Charles Schwab is giving teens the chance to gain real-world investing experience.
With a Schwab Teen Investor Account, teens ages 13 to 17 can open a joint brokerage account with a parent and start investing.
The Schwab account isn’t the first investment account for teens; the Fidelity Youth Account, launched in 2021, also lets teens begin investing while their parents monitor account activity. Schwab’s account is a joint account with the parents, who will have full access to help manage it.
A recent survey from Schwab showed that 70% of teens are “very” or “extremely” interested in investing. That echoes Fidelity’s Teens and Money Study from 2023, which found that 75% of teens said investing was important to them, even if only 23% had already started investing.
“We want to help young investors build good habits and set them up for a lifetime of informed decisions and meaningful outcomes,” said Jonathan Craig, head of investor services at Charles Schwab, in a post announcing the account’s launch.
Here are seven things teens and their parents should know about using the Teen Investor Account before getting started:
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Education is a big part of Schwab’s Teen Investor Account from the start. Once a teen signs up for the account, they’ll get rewarded for taking Schwab’s Quick Start to Stock Investing course within the first 45 days.
After completing the course, teens will receive $50 invested across the top five stocks in the S&P 500. Schwab will invest $10 in fractional shares across each of the top five stocks at that time.
The account bonus offers a monetary incentive to help teens learn the basics of investing, but there are additional educational opportunities as they use the account.
Teens will get access to an education series focused on four themes after opening the account: Personal finance essentials, Investing 101, How to invest in stocks, and How to trade at Schwab. From there, they can continue learning through access to Schwab’s education hub, featuring videos and articles for investing beginners.
“It’s an incredibly exciting time to be a new investor as there has never been greater access to markets, information, product choices, and tools,” Craig said. “But greater access also brings greater complexity and the need to provide resources and education to help investors of all ages sort through it all and make investing decisions based on their goals.”
Since the Teen Investor Account is a joint brokerage account for both teens and parents, parents are encouraged to get involved in their kids’ investing journeys. And according to a recent Schwab survey, that’s what both teens and their parents are looking for.
Not only do 91% of parents want to help their kids invest, with 73% believing it’s “very important” for teens to learn about investing, but 87% of teens also want their parents involved in helping them invest. They even say they trust their parents more than other sources of guidance.
Parents get involved from the beginning by starting the account application process. After the account is open, teens can manage their money and investments themselves, but parents have full visibility into account activity at all times. Both parents and teens can add or withdraw funds from the account.
Parents can also choose to open a debit card when they sign up, which is connected to the teen’s account. Teens can use the card to access any cash held in the account. While there’s no minimum to open the account, Schwab won’t issue the debit card until a $100 funding requirement is met.
Parents can set up alerts for spending, and must be the ones to open or close the debit card account.
There are plenty of investment options for teens to choose from once their account is set up and funded. There’s no minimum balance requirement to start investing, and no minimum trade requirements. There are also no account maintenance fees.
Available investments include exchange-traded funds (ETFs), mutual funds, fixed-income products (such as U.S. Treasury Bills and bonds), and fractional shares. Teens can also choose from Schwab Investing Themes, which offer curated investments in specific sectors, like cybersecurity or AI.
Some investment types are restricted within the account. Those include margin trading, options trading, trading on unsettled funds, FOREX, alternative investments, and more. Teens won’t have access to individual cryptocurrencies through the account — though they may invest in exchange-traded products (ETPs) that are tied to cryptocurrency prices.
While the account does limit some of these riskier investment options, it’s still important for teens (and parents) to understand the risks of investing. Investments aren’t FDIC-insured the way that bank accounts are, for example. You can lose money on your investments, and markets are volatile.
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There is some flexibility in what parents and teens choose to do with the account in adulthood.
After they turn 18, teens can either continue using the account (up to age 21) or transfer their assets to a regular individual brokerage account.
If teens and parents want to continue sharing access, they may choose to keep the teen’s account open longer. Another option is opening a new joint brokerage account.
Otherwise, older teens may take the investing principles they’ve learned and open their own individual brokerage accounts. If the new account is opened in their name, parents may not have ownership or access like they would with the teen account.
Schwab’s joint brokerage account, along with Fidelity’s teen-owned brokerage account, both offer options for teens to invest and get a financial education with assistance from parents.
But they’re not the only way teens can start learning and practicing good money habits. Here are a few more alternatives for parents and teens to consider today:
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Custodial account: Unlike a teen investment account, a custodial account (UGMA or UTMA) is fully set up and managed by a parent or guardian. Parents can contribute to and manage the account before their child receives access, usually at age 18 or older.
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Roth IRA: Roth IRAs are popular options for tax-advantaged retirement savings — and they’re even available for kids. Parents can open custodial Roth IRAs for their children who earn income (which could range from a regular babysitting gig to a part-time summer job) and manage the account until their child reaches adulthood.
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High-yield savings account: A high-yield savings account doesn’t offer investment opportunities, but it can help teens save for the future. Today, the best high-yield savings accounts earn upwards of 4% APY. Plus, savings are insured by the FDIC, so there’s no risk of losing the money.