Investing for Kids: Best Accounts and Strategies for 2026

Investing for kids isn’t just about saving money — it’s about giving them a financial head start.

When money is invested early, it has something incredibly powerful working in its favor: time. Thanks to compound growth, even small investments made during childhood can grow significantly over decades. A few hundred dollars invested early can potentially turn into thousands by the time your child reaches adulthood.

But many parents aren’t sure where to start. Should you open a custodial brokerage account, a Roth IRA or a 529 plan for education?

The good news is that investing for kids has never been easier. Many brokerages now offer custodial accounts for minors, and several investment apps let teens start learning how markets work.

We’ll walk through the best investment accounts for kids, how to start investing for your child, what investments may work best for long-term growth and common mistakes to avoid.

Best investment accounts for kids by goal

If you’re not sure where to start, here’s a quick breakdown based on your goal:

• Best for flexibility: custodial brokerage account (UGMA or UTMA)
• Best for retirement savings: Roth IRA for kids
• Best for education: 529 education savings plan
• Best for hands-on learning: teen brokerage account or investing app

Best investment accounts for kids

The best investment account for your child depends on your goals. Some accounts are built for flexibility, while others offer tax advantages or are meant specifically for education savings.

Here are the main ones to know.

Custodial brokerage accounts (UGMA and UTMA)

A custodial brokerage account is one of the most flexible ways to start investing for a child.

These accounts are opened and managed by a parent or guardian on behalf of a minor. The adult acts as the custodian and manages the money until the child reaches the age of majority, which is usually 18 or 21, depending on the state.

Custodial accounts are typically set up under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). Both allow adults to transfer assets to a child without creating a formal trust.

One of the biggest advantages of a custodial brokerage account is flexibility. Unlike a 529 plan, which is mainly designed for education expenses, money in a custodial account can generally be used for any expense that benefits the child.

These accounts can usually hold a wide range of investments, including stocks, exchange-traded funds (ETFs), mutual funds and bonds. That makes them a strong option for parents who want to build long-term wealth for a child without locking the money into one narrow purpose.

Pros

• Flexible investment options including stocks, ETFs, mutual funds and bonds
• No annual contribution limits
• Available at many major brokerages
• Can be used for a wide range of child-related expenses

Cons

• Assets legally belong to the child
• May affect future college financial aid
• Tax treatment can be more complex than a standard savings account

Roth IRAs for kids

If your child has earned income, a custodial Roth IRA can be one of the most powerful long-term investing tools available.

A Roth IRA lets contributions grow tax-free. Qualified withdrawals in retirement are also tax-free.⁽¹⁾ Since children have such a long investing timeline, tax-free compounding can be especially valuable.

For example, if a teenager contributes a few thousand dollars to a Roth IRA and leaves it invested for decades, that money has a long runway to grow. That’s why a Roth IRA for kids is often one of the best options for parents who want to help their child build retirement savings early.

The catch is that your child must have earned income. That could come from a part-time job, babysitting, tutoring, lawn care or work performed for a family business, as long as the income is legitimate and properly documented.

Pros

• Tax-free growth
• Tax-free qualified withdrawals in retirement
• Huge long-term compounding potential
• Can help kids start saving for retirement decades early

Cons

• The child must have earned income
• Annual IRA contribution limits apply
• The account is meant for retirement, not short-term goals

529 education savings plans

A 529 plan is a tax-advantaged account designed specifically for education savings.

Money in a 529 plan can grow tax-free, and withdrawals are also tax-free when used for qualified education expenses.⁽²⁾ These accounts are commonly used for college, but they may also be used for certain trade schools and some K-12 expenses, depending on the rules.

For parents whose main goal is helping with future education costs, a 529 plan can be one of the most efficient options available. Many plans offer age-based portfolios that automatically become more conservative as the child gets closer to college age.

Pros

• Tax-free growth for qualified education expenses
• Often high contribution limits
• May come with state tax benefits depending on where you live
• Can be a strong fit for college-focused savings goals

Cons

• Non-qualified withdrawals may trigger taxes and penalties
• Investment options may be more limited than a brokerage account
• Best suited for education-related goals

Teen brokerage accounts

Some brokerages offer accounts designed specifically for teenagers. These accounts allow teens to buy and sell investments while parents maintain visibility and oversight.

