Opening a Brokerage Account for Your Child

Brokerage accounts for kids are generally custodial accounts, with the parent or guardian managing the assets until the child reaches adulthood. Only the parent or guardian can open the brokerage account, even when the account bears the child’s name.

When the child reaches maturity — the legal age varies by state — they take possession of the account. Overall, the process for how to open a brokerage account for a child is fairly straightforward. But there are things to be aware of. Here’s what to know.

Why Open a Brokerage Account?

A brokerage account is an investment account that operates through a brokerage firm. When you open a brokerage account, you deposit money into it, then use that money to buy securities. You can also sell securities that you’ve purchased. Depending on where you open a brokerage account, you may be able to buy stocks or other assets, such as:

•   Stocks

•   Mutual funds

•   Exchange-traded funds (ETFs)

•   Bonds

You may be charged commissions or other fees to execute trades, but there are typically no limits on how much you can invest, excepting certain advanced types of trading, such as with margin accounts. That, in a nutshell, is how a brokerage account works.

Note, too, that a brokerage account is not the same thing as a retirement account. When you sell assets at a profit in a brokerage account, you may have taxes due or other tax impacts. You can buy and sell investments at your own pace, in alignment with your investing goals.

With an Individual Retirement Account (IRA), you may invest in many types of assets, but certain items (such as collectibles) are disallowed in most accounts. IRA holders must wait until age 59 ½ to withdraw funds without any tax penalty (some exceptions apply, such as disability). Early withdrawals from a traditional IRA are taxed at your ordinary income tax rate, plus you’ll generally incur a 10% additional penalty. When deciding on a taxable brokerage account vs. IRA, choose the one that furthers your financial goals. It may be helpful to consult a tax or financial professional for guidance on your specific situation.

Can Children Have Brokerage Accounts?

Children can have brokerage accounts, but they are not allowed access to the account’s money or assets. In almost all cases, such brokerage accounts are custodial, meaning the parent is generally responsible for managing the money until their child reaches adulthood.

Numerous discount brokers offer investment accounts for kids online. Some brokers have also introduced hybrid products for teens that allow them to save money, spend, and invest all in one place with the supervision of their parents. If you’re looking for a hands-on way to teach kids about how markets work, a brokerage account may be a good idea.

It’s worth noting that there may be benefits to investing early, too. The longer money is invested, the more opportunities it has to potentially generate gains or value over time. That’s something parents may want to keep in mind when considering whether to open a brokerage account for a child. However, it’s also important to remember that investing involves risk, as well — it’s possible to lose gains and the principal invested in market downturns.

When considering options for a custodial account, it can be helpful to consult with a financial or legal expert to help you understand the options available within your state and for your personal circumstances.

Can a Child Have a Brokerage Account in Their Name?

A custodial account is technically in the child’s name, even though it’s controlled by the parent. So yes, a child can have a brokerage account in their name. However, they themselves can’t open the account without the help of a parent.

How to Open a Brokerage Account for a Child

Opening a brokerage account for your child typically involves two key steps.

The first step is choosing a brokerage that offers investment accounts for kids. Factors to consider in making your decision could include the range of investment options available, how easy it is to access the account, and the costs or fees.

The next step is deciding which type of account to open. There are generally three possibilities to choose from when opening a brokerage account for a child.

Opening a Guardian Account

A guardian account allows you to invest money on behalf of your child. Once the child turns 18, you can hand the money in the account over to them.

Opening a Custodial Account

With a custodial account, the parent opens the account but the assets in it belong to the child. The parent can direct investment decisions while the child is a minor. Under IRS rules (often referred to as the “kiddie tax”), unearned income up to certain IRS limits is taxed at the child’s rate, and unearned income above that threshold may be taxed at the parent’s marginal tax rate. Withdrawals are allowed only for expenses benefitting the child. Once the child reaches adulthood, they typically automatically become the owner of the account.

A new type of custodial style account is the Trump account, savings and investment accounts for eligible kids under the age of 18. Created by the One Big Beautiful Bill Act and launched on July 4, 2026, Trump accounts are a type of traditional IRA that operates with special rules. Once the child reaches age 18, the accounts follow traditional IRA tax rules.

