It’s never too early to start investing for your kids and teaching them the concept of setting aside money for a goal. The more time you have in the market, the more your money can grow.
Below, CNBC Select breaks down the best investment accounts for kids, not including savings vehicles like certificates of deposit (CDs) or high-yield savings accounts. When it comes to choosing the right investment account, deciding first on what your goal is for your kid — investing for a college education or investing for their retirement years — can steer you in the right direction. (See our methodology for more information on how we made this list.)
Best investment accounts for kids
- Teen-owned brokerage account
- 529 college savings plan
- Coverdell education savings account
- Custodial Roth IRA
- UGMA or UTMA custodial accounts
1. Teen-owned brokerage account
Who’s this for? Brokerages have investment accounts exclusively for minors, which are ideal for parents who want their older kids to learn more actively about investing. Just note that a brokerage account in a minor’s name is considered a student asset when it comes to eligibility for federal financial aid for college, which carries a heavier weight than parental assets.
Standout benefits: Teen-owned brokerage accounts are a good way to have kids learn about money hands-on while keeping an eye on their activity. For example, with the Fidelity Youth® Account, an investment account for teens 13 to 17, the teenager controls the account but parents first open it and can monitor activity, transactions and trades. There are no minimums required and no account fees, and teens can invest in most U.S. stocks, some ETFs and mutual funds.