MoneyLife

Do You Have To Be 18 to Invest in Stocks?

By Grace Kilander
do-you-have-to-be-18-to-invest-in-stocks

Investing in stocks is a great way to boost your financial confidence and build a reliable portfolio of securities and equity. The fact that investing requires little or no expertise makes it appealing to young people who are looking into investing.

But like most legal activities, you need to be 18 or older before you can open a brokerage account. Since signing up for a brokerage account is the first step towards becoming an investor, young people under 18 looking to invest are sometimes frustrated by the age limit. 

However, with the help of your custodian, you can apply to invest with the help of the MoneyLion investment application. It makes investing in stocks possible for people under 18. 

Therefore, it is no longer a question of if you can invest when you’re under 18 but rather when. You won’t have to worry about how old you are or how much you need to invest. You can just focus on building your investment portfolio!

What is a stock?

A stock is an investment that indicates partial ownership of a corporation. Owning stocks in a company helps build your savings, protect your money against inflation, and earn dividends. 

Many companies sell shares as a way of generating money from investors. If you buy shares from a company, then you’re holding a portion of the company’s “stock,” making you a stockholder or shareholder. 

Investing in stocks is one of the fastest ways to build your financial portfolio and accumulate wealth in the 21st century. By owning a fraction of the company, you are entitled to a particular percentage of the company’s profit. As a shareholder, you can also participate in the company’s decision-making process by voting on important issues.

How do stocks work? 

Money invested in stock grows in value every year, especially if the stock is held for a long time. A reason why people invest over a long period of time is to give the stock time to grow in value through compound interest. This translates to more wealth for the investor. That is why young people need to start saving and investing early. 

You can decide to buy stocks directly and own individual stocks. Individual stocks qualify you as a shareholder of the firm. You and a group of people can also pull money together in collective investment. This money is often regarded as funds, and it is used to buy a portion of shares that a fund manager manages. 

If you decide to settle for collective investment, you don’t have to bother choosing the best stock to buy. The fund manager is responsible for that. In a collective investment, you are not a direct shareholder of the company. And as such, you don’t have the right to vote on some company decisions. But either way, you still earn a dividend.  

When can I begin investing in stocks?

Gone are the days when you have to reach the minimum age limit of 18 years before you can start exploring the stock market. Nowadays, a 10-year-old with a $5 bill can access the stock market through either a custodial or joint account. 

Strictly speaking, if you are an adult over 18 years old, you can buy individual stocks or join collective investments to buy funds. However, if you’re under 18 and want to start investing, you will have to use a joint or custodial account. Opening a custodial account means you will need the approval of an adult of legal age, like your parents or a legal guardian, to serve as your custodian.

The custodian will help you manage the account independently. They’ll guide you in making wise decisions regarding stocks and other investment options. They will also sign any official documents related to the account. Once you turn 18, your custodian account will be handed over to you. 

Alternatively, you can sign up for a joint account, which is an account that you share with your guardians. Joint accounts are another great way to start investing if you’re under 18.

Difference between stocks and ETFs

When it comes to stocks vs ETFs, which one should you go for? Buying a stock means you own a tiny percentage of a firm, including the company’s profit and overall value. However, aside from the company’s profit or value, what happens if the company runs at a loss? Well, your stocks will also be running at a loss, meaning not only is your stock influenced by the company’s growth but by the company’s decline, too. 

This automatically puts you at risk of losing the value of your stock, which is where ETFs come into play. ETF is short for exchange-traded funds, which is a low-risk investment strategy that entails buying a collection of different stocks and bonds. With an ETF, you invest your money into the entire market, reducing your chances of losing as it is more reliable. 

ETF is more favorable because it provides room for diversification of your portfolio, which subsequently minimizes the chances of loss. Diversification also allows you as an investor to manage your risks. 

For instance, if you have five different stocks in your portfolio and the stock market unexpectedly dips, then the probability of your running losses in all five stocks is very small, especially compared to your chances of loss when you only have one stock in your portfolio.

Auto-Investing in stocks With MoneyLion

MoneyLion is a flexible and easy-to-use auto-investing application that helps you set up your personalized stock portfolios. It also helps you easily manage your stocks and bonds without management fees or minimums. 

Whether you are new to the stock market or already an investing guru, you will find MoneyLion easy and interesting to use. MoneyLion helps you choose an investment strategy that supports your goals all while providing you with unlimited options, ETFs included.

To open a MoneyLion account, you will need your social security number, a verified phone number, and a home address that serves as proof of permanent US residency. Once you meet these requirements, you are good to go. 

Step 1: Download the MoneyLion app.

You can download the MoneyLion app through the Android PlayStore or the App Store. You can also install the application directly from MoneyLion’s website

Step 2: Create an account.

After installing the app, create an account with MoneyLion using a valid email address, your full name, and a unique password. From there, you can proceed with enrollment.

Step 3: Enroll in a MoneyLion investment account.

The enrollment process is very straightforward and involves the following steps:

  • From the app’s home screen, tap on the Finance tab.
  • You’ll be taken to a page where you’ll be prompted to provide your date of birth, residential address, and phone number.
  • Once you input your phone number, you’ll receive a verification code via SMS, which you’ll use to continue with the enrollment.
  • Next, you’ll be asked to answer some questions about your investment goals and risk preference. Your answers will help MoneyLion create a personalized investment strategy for you.
  • From there, an investment profile will be set up for you.
  • Next, you’ll sign the MoneyLion legal agreement.
  • Last but not least, you’ll be asked to fill in your Social Security information to confirm and protect your identity, as required by federal law.
  • After the app confirms your information, the process is over and your account is officially opened!

Step 4: Set up auto-invest. 

The MoneyLion auto-invest feature provides an avenue for you to effortlessly build funds for your future without ease. The best part is that you can start investing with as little as $5. 

The setup process is pretty simple once you have registered your account. Set up the auto-invest feature by following these five steps:

  • Log in to the MoneyLion app, and from the home screen, tap on the Finance tab.
  • Once the Finance tab opens, scroll down to the auto-invest feature. 
  • You’ll then receive a prompt to link a funding account, assuming you haven’t added one yet.
  • Then, enter the amount you want to invest on a recurring basis. This amount can be as low as $5.
  • Choose the frequency of your automatic investments. You will have the chance to make a selection from weekly, biweekly, and monthly investment options.

Once you confirm the frequency of your automatic investments, you’ll be taken to a preview window. After reviewing the information, click save, and voila! You’ll receive a congratulatory message informing you that your auto-invest account has been set up.

Step 5: Enjoy!

The auto-invest feature literally runs on its own. Seeing as it’s automatic, this feature functions on autopilot. 

For instance, if you sign up on a $20 weekly recurring basis, then $20 will be transferred from your funding account into your investment account every week. At the end of the first year, you’ll earn $1,040, and the second year, you will reach $2,080, and so on. 

Once the auto-invest feature is set up, you don’t have to think about actively transferring money. Let MoneyLion work for you. You can turn it off at any time.

Start your investment journey with MoneyLion

There is no better time to start investing in stocks than the present. Thanks to technology, investing in the stock market has never been easier for both men and women. If you’re under 18, you can always buy shares through a custodial account or joint account. With as low as $5, you can also leverage the uniqueness of the MoneyLion platform. 

You can take a bold step towards your financial security and kickstart your investment journey by signing up for a $1/month diversified MoneyLion investment account. It gives you the chance to conveniently activate an auto-invest feature, too. And you know the coolest part? You can sign up from the comfort of your home.

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