Hey viewers, welcome back to FLC blogs. In this article, we will discuss Brokerage Accounts!
A custodial brokerage account is an investment account for minors, which the parents open in place of the kids until they come of age (18-21). These accounts are necessary, as they are the only way minors can open brokerage accounts until they are 18-21. This article will give you a brief description of the different types of brokerage accounts, and what the pros and cons are in different contexts. However, before you even start signing up for brokerage accounts, be sure to research how on and why investing is important and what to do, as shown in our article on how to invest as a teen.
The main goals for choosing brokerage accounts are making sure they have low or free charges for buying and selling stocks, don't require a large minimum deposit, and allow the owner to buy fractions of stocks, which makes them able to invest as little as $5 in large companies.
Now, many new and old companies are opening custodial brokerage accounts, each with different values.
New custodial brokerage accounts are usually around for a couple of years and market their services directly to parents or teens wishing to invest. To invest, they may charge a minimal monthly fee.
Greenlight:
Greenlight is a debit card for kids that is managed by parents. Conversely, it's not just a debit card, but also a platform that teaches kids (and parents) how to invest and learn to save. For a small fee of 7.98 per month, up to 5 kids can be included in a debit card with investing capabilities. With Greenlight MAX, parents and kids can view and purchase real stocks on the NY stock exchange and NASDAQ, with every transaction being approved by the parent. Not every stock will be available, but most stocks that meet their requirements are. Kids are also able to buy fractions of stocks, which allows them to buy big, expensive companies for however much they want to invest. For basic buying and selling, there are no extra fees beyond the monthly $7.98. Also, age-appropriate language explains all of the investing terms as they come up, right in the app, making this investing experience easy for kids to understand.
Loved Investing:
This custodial brokerage account allows parents to open an account for someone under 18. It's easy to set up in minutes, and the adults are in control until the child reaches 18. This app is completely free, no subscriptions are required to invest, and you can invest in fractional shares. It also has premade portfolios to get started, with different percentages of stocks to bonds. The child can also watch their portfolio grow over time with their login, and with approval can select their investments. There is also a family mode where people in the family can communicate and share stocks and view each other's portfolios.
Stockpile:
Stockpile is a great way to get started investing with basic investment strategies. It's also great for parents to give “gifts” of stocks to their children. While not many other features beyond basic investing tasks, ones looking to give stock are in the right place. There is no minimum balance, and it allows you to buy stocks and ETFs. There are no fees for trading or activities within the account, but a $75 transfer out fee. It is a mobile app available on the app store and google play store, allowing users to communicate with other app users. The app mainly focuses on gift cards but is also great for buying and selling basic stock, along with fractional shares.
Stash:
Stash is a great option for new investors, young and old, who need educational content to guide them through the process of investing. There is a monthly subscription from $1 to $9 depending on the plan you pick, with a $75 termination fee. There is a “Learn” feature that caters to the younger audience, as most Stash users are new to investing. Overall, Stash is a great opportunity to improve investment and money management for teens new to investing.
Acorns:
The family tier of Acorns allows the owner to open a custodial account, which is managed by the parents until the child turns 18, then the money is theirs. There is a monthly fee of $3-$5 per month, and to transfer your account to another provider, there are steep fees for that. It also recommends a portfolio based on the level of risk and the amount of time you have. Overall, Acorns is great for investing spare chance, but $3-$5 per month can quickly add up with smaller balances.
Older, traditional brokerage accounts have been around for longer amounts of time and used to charge large sums to invest. Currently, buying and selling through these accounts is much cheaper, a savior for new and young investors.
Charles Schwab:
A custodial account that has a $0 minimum balance, excellent customer service, and $0 in extra fees. Its mobile app is exceptional, allowing a large selection of funds, great research options, and caters to all types of investors. However, there is only a small selection of fractional shares, so if that's a big deal, it would be best to think about other brokers. Overall, Charles Schwab is great Fidelity for beginner investors with low fees and exceptional research options but falls short on fractional shares.
E-Trade:
E-Trade attracts beginner investors with its $0 minimum balance, a large selection of educational resources, ease of access to tools, investing, and the mobile app, and a large selection of investments. It also has excellent customer service and support in person or online, making it an excellent option for beginner investors and parents.
Account balance minimum of $0 plus the transaction fee of $0 attracts many young investors, with commission-free stock, ETF, and options trades. Research providers are in abundance, with strong customer service and a highly rated mobile app. Their educational resources are among the best of the best, with options for all levels of investing. Overall, a great low-cost option for all investors with amazing educational resources.
Interactive Brokers:
Easy to use research abilities combined with tools for a large investment selection get to enjoy to low-cost benefits of Interactive Brokers. $0 minimum balance and $0 transaction fees make it a tempting option for casual traders as well. Overall, interactive brokers are great for beginning traders and teens wishing to further their knowledge of investing.
Ally Invest:
Ally Invest, just like the brokerage accounts above, has a minimum account balance of $0, combined with a transaction fee of $0 as well. Their research and tools are above average, allowing investors to gain knowledge on how to invest right in the app. Overall, a great tool for any type of investor is Ally Invest.
To conclude, there are many different types of brokerage accounts each with its benefits, and there is so much more to research about the different types. Feel free to research the ones you find helpful more in-depth, as there are countless reviews on the internet. That was all in this FLC article! Stay tuned for more information. Make sure to subscribe for updates! Happy investing!
