3. Brokerage account
Whether parents are looking for flexibility in the investments they can choose or for an uncapped contribution limit, an ordinary brokerage account is a great option for an investment account for kids. In fact, some brokers have accounts specifically designed for minors.
For teens ages 13 to 17, the Fidelity Youth Account has no opening balance or minimum balance, and there are no subscription or account fees. Charles Schwab also offers an account for minors -- the Schwab One Custodial Account for people younger than 18. No minimum deposit is required to open the account, and there are no maintenance fees.
4. UGMA/UTMA accounts
Accounts under the Uniform Gift to Minors Act (UGMA) and the Uniform Transfer to Minors Act (UTMA) are set up by custodians (though not exclusively) to hold gifts or transfers. They share some similarities with 529 plans, but there are notable differences, including tax considerations. Also, the withdrawals do not have to be used on education-related expenses.
It's important to recognize that contributions to these accounts aren't tax-deductible. In addition, the assets in the accounts are in the minors' names, which may affect federal financial aid eligibility for college.
Many brokerages offer UGMA and UTMA accounts. Vanguard, for instance, offers both accounts without enrollment, transfer, or advisor fees for custodians who eschew Vanguard's advisory services.
5. Custodial Roth IRA
A custodial Roth IRA is a smart consideration for forward-looking individuals, as it enables kids to start saving for their golden years as soon as they start earning income. When the tax-advantaged account is opened, a parent or grandparent serves as the custodian, and the child is listed as the beneficiary.
Upon turning 18 -- or 21 in some states -- the child becomes the account holder and can make transactions independently. For 2026, the maximum contribution individuals can make to a Roth IRA is $7,500 or their child's total compensation for the year, whichever is the lesser amount.
How to open an investment account for minors
In deciding what type of account to open, one of the primary considerations is whether the minor has taxable income. If the child is collecting income and reporting it to Uncle Sam, it's possible to open a Roth IRA for kids. And it's not even required that the child fund the account.
For example, if a kid/teenager earns $1,000 walking dogs in a given year, he or she can keep his earnings, and Mom or Dad can fund the Roth IRA up to $1,000.
Many brokerages offer the opportunity to open a custodial Roth IRA. Once you decide where to open the account, you must provide information such as Social Security numbers, employer details, and driver's license information, if applicable.
