8 Best Investment Accounts for Kids

Helping your kid open an investment account can teach them valuable lessons about money and the power of investment growth.

One of the biggest keys to successful investing is a long time horizon for your money to grow — and kids have a lot of time on their side. If they're willing to let their money remain invested for several years, they're likely to see a nice return on their initial investment. Seeing their money grow can encourage them to be good savers and investors as adults.

Whether it's your kid, grandchild or a friend or family member, here are eight accounts to get kids started investing.

1. 529 savings and investing accounts

If saving for a child’s education is the goal, a 529 account is tax-advantaged for education expenses. Investments grow tax-free and can be withdrawn for qualified expenses like textbooks, tuition and room and board.

2. Custodial brokerage account

A custodial account is a specific type of financial account that is established on behalf of a child and managed by an adult. Although the account will initially be in your name, the child will automatically take complete control once they reach age 18 or 21, depending on state laws. (Custodial accounts are often called UTMA or UGMA accounts.)

» See our list of the best custodial accounts

3. Roth IRA

If your children are older and have earned income from a part-time job, such as babysitting, raking leaves, or something similar, you can help them open a custodial IRA. A Roth IRA, in particular, is ideal for children: Your child's contributions to the account will grow tax-free. Those contributions can be pulled out at any time, and the investment growth portion can be used for retirement or tapped for particular qualified purposes such as a first-home purchase or higher education expenses.

» See our list of the best Roth IRA accounts

4. Trading accounts

If your teen asks about stock trading, your mind might go to investment apps that are popular with younger generations (such as Robinhood and Webull). But often these don't offer investment accounts for kids.

However, some brokerages are creating new account types explicitly geared for teens who want to learn to trade investments. Fidelity, for example, offers a Youth Account, which lets teens aged 13 to 17 control the account but lets parents monitor its activity, trades and transactions, complete with alerts. Once they’re of age, they can decide whether to continue with the same brokerage account or open their own.

5. High-yield savings account

While a high-yield savings account isn’t an investment account, it is an excellent place for the kid in your life to build a liquid emergency fund that will earn a higher interest rate in a safe and insured spot.

High-yield savings accounts, often provided by online banks and credit unions, pay higher interest rates than savings accounts at brick-and-mortar banks. By opening a kid's savings account with them, you can help your child learn about budgeting, saving, and short-term money management.

» See the best high-yield savings accounts

6. Certificates of deposit

A certificate of deposit, or CD, is a type of savings account that earns a fixed rate over a fixed term. One benefit of CDs is that they provide a safe place to set aside your savings, and they’ll earn a guaranteed return. You can also lock in the rate for the term of the CD, which is a benefit when interest rates are expected to fall, as they are in 2025.

CDs tend to pay higher rates than regular savings accounts, but you lock up your money for the term, ranging from three months to five years. They might be right for you if you do not need access to the funds for a short time and want to protect your savings or earn a return without taking on too much risk.

» Compare the best CD rates

7. ABLE accounts

An ABLE savings account, named for Achieving a Better Life Experience, is a type of 529A account that allows a person with a disability to save money and wages without losing public benefits^[0]

8. Special needs trust

A special needs trust is one way someone with a disability can receive financial support without jeopardizing income-tested government benefits. Someone — usually a parent or guardian — sets up, funds and invests this type of trust, which the beneficiary will inherit.

Opening an investing account for kids

1. Decide on an account type

To get your kid started investing, you should first decide which investment account is best for them. The most common choices are outlined above; the ultimate decision largely hinges on two main factors: whether they have earned income and whether they have a disability.

2. Choose the right broker

No matter which type of brokerage account you decide to open for your kids, you'll need to start by finding a broker that offers that account. The best investment accounts for kids charge no account fees and have no minimum initial deposit. This allows your kids to start investing with a small amount of money.

Consider the costs associated with the investments your child plans to choose. For example, you should ensure the broker charges no trade commissions for kids who want to practice trading stocks.

3. Open the account

You can open a custodial account — both a standard brokerage account and a Roth IRA — for your child in under 15 minutes or so. You can complete the entire process online with most brokers.

To speed things up, make sure you have the necessary information ready. The broker will likely ask for your and your child's Social Security number, dates of birth and contact information.

4. Fund the account

Even though you've opened the account, you'll need to fund it before you can start choosing investments. To fund it, link another bank or brokerage account so you can transfer money into the new account. You may also need to supply your employment or other personal information.

Brokers increasingly rely on third parties to connect your new account with an existing one, which speeds up the process. For those who don't use these services, you may need to confirm that a deposit in your bank account (often two separate transactions of a few cents each) came from the broker, which can take several days.

5. Help your kid decide what to invest in

Once the custodial account is open and funded, the real fun begins: Investing the money. Typically, you can invest in individual stocks, mutual funds, index funds and exchange-traded funds within a brokerage account. To get kids excited about investing, you might consider a two-pronged approach:

• Help them pick one or two individual stocks. Focus on household names they're familiar with — owning even one share of a brand kids recognize will get them excited about investing.

• Build the rest of the portfolio with index funds. As your child continues to add money to the investment account, consider skipping additional shares of individual stocks and instead focusing on low-cost index funds or ETFs. These funds bring much-needed diversification to the portfolio by pooling hundreds of stocks into one investment. That way, your child can invest in many companies in one transaction for one price.

Read our guide to various types of investments to learn more about the investments your child can choose from and to decide which is most suitable.

Once they've selected and purchased their investments, check their earnings and losses every few weeks and compare the small fluctuations with the more significant long-term changes shown on their quarterly statements. This can spark discussion and inspire kids to become more informed investors.