account value over months versus years CFPB resources on teaching kids about money.
Use small, real examples to show how regular saving and compound growth work over time, and keep explanations tangible rather than technical to build confidence CFPB teaching resources.
Using saving and investing as learning tools
Treat early investing as part classroom, part practical lab: let teens track performance, read simple statements, and make small allocation decisions while adults guide larger choices and tax matters T. Rowe Price survey on parent involvement.
Encourage habits like regular reviews and keeping a short log of why a decision was made so the learning sticks, and emphasize that outcomes vary and depend on market conditions and time horizon.
Common mistakes parents and teens make
Overtrading and chasing returns
A frequent mistake is treating a custodial account like a trading account and reacting to short-term moves; education sources recommend a buy-and-hold mindset and low-cost diversified funds to reduce fees and errors Investor.gov guidance.
Set simple rules such as limiting trades and reviewing allocations only on a set schedule to help avoid emotional decisions that increase costs.
Ignoring fees, taxes, and state rules
Another common trap is overlooking broker fees, sales charges, and state age-of-control rules; these factors affect long-term outcomes and how and when control shifts to the teen, so check disclosures and state guidance before acting FINRA custodial account guidance.
Keep records for tax reporting, track gifts separately from earned income, and consult primary sources for specific questions rather than relying only on general tips IRS guidance on IRAs and reporting.
Practical scenarios: three example paths a 14 year old might take
Scenario A: no earned income, saving gifts
In this scenario a teen uses a custodial brokerage account funded by gifts or parental transfers; the custodian opens the account, chooses low-cost diversified funds, and keeps a record of gifts for family tracking Investor.gov custodial account guide.
Because there is no earned income, Roth IRA contributions are not an option until the teen earns qualifying income in a later year IRS IRA contribution guidance.
Scenario B: part-time job and custodial Roth IRA
When a teen earns wages from a part-time job, those wages can make the teen eligible for Roth IRA contributions up to the amount of earned income, and the family should keep pay stubs or simple records to support the contribution amount IRS IRA guidance, and consider part-time opportunities like best summer jobs for teenagers to build qualifying income.
This path emphasizes retirement saving early, using tax-advantaged rules while teaching the teen about long-term compounding and contribution limits.
Scenario C: parent-managed custodial brokerage for long-term learning
Here the parent acts as custodian and uses the account primarily as a teaching tool, making small regular contributions and reviewing diversified fund performance with the teen to build financial literacy over years T. Rowe Price survey on family investing habits.
That approach balances learning, record keeping, and gradual transfer of responsibility as the teen nears the state-defined age of control.
Sample starter allocations for teen investors
Conservative example
Conservative example, for teens with short term spending goals: 40 percent equities, 60 percent fixed income or cash equivalents; this is educational and not a promise, and families should adjust by goals and risk tolerance Investor.gov investing basics.
Balanced example
Balanced example, for a mix of growth and stability: 60 percent equities, 40 percent bonds or diversified fixed income; use low-cost diversified funds for each component to keep fees down T. Rowe Price survey.
Aggressive example
Aggressive example, for long-horizon growth and learning: 80 to 90 percent equities and the remainder in bonds; this shows how time horizon affects allocation but depends on each teen’s comfort with volatility Investor.gov guidance.
Next steps checklist and timeline for parents and teens
Immediate steps (week 1)
Week 1 actions: confirm whether the teen has earned income, decide on custodial brokerage versus custodial Roth IRA, gather IDs and Social Security numbers, and review broker account requirements and fees Investor.gov custodial account page.
Open the account with the chosen broker once documents are ready and fund a starter investment into one or two diversified, low-cost funds so the teen can begin tracking performance.
First 6 months and review points
Over the first six months set a review cadence, check if contributions match the plan, review fees and confirmations, and adjust contributions or allocations only after a reasoned discussion rather than reacting to short-term market moves FINRA custodial account guidance.
Keep records for gifts and earned income, and set a calendar reminder to revisit the plan annually or when major life changes occur.
Resources, regulator pages, and further reading
Key regulator links to check
Before acting, save and read these pages: the SEC/Investor.gov page on custodial accounts, FINRA’s overview of custodial accounts, IRS guidance on IRA contributions and earned income rules, and CFPB resources for teaching teens about money Investor.gov custodial account guide.
Also check broker disclosures and your state’s legal guidance on UGMA and UTMA to confirm the age at which control transfers to the child Cornell Law UGMA UTMA explanation.
Teaching resources for parents and educators
CFPB materials and similar educator-focused pages offer lesson ideas and simple exercises to teach budgeting, saving, and the basics of investing as part of regular family conversations CFPB teaching resources, and see our guide to financial education for children for practical lesson ideas.
Closing summary: safe, simple next moves
Key takeaways
Minors, including a 14 year old, typically invest through custodial accounts such as UGMA or UTMA, and may use a custodial Roth IRA only if they have qualifying earned income, so check state rules and IRS guidance before starting FINRA custodial account overview.
For most families, the safest early steps are to verify earned income eligibility, pick low-cost diversified funds, keep clear records, and treat the account as a learning tool rather than a speculative playground Investor.gov guidance.
Where to double-check details
Double-check broker account terms, fee schedules, the relevant IRS pages on IRA contributions, and your state’s UGMA or UTMA rules before opening and funding accounts IRS IRA contribution guidance.
Appendix: checklist and quick glossary
One-page checklist to copy
Checklist: confirm earned income, choose account type, gather IDs and Social Security numbers, open account, fund initial investment, set contribution plan, and schedule reviews; store pay stubs and gift records for tax purposes Investor.gov custodial account guide.
Glossary of key terms
UGMA and UTMA: custodial account laws that let adults hold assets for minors until state-defined majority age Cornell Law UGMA UTMA explanation.
Custodial Roth IRA: a Roth IRA opened for a minor who has qualifying earned income and subject to normal IRA contribution limits IRS IRA contribution guidance.
Kiddie tax: tax rules that can affect investment income of children under certain thresholds and circumstances, so track earnings and consult IRS guidance IRS guidance on reporting.
No. In the U.S. a 14 year old cannot open a standard individual brokerage account; they typically invest through a custodial account (UGMA or UTMA) opened and managed by an adult custodian.
Yes, but only if the teen has qualifying earned income for the year and contributions do not exceed their earned income; keep pay stubs or records to document eligibility.
Possibly. Custodial account assets are legally the child’s and can affect financial planning. Investment income can create tax reporting needs and may be subject to kiddie tax rules, so track earnings and consult primary sources.
FinancePolice is an educational resource to help you compare options and understand decision factors; verify account features and legal rules with brokers and official sources before acting.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.