With the rise of financial technology and innovation, there are now several apps that provide opportunities for minors under 18 to get started with investing. By enabling fractional share purchases and automated investing, these apps allow teens to begin building their portfolios and gaining valuable investing experience early on. While most traditional brokers require account holders to be legal adults, new fintech apps are breaking down this barrier through innovative approaches tailored to young investors’ needs. When used responsibly under parental guidance, these apps can set up underage investors for future success by teaching core concepts like risk management, compound growth, and portfolio diversification. However, proper research is still required to find apps that suit one’s goals and risk appetite. This article explores some of the top apps that let minors invest under 18.
Fractional share investing opens the doors for young investors
One of the biggest obstacles for teenage investors has traditionally been the high share prices of many popular stocks. For instance, purchasing a single share of Amazon currently costs over $100. By enabling fractional share purchases, apps like Stash allow minors to invest in expensive stocks like Amazon and Apple for as little as $1. This makes it feasible for those with limited capital to still create a diversified portfolio. Apps like Stash, Acorns, Invstr, and many others now offer this fractional share capability. Fractional shares have the same upside and downside potential as full shares, providing true equity exposure. While trading fractional shares comes with additional fees, the flexibility and accessibility they provide make these apps ideal for minors just starting out.
Automated investing takes the guesswork out of building a portfolio
Actively picking stocks can be intimidating for novice teen investors. Robo-advisor apps such as Acorns and Invstr simplify the portfolio construction process through automated, algorithm-driven investing. After assessing an investor’s risk tolerance, time horizon, and goals, the app recommends a suitable portfolio allocation across stocks, bonds, and other assets. It then handles all the buying, selling, and rebalancing automatically, allowing hands-off investing optimized to one’s needs. This takes the guesswork out of deciding what and when to trade. The set-it-and-forget-it approach also enables dollar-cost averaging for steady portfolio growth over time. Automated portfolios provide an easy entry point for teen investors to start putting their money to work.
Educational tools and resources help develop investing skills
Beyond just facilitating trades, many of these apps also aim to educate young users on investing essentials. For example, Invstr offers a virtual trading environment where minors can practice buying and selling stocks with virtual money before putting real money on the line. This allows teen investors to gain experience reading charts, identifying trends, and navigating market volatility without risk. Other apps like Greenlight provide guidance on core concepts like dollar cost averaging, dividends, and understanding company fundamentals. By supplementing the investing experience with learning, these apps help minors build skills and knowledge that will enable long-term success. However, supervision is still advised to ensure proper understanding of risks like losses.
Start small and invest responsibly with parental oversight
While these apps provide an accessible starting point, minors should still begin cautiously with small amounts they can afford to lose. It is important to learn good practices like avoiding emotional decisions, focusing on long-term growth, and managing losses. Parents should provide oversight to ensure responsible investing habits are built. With the right diligent approach under guidance, using these apps to start investing early can give teens a head start on the path to financial security and independence down the line.
In summary, innovative fintech apps are empowering the next generation of investors by allowing teens under 18 to start building their portfolios. Features like fractional shares, automated investing, and educational tools are tailored to minors’ needs for accessible, responsible investing. While adult supervision is still essential, with the right guidance these apps can equip young investors with fundamental skills that will benefit them immensely in the future.