How to help your teen start to invest

Can teens invest in the stock market?

Legally, most countries require a person to be at least 18 years old to enter a brokerage agreement and manage an account in their own name, although exact ages and conditions vary by country.

However, that doesn’t mean teens are locked out of the market. In many countries, the law allows adults (most often parents or guardians) to open and manage accounts on their behalf. The assets belong to the teen, but an adult manages them until the local age of majority (commonly 18 or 21, depending on the country and account type).

Opening an account for a teenager usually requires standard identity checks for both the parent and the child, in accordance with local regulations. The process typically involves identification for both the adult and the teen, proof of address, and source-of-funds information.

Additionally, there’s a growing number of learning platforms and apps designed for younger users. These let teens follow real market prices, create virtual portfolios, and understand how investments behave without risking real money. While these tools don’t replace real investing, they can build the knowledge and confidence needed once a real account becomes possible.

Investing accounts for teens

Since teens can’t yet open a brokerage account on their own in most countries, investing must be supervised by an adult. That’s where different account structures come in. Each one defines who controls the investments, how taxes are handled, and when the teen gains full ownership.

Depending on the country, common account options families can consider when starting to invest for a teen include:

Youth or junior investment accounts

These accounts allow a parent or guardian to manage investments on behalf of a minor until they reach the age of legal adulthood under local laws. The assets belong to the teen, but the adult handles all transactions, taxes, and withdrawals. Once the child turns 18 or 21 (depending on the country), full ownership is automatically transferred. Where available, these accounts are often flexible because they allow investments in stocks, ETFs, mutual funds, and bonds (subject to provider and local restrictions).

Tax-advantaged retirement accounts for minors

If a teen has earned income from part-time work or freelance jobs (pocket money, gifts and most investment income don’t qualify), families can open a retirement account in the teen’s name. For example, in the UK, a Junior SIPP allows contributions from parents or guardians within annual allowances. Contributions are made with after-tax money, but growth and qualifying withdrawals can be tax-free, subject to local rules. Similar retirement options for minors exist in other European countries, though they remain less common than standard youth investment accounts. Availability, allowances, and tax treatment vary by country.

Education-focused accounts

Some families invest with a clear academic goal in mind. In some countries, education-focused accounts offer tax advantages when the funds are used for approved educational expenses. They help parents and teens plan for tuition, housing, and other study-related expenses, but withdrawals for non-educational purposes typically incur penalties. Check local eligibility and limits.

Joint or parent-managed accounts

In some countries, families can open a shared or parent-managed investment account. The parent retains legal control, but the teen can follow performance, suggest trades, or take limited action under supervision. These accounts are often used for educational purposes, providing young people with hands-on experience while maintaining adult oversight. Availability and permissions differ widely by country and broker.

How parents can start investing for their teenagers

Once the right account is in place, the next step is turning it into a learning experience that also builds real wealth. The process doesn’t need to be complicated.

Here’s how families can approach it:

Set a goal and a timeline

Every investment should serve a purpose. Define what the money is for: future studies, long-term savings, or simply understanding how markets work. Your goal determines the acceptable level of risk and how long the money should remain in the market.

Create a plan together

Discuss how much can be saved, how often contributions will be made, and what level of involvement the teenager wants in the process. Planning this with your child keeps expectations clear and builds accountability.

Choose diversified starting investments

Consider beginning with broad-market index funds or ETFs that cover a wide range of companies. They’re simple to understand, affordable to hold, and help balance risk automatically. Adding a few individual stocks that the teenager is familiar with or follows can make learning even more engaging.

Automate your deposits

Regular investing matters more than perfect timing. For example, setting up small, automatic deposits every month can help your money grow steadily and remove emotion from the decision-making process.

Review your progress

Schedule check-ins a few times a year to assess how the portfolio is performing, without reacting to every short-term move. Use these moments to explain why prices move, how dividends work, and what compounding means in practice. The goal isn’t to chase quick gains but to build discipline.

Investing for a teenager is most effective when the focus remains on education and habit formation. Over time, these habits can serve as a foundation for more confident and independent investing in adulthood.

