With the rise of financial technology, investing has become more accessible than ever for minors under 18. Mobile apps provide an easy and convenient way for teenagers to get started in the stock market with little money. While investing as a minor has limitations, choosing user-friendly apps to invest small amounts can be a valuable learning experience. This article will explore top free apps for under 18s to invest in stocks and how to use them responsibly.
Use custodial accounts on leading investment apps
The best way for minors to invest is through custodial accounts on reputable investment apps and brokers. Apps like Stash, Acorns, and Robinhood offer streamlined custodial accounts with parental oversight. A parent or guardian controls the account and monitors activity, while the minor contributes funds and directs investments under guidance. Stash allows teens to invest with just $5 through fractional share investing. Meanwhile, Acorns automatically invests spare change from everyday purchases into diversified ETF portfolios. Robinhood offers commission-free trading of stocks and ETFs, while providing educational resources on investing.
Practice with virtual trading apps before using real money
For teenagers new to investing, using virtual trading apps is advisable before putting real money on the line. Apps like Invstr, marketwatch virtual stock exchange, and HowTheMarketWorks offer simulated trading platforms. Users can build virtual portfolios, track mock investments over time, and trade fictional money. This allows minors to learn investing basics, test strategies, and gain experience before taking on any risks. Virtual trading apps offer a consequence-free environment to make beginner mistakes while developing skills.
Start small with fractional shares and auto-investing features
The key for under 18s investing is to start small and take a long-term approach. Fractional shares offered by apps provide an affordable way to invest as little as $1 into top stocks like Apple or Amazon. Auto-investing features can also incrementally build portfolios over time with spare change or recurring deposits. By investing small amounts consistently into diversified ETFs, minors can steadily accumulate funds for future education or large purchases. Even modest recurring investments of $25 or $50 per month can stack up substantially in a Roth IRA after years of compound growth.
Use investment education resources to develop financial literacy
Investing apps aimed at teenagers often provide educational guides, videos, and other resources to develop financial literacy. By reading up on core concepts like compound interest, portfolio allocation, and investment risks, minors can make more informed decisions. Reputable apps promote responsible investing habits over speculation or trading solely for entertainment. Parents can also go through educational materials with teens to bond over investing and ensure proper understanding.
In summary, reputable investment apps provide under 18s a monitored gateway to the stock market. Minors should use virtual practice platforms first, then start small with fractional shares and auto-investing. Responsible use of apps to steadily build investment knowledge and experience can pay huge dividends down the road.