Opening an IRA Account

If your child has earned income from a part-time or summer job (even babysitting or lawn mowing), you might consider opening a custodial IRA for them. With a custodial IRA, you direct the investments until the child turns 18 (or 21 in some states). At that point, the account becomes their property.

One key distinction: An IRA has annual contribution limits, but most other types of custodial accounts (aside from Trump accounts) do not. Each year the maximum IRA contribution is the amount equal to the child’s total earnings; in 2026 the amount is capped at $7,500. (If a child earns no money in a given year, the maximum contribution is $0.)

The Roth IRA, which holds post-tax dollars, may often be a better choice for a kid than a traditional IRA funded by pre-tax dollars. The benefits of the traditional IRA — such as lowering your taxable income during your earning years — won’t help a young person very much.

Recommended: Roth vs Traditional IRA: Main Differences

Types of Brokerage Accounts a Parent Can Open for a Child

When opening a custodial account for a child at a brokerage, you have two options: a Uniform Transfers to Minors Act (UTMA) account and a Uniform Gifts to Minors Act (UGMA) account. Most states recognize both account types. With either one, you control the account until the child reaches the age of termination, which in some places may be later than the age of majority.

UTMA Account

UTMA accounts allow minors to hold securities without the creation of a separate trust. This type of account permits you to hold many types of assets, including:

•   Stocks

•   Bonds

•   Mutual funds

•   Real estate

•   Fine art

•   Precious metals

•   Patents

•   Royalties

•   Shares in a family limited partnership

The IRS taxes earnings in a UTMA at the child’s tax rate, up to a limit of $2,700 for 2026. Any gifts made to a UTMA on behalf of your child are irrevocable, meaning once you put the money in it becomes theirs; you can’t take it back out again. Any withdrawals must be used to pay expenses for the child, such as school tuition. Also, keep in mind that some of the assets listed above, such as real estate, art, and precious metals, are considered alternative investments, which may entail higher risk than traditional assets such as stocks and bonds.

UGMA Account

A UGMA account is similar to a UTMA account in terms of tax treatment and who actually owns the assets in the account. The main difference between a UGMA and a UTMA account lies in what you can invest in. For a UGMA account, those are typically limited to stocks, bonds, and mutual funds. So if you’re choosing between a UTMA and a UGMA, it’s important to consider which types of assets you’d like to keep in the account.

Investing for Kids

A brokerage account can be a useful teaching tool for helping kids to grasp such concepts as:

•   How investing works

•   Compound returns and why compounding matters

•   The importance and value of saving money

Tips for Choosing the Right Broker

If you’re navigating how to open a brokerage account for your child for the first time, you may not be sure what an investment broker does or how to decide where to keep the account. When you’re seeking out the right broker, here are a few key questions you could ask as you narrow down the options:

•   Does this brokerage firm offer investment accounts for kids?

•   What types of brokerage accounts for kids are available?

•   Is there a minimum initial deposit to open the account?

•   What are the fees?

•   Which investments will I be able to trade in the account?

If you have an existing brokerage account for your child, consider whether moving it to a different broker makes sense. For example, you may want to move if you believe your current brokerage is charging too much in fees.

The Takeaway

A brokerage account for your child would likely take the form of a guardian account or a custodial UGMA or UTMA account. Knowing what types of assets you intend to deposit may help you determine what kind of account works best.

Hybrid save-and-spend accounts designed for teens can help them learn about investing while under adult supervision. In these cases, the parent oversees the accounts until the child reaches adulthood.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

FAQ

Can I open a brokerage account in my child’s name?

Yes, you can open a custodial brokerage account for your child in their name. Transfers to a custodial account are irrevocable, but you’ll have control of the account and make the investment decisions until the child reaches adulthood. In the meantime, the assets in the account will belong to the child.

Can I open a brokerage account for a family member?

Generally, you can open a brokerage account for a family member only if that person is your minor child. You are allowed to establish a 529 college savings plan on behalf of other family members, including siblings, nieces, nephews, or cousins.

Can I buy stocks for my child?

Yes, you can purchase stocks for your child. You can make the purchases through a custodial account. There are also financial apps that allow you to purchase full or fractional shares of stock for your child.

Photo credit: iStock/Morsa Images

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