I’m interested in setting up a small account for my kids -- ages 11 and 13 -- where they would learn about investing in stocks, bonds and mutual funds by actually trading. Where should we go to get started?
Opening a custodial account with a brokerage firm is a great way to teach your kids about investing. You can make investing decisions together, and money in the account may be used for anything that benefits your children until they reach the age of majority (21 in most states, 18 in a few) and they take control of the account themselves. A custodial account also gives you access to the brokerage firm’s research, which can be a good way for you and your kids to learn about stocks.
If you already have a brokerage account, ask your firm about the minimums and fees for a custodial account. Having both accounts at one firm will make record-keeping easier and could give you a break on some account expenses.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Several firms make it easy to set up a custodial account, even if you aren’t already a customer. For example, TD Ameritrade offers custodial accounts with no fees or minimum investments; you’ll pay $9.99 for each online stock trade, and $0 for 101 exchange-traded funds and no-transaction-fee mutual funds.
Charles Schwab has a $100 minimum to open a custodial account, then charges its standard fees for trades: $8.95 for each online stock trade, and $0 for Schwab ETFs and OneSource funds.
Scottrade has a $500 minimum initial investment and no account fees; online trades are $7 each, or $0 for no-transaction-fee mutual funds.
Many parents like ING Direct’s Sharebuilder program. There’s no minimum and no maintenance fees, and if you sign up for regular monthly investments through the automatic investment plan, you’ll pay $4 per trade.
Custodial accounts for children younger than 19, and full-time students younger than 24, are generally subject to the kiddie-tax rules: The first $950 of the child’s investment income is tax-free; the next $950 is taxed at the child’s own, low rate. Any investment income that tops $1,900 is taxed at the parents’ higher rate.
-
Stock Market Today: Dow Dives 1,123 Points After FedMarket participants reacted predictably to a well-telegraphed hawkish turn by the Federal Reserve.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are SayingFederal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
How Direct Indexing Could Work for YouTax efficiency is the primary goal for many new direct indexing offerings, but they come with a lot of caveats.
-
The Advantages of Brokered CDsBrokered CDs are certificates of deposit sold by brokerage firms that typically offer higher yields. But they don't come without some risk.
-
Creating a Values-Based Financial Planpersonal finance More savers and spenders are thinking big picture when it comes to their financial decisions.
-
How to Invest $1,000: Open a Robo advisor AccountSmart Buying It's easier than ever to access low-cost, automated investing advice.
-
How to Invest $1,000: Buy Fractional Shares (of Great Companies)Smart Buying If a single share of a pricey stock seems out of reach, programs from Schwab, Fidelity and Robinhood can get you access to just a slice.
-
Best Online Brokers and Trading Platformsonline brokers Find the best online brokers using our survey that compares investment offerings, tools, apps, advice and more.
-
What’s All the Fuss About Direct Indexing?investing Investors who want control over which stocks they own are looking at direct investing. It comes with some distinct advantages, but it’s not for everyone. Here’s what to consider if you’re curious.
-
Stock Market Today: Stocks Struggle, But Energy Keeps Charging AheadStock Market Today Mixed bank earnings and rising Treasury yields muted most sectors Monday, but energy continued its market-leading ways.
