Stony Brook Securities is very happy to have our first guest blog post! The author Lynn is the 13 year old daughter of one of our consulting clients who is becoming interested in markets…hence the title and information in this post. We are glad to post articles like this to our users as we feel it will allow for more of a wide range of topics and opinions. Go Lynn!
When it comes to the question of how old do you have to be to buy stocks, it should be about your personal situation. In most states, you may not be able to buy stocks until the age of 18 while some states have even increased the legal age to 21. I disagree with the notion of age being a reason one cannot invest. The earlier one starts to invest, the more experience they will have and the more they will be able to invest for their future. Despite all the age challenges, it is possible that you can make a deposit into a custodial account ( this could be the account of a guardian or parent, who can place trades for you legally). The funds belong to the minor on the account and the custodian (manager) cannot use the funds for any expenses not for the minor on the account. The only caveat here is that the minor on the account is taxed at the level of the custodial (manager) until the minor is 25 years old.
Despite the challenges and odds against young people who often ask the question; how old do you have to be to buy stocks, it will be interesting to note that some of the world’s richest people started very early. Warren Buffet for instance, bought his first stock at the age of 11, hence it is up to you to decide when you want to buy your first stock at a young age. If you put your mind into it, you wouldn’t allow government restrictions to hold you down. You don’t have to be a great investor to invest in stock as long as you have the means and time to invest. I am a large believer in granting easy entry to the financial markets at any age to anyone who desires it.
How Old Do You Have to Be to Buy Stocks?
When it comes to the question of how old do you have to be to invest in stock, you should consider the numerous benefits you can derive from such. First, investing in stocks at an early stage can help you derive financial freedom. Second, it can complement your main income over the years that you are in the market. Fortunately, there are online platforms that can be used if you are serious about investing in stock. There are dozens of online brokerages who will allow for accounts to be set up in just a few minutes to begin investing that same day.
How old do you have to be to invest in stock?
If you ask anyone walking down the street or in your local Starbucks; how old do you have to be to invest in stock? He or she will tell you that age does not matter as long as you have few hundreds of dollars to spare. Age restrictions will keep most people out of the stock market who are under 18 but you don’t have to be one of them. It is true that the biggest obstacle aside from financial constraints to buying stocks is age The reason is that government and brokers do believe that most underage people are not wise enough to make certain financial decisions, most especially in securities and asset trading. I have an issue with this because the regulators have rules and restrictions specifically around individual investors which prevents them from having something like too much leverage. Technology and regulations have made it very hard for someone to lose all of their money.
How old do you have to be to trade stocks?
You probably want to know how old do you have to be to trade stocks, the answer is simple; you must be old enough to make financial decisions. Aside from the age issue, many young people are not legally allowed to trade stocks because of “liability exposure’ problem. Brokers don’t want to be responsible for any poor financial decisions made by individuals under the age of 18, even when you want to trade stocks online, brokers will verify that you are older than 18 or 21 (in some states) before a stock trading account is opened in your name. Again, this is where a custodial account comes into play.
What you can do
The question of how old to buy stocks should be a matter of personal issue. Even if you are below 18 and you are not legally entitled to invest in stock, you may want to consider a custodial account. A custodial account is the one that has all assets recorded in your own name, but the account must be administered by your parent or custodian. The only people allowed to place orders in this type of account must be 18 years or older.
Aside from liability and age, another obstacle you may want to consider when contemplating stock trading is that of risk. While investing for the future is a great thing and will help build financial freedom, all investing does come with some level of risk.
How old do you have to be to invest?
The question of how old do you have to be to invest should not be difficult to answer, especially with all the information provided in previous paragraphs. If you are below 18 and have a custodial account, you can do all of the investing you want through the admin of the account.
First, I want to thank Lynn for writing this. This is great. But the best part of this for me is the fact that she is engaged in the market.
She is a 13-year-old who would like to get her feet wet in markets. She did some research about age requirements in order to do this and has set up a custodial account with her parents. Truly remarkable.
The best part about this article from a 13-year-old is the fact that she is clearly engaged. Engagement in markets is far more important than any special type of trade or technical analysis (technical analysis doesn’t work anyway). Engagement in markets allows people to be more aware of what is going on. It allows them to grab more information from the markets day to day. Creating financial freedom through investing and trading cannot be done by showing up once a month, or putting your money in a low-cost index fund because “stocks always go up” (we know they don’t). It does require daily work and the more engaged one is in markets the better.
We agree with a lot of what Lynn said especially with the notion of barrier to entry. We absolutely hate the fact that government and regulators who have NEVER made a trade get to decide what we can and cannot do in markets. I argue that allowing anyone of any age to get involved in markets is a far more positive educational experience than attending a high school finance class surrounded by other students who sleep through the entire class. How could anyone not allow young kids to get real world exposure for something they actively want to do, especially someone who has ABSOLUTELY ZERO real work experience in doing it (government and regulators)?
Hats off to Lynn for figuring out for herself what it will take for her to become active in markets as well as having the confidence to put her writing out there for all of Stony Brook Securities’ readers. The more engaged she is from a younger age the sooner she will become successful. This should be a lesson for anyone reading this blog. If you aren’t quite sure you want to get involved in markets or you think there is too much risk or you think it may be difficult to start actually investing, think again. Go Lynn!