What to invest in for teens under 18

Choosing where to invest is the part that most teens find most interesting. Their goal should be to stay diversified and straightforward rather than chase excitement.

Three common investment types that can suit learning and diversification include:

Broad-market index funds and ETFs

These funds track entire markets, such as major equity indices, by holding hundreds of companies simultaneously. They’re a simple, low-cost way to get broad exposure to markets, but values can fall as well as rise and returns are not guaranteed. For most beginners, though, they’re the easiest way to benefit from long-term market growth without needing to research individual stocks.

Individual company shares

Buying a few well-known companies can make investing more personal and meaningful. Teens can follow brands they use or admire and learn how business performance affects stock prices. The portion allocated to single stocks should remain small relative to diversified funds, keeping potential losses manageable while maintaining learning value.

Cash and short-term bonds

When certain goals are approaching, like buying a laptop or funding a summer programme, it makes more sense to keep part of the savings in safer assets. Cash, money market funds, or short-term government bonds aim to preserve capital and can provide a smoother experience in case of a market downturn.

Risk controls for teen investors

Every investor faces risk, but for teens, the lesson lies in learning how to manage it. Families can reduce unnecessary exposure and build healthy habits through these practical safeguards:

Diversify properly

Holding a mix of broad funds and a few individual stocks limits the damage if one company performs poorly. Diversification doesn’t remove risk entirely, but it helps the portfolio recover more steadily after market drops.

Avoid leverage and risky products

Borrowing money to invest or using complex instruments such as options can magnify both gains and losses. Teen accounts should stay within cash-funded, straightforward products. The goal is to learn about consistency, not to test your luck.

Limit concentration and trading

Placing too much in a single stock or trading too frequently can turn investing into speculation. As a simple guardrail, avoid putting more than, say, 5–10% of your portfolio in any single share. Maintaining balanced allocations encourages patience and discourages emotional reactions to price fluctuations.

Set rules for volatility

Markets fluctuate daily. Agreeing on review intervals, such as checking the portfolio only once a month, prevents impulsive selling and reinforces long-term discipline.

Use regulated platforms

Not all trading apps are legitimate. Families should verify that the chosen broker or app is authorised by a recognised regulator (for example, the UK’s FCA, Australia’s ASIC, the US SEC/FINRA, and Singapore’s MAS), noting that protections and compensation schemes vary by country and product.

Keep supervision and data security tight

Parents should monitor account access and ensure the use of strong passwords, two-factor authentication, and safe data practices. This type of oversight teaches responsibility while reducing exposure to online fraud or misuse.

Good investing habits for teens

Strong habits make early investing last. The following behaviours can teach your child structure, protect against emotional mistakes, and keep the learning experience active:

• Reinvesting earnings. Using dividends and interest to purchase additional shares demonstrates how growth builds upon itself. It’s the most direct way to understand compounding without needing extra money.
• Staying curious but sceptical. It’s essential that they research companies and markets, but they should also critically evaluate every source. Independent thinking builds better judgment than following tips or trends.
• Ignoring hype and short-term noise. Market chatter distracts more than it helps. Staying focused on long-term goals helps prevent impulsive decisions when prices move sharply.
• Using setbacks as lessons. Losses test our discipline more than success does. Analysing the reasons behind them, such as poor timing, lack of diversification, or overconfidence, builds emotional control for the future.
• Learning through safe practice. Fractional shares can help teens start small with real money, while demo accounts allow them to test ideas without risking actual money. Both make learning practical and controlled.

Good investing habits give young investors a framework they can trust. When decisions follow clear rules rather than emotions, outcomes may be more consistent over time, but returns are never guaranteed.

Conclusion: Starting with guidance, growing with discipline

Teenagers don’t need to master markets to start learning to invest. They need someone to show them how consistency works: how saving a little, watching it grow, and waiting through quiet periods builds trust in the process.

Parents play the central role. Helping a teen invest within clear limits and explaining what happens along the way teaches lessons that will last a lifetime. Mistakes made now are small, but the experience gained can shape better choices for the future.