How Old Do You Have to be to Buy Stocks?

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Contributor, Benzinga
April 5, 2021

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You have to be 18-years-old to buy stocks on your own. You can invest as a minor if your parent or another guardian opens a custodial account with you.

Investing is risk-fraught and it is not for the faint-hearted. Those of you, who wish to take a plunge into the stock market for the lure of disproportionate profits might also have to brace for losing out big time if your bets go haywire.

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Investing requires time, learning, which can be best done through experience, and self-evaluation of your risk and return predisposition.

What is Investing?

Investopedia defines investment as an act of committing capital and time to a business, project, real estate, etc. in a bid to make a profit. Simply put, it is ploughing in money in anticipation of future returns. Since investment involves two scarce and costlier inputs, namely time and money, it should be done judiciously, wisely and with utmost care.  

So, what is the right age when one can start investing? We set out to explore.

How Old Do You Have to be to Invest in Stocks?

18 is the minimum age set by most brokers for opening an account with them. This is because 18 is when a person can legally enter into a contract on his own. Some states have a mandatory minimum age of 21 for letting someone invest in stocks. 

These are the states that have an over-18-years minimum requirement for investing:

  • Alabama, Delaware, Nebraska – 19 years
  • Mississippi – 21 years

How to Buy Stocks

If you're ready to build out your portfolio, our step-by-step guide will help you begin investing.

Step 1: Check the age requirement

Children who are below 18 can have their tryst with Wall Street, but not without handholding. They can work in sync with their parents or their trusted guardians or elders to gain experience in investing.

This is called passive investing, where parents or elders buy stocks in the name of their minor wards.

Legally, even minor children can own stocks, either bequeathed to them through a will or as a gift. However, trading in stocks can be done by the setting up of a ‘Uniform Transfers to Minors Act’ or ‘Uniform Gifts to Minors Act account,’ depending on the state of your domicile. The account owner is an adult, but he is operating the account on behalf of the minor.

Once the child attains the mandatory minimum age, the custodian can be removed from the account and the former now becomes the sole owner of the account.

Children below the eligible minimum age can have something called either the guardian account or custodial account, which allow holding stocks in the name of minor but the account is operated by the minor’s designated guardian, who can either be his/her parent or a legal guardian.

Step 2: Select an online broker

A young investor would do well if he scouts around for a no-frills online broker, which will not charge outrageous commissions. Those brokers having no minimum investment, no minimum account balance and no activity fees could be a better bet, as fledglings aren’t expected to have a huge investable surplus.

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Step 3: Research potential companies

Next it's time to look into the companies you want to invest in. Begin with a company's annual report. Take a look at the annual letter to shareholders. This will give you an idea of what is happening within the company and help you understand the numbers in the annual report.

Follow up with some research through your broker's site. Use the analytical tools to evaluate each potential company. You can also look into SEC filings, quarterly earnings updates and the recent news. Take a look at your broker's education options to see if anything is offered to help you learn to pick stock. You'll likely find a free webinar or on-demand video available.

Step 4: Buy stock

Start small when you purchase stock for the 1st time. You can purchase just a single share and add more over time.

You may also want to look into fractional shares. This allows you to buy a portion of stock, which can be a good option if you're looking at more expensive, well-known stock.

Buy Stock Today

You can invest in stock as soon as you have some extra cash to spare. You don't need to wait until you're middle aged to buy stock. Review our top online brokers to get started in the stock market now.

Frequently Asked Questions

Q
How old do you have to be to start buying stock?
A

You can buy stock at any age. If you’re under 18, you must do so through a custodial account set up with a guardian. After the age of 18, you can open an account and start buying stock on your own.

Q
Can I buy 1 share of stock?
A

Many brokerages, such as Robinhood, TD Ameritrade and Webull, allow you to buy 1 share or fractional shares.

Q
Where can I learn more about the basics of trading and investing?
A

Benzinga is your 1-stop-shop for trading education. Start with our review of the best day trading courses. We’ve also got a list of the top stock trading schoolsonline stock trading courses you can start now and self-paced modules to teach you about forex.

Visit Benzinga daily to stay on top of all the latest market happenings. Or subscribe to Benzinga Pro to get faster stock market news and research.

Q
Aren’t online trading and investing the same thing?
A

No. Online investing requires you place orders online to buy and sell securities instead of directly with a broker by phone. Day trading is a trading strategy. You buys and sell the same security in a short period of time (often the same day) to profit from small movements in the price