You generally have to be 18 to open a brokerage account in your own name, because that’s the age of majority in most states and the age at which you can sign a binding financial contract. Three states set the bar higher: Alabama and Nebraska require you to be 19, and Mississippi requires you to be 21. If you’re younger than your state’s cutoff, you can still invest, but only through a custodial account that an adult opens and manages for you.
Why Brokerages Require the Age of Majority
A brokerage agreement is a contract, and contracts signed by minors are generally voidable. The minor can walk away from the deal while the other party stays bound. Brokerage firms won’t take that risk, so they require account holders to have reached the age of majority in their state before opening an individual account.
Once you’re old enough, you can open a standard individual brokerage account. That gives you full control over your investments and full responsibility for what comes with them: losses, any margin debt you take on, and the taxes owed on your gains, dividends, and interest.
If You’re Under Age: Custodial Accounts
The main way to invest before you reach the age of majority is through a custodial account opened by a parent or another adult. These accounts are set up under one of two state laws adopted almost everywhere: the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA).
A UGMA account can hold cash, stocks, bonds, and mutual funds. A UTMA account works the same way but can also hold a broader range of property, including real estate and other non-financial assets. In both cases, the child is the legal owner of the assets, and an adult custodian handles all investment decisions until the child comes of age.
One thing to understand before money goes in: contributions to a custodial account are irrevocable gifts. The custodian can’t take the money back for personal use, and has a legal duty to manage the account solely for the child’s benefit. Mismanaging the funds can create personal liability for the custodian.
Trading Restrictions Inside a Custodial Account
Custodial accounts come with tighter rules than a standard brokerage account, and it’s worth knowing what you can’t do before you get excited about a strategy you’ve read about.
Most firms don’t allow margin trading in a custodial account, so you can’t borrow from the broker to buy securities. Options trading is usually limited to basic strategies such as covered calls and cash-secured puts; speculative strategies involving uncovered options are generally off-limits. These limits exist because the custodian’s fiduciary duty pushes toward conservative management, and leveraged or high-risk trades conflict with that.
Day trading isn’t really available either. Pattern day traders have to keep at least $25,000 of equity in a margin account, and since custodial accounts don’t support margin, the strategy isn’t possible. Once the child reaches the termination age and converts the account to a standard individual account, these restrictions fall away.
When the Minor Takes Over the Account
Every custodial account has a termination age, which is the point at which the account has to be turned over to the child (now an adult) to manage on their own. That age varies by state and by account type. UGMA accounts typically transfer at 18 or 21. UTMA accounts most often default to 21, and several states allow the custodian to designate a later age, sometimes up to 25.
When the beneficiary hits the termination age, the brokerage firm generally freezes the custodial account until the beneficiary converts it into a standard individual account in their own name. If the conversion paperwork isn’t finished promptly, trades and withdrawals may not go through. It helps to contact the brokerage before the termination date so the handoff is clean.
A Custodial Roth IRA for a Working Minor
If the child under age has earned income, there’s a second option worth knowing about: a custodial Roth IRA. A parent or guardian opens it on behalf of the minor, and the child owns it.
The key requirement is real earned income. That can come from a regular job or from work like babysitting or lawn care, but Roth IRA contributions are capped at the lesser of the child’s earned income for the year or the annual contribution limit. For 2026, that cap is $7,500.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Whatever anyone contributes on the child’s behalf, including a parent’s matching contribution, counts against that single annual limit.
Contributions go in after tax, and qualified withdrawals in retirement come out completely tax-free. Starting decades before retirement is the whole point. Once the child reaches the age of majority, they take over the account and manage it on their own.
A Note on Taxes Inside a Custodial Account
Investment income earned inside a custodial brokerage account belongs to the child for tax purposes, and the “kiddie tax” rules govern how it’s taxed. For 2026, the first $1,350 of unearned income is tax-free, the next $1,350 is taxed at the child’s own (usually low) rate, and anything above $2,700 is taxed at the parent’s marginal rate.2Office of the Law Revision Counsel. 26 U.S. Code 1 – Tax Imposed If total unearned income stays at or below $2,700, the kiddie tax doesn’t come into play. Parents can sometimes report a child’s investment income on their own return if the child’s gross income was under $13,500 and consisted only of interest, dividends, and capital gain distributions; otherwise the child files separately.3Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax)
None of this changes the age answer. If you’re old enough to open your own account, open one. If you’re not, a custodial account gets you into the market now, and the account becomes fully yours the day you reach your state’s termination age.