For example, the Fidelity Youth Account allows teens ages 13 to 17 to trade stocks and ETFs with parental supervision. The goal is to help young investors learn how markets work and build confidence managing money before adulthood.

Pros

• Teens can gain hands-on investing experience
• Parents typically maintain oversight or monitoring access
• Can help build financial literacy early
• Often includes educational tools and resources

Cons

• Limited to older children, usually ages 13 to 17
• Teenagers may take unnecessary risks without guidance
• Fewer account options compared with full brokerage accounts

Investment apps for kids

Several fintech apps now combine debit cards, allowances and beginner investing tools designed for kids and teens.

Platforms like Greenlight and BusyKid allow parents to manage a child’s spending while also letting them invest a portion of their money. These apps often include parental controls and educational tools that explain how investing works.

For younger children especially, these apps can be a useful introduction to basic financial concepts like saving, investing and long-term planning.

Pros

• Designed to teach financial literacy in a simple way
• Often includes parental controls and spending limits
• Kids can invest small amounts through fractional shares
• May combine spending, saving and investing in one app

Cons

• Monthly subscription fees are common
• Investment choices may be limited
• Some apps prioritize education over full investment flexibility

Compare investing accounts for kids

Compare accounts based on their fees, age requirements, and features.

4 of 4 results

Updated regularly

Fee	Age requirements	Features
Greenlight Max	$9.98 per month	Any age	Teaches investing skills Up to 3% rewards Cell phone and identity protection	Go to site View details	loading
UNest	$4.99 per month	Any age	Easily receive money from family and friends Earn rewards and bonuses	Go to site View details	loading
Step	From $0 per month	Any age	Kids invest in fractional shares and ETFs Set Parent investing parameters Invest spare change with round-ups	Go to site View details	loading
Robinhood	$0 per year	Any age	Get up to 3% in IRA match with Gold Get 3.35% APY on cash with Gold Active trading tools	Continue View details	loading

loading

Load More

Showing 4 of 4 results

Compare other products

Looking for other options? Check out these similar products.

How we picked these

How to start investing for your child

Getting started is usually easier than many parents expect. Most major providers let you open an account online in a relatively short amount of time.

1. Choose the right account type

Start by deciding what you want the money to do.

• Choose a custodial brokerage account if you want flexibility.
• Choose a Roth IRA if your child has earned income and you want tax-free retirement savings.
• Choose a 529 plan if your main goal is education savings.

2. Open the account

You’ll usually need your child’s Social Security number, your own identifying information and a linked bank account to fund the account.

3. Fund the account consistently

You don’t need a huge lump sum to get started. Many parents use birthday money, holiday gifts or small recurring monthly contributions.

Consistency tends to matter more than trying to invest a large amount all at once.

4. Keep the investments simple

For most kids, a simple and diversified portfolio makes the most sense. Broad index funds and total market ETFs are often enough for long-term growth without adding unnecessary complexity.

Best investments for kids

Once the account is open, the next question is what to actually invest in.

Index funds (ETFs and mutual funds)

For most kids, simple and diversified investments tend to work best. That’s why many parents start with index funds.

An index fund is designed to track a market index, such as the S&P 500. Instead of trying to pick individual winners, it spreads money across many companies at once, which helps reduce risk over the long term.

Index funds come in two main forms: ETFs and mutual funds. ETFs trade throughout the day like stocks, while mutual funds are priced once per day. Both can offer low costs and broad diversification, which is why they’re commonly used for long-term investing.

For a child’s portfolio, either structure can work. The most important factor is choosing a low-cost, diversified fund and staying invested over time.

Individual stocks

Individual stocks can be a fun educational tool, especially if your child is excited about a particular company or brand. Owning even a small piece of a recognizable business can make the idea of investing feel more real.

Still, individual stocks are riskier and less diversified than broad funds, so they usually make more sense as a small part of a child’s portfolio rather than the whole strategy.

Robo-advisors

Robo-advisors can be a good fit for parents who want a hands-off approach. These platforms automatically build and manage a diversified portfolio based on your goals and risk tolerance.

They can simplify investing, though management fees may be higher than building a basic portfolio yourself with low-cost index funds.

Benefits of investing for kids

Investing early offers several long-term advantages for kids, from financial growth to life skills development.

• More time for compound growth. The biggest benefit of investing for kids is time. Starting young gives money more years to compound, which can make a surprisingly large difference over the long run.
• Early financial education. Investing can help kids understand saving, patience, risk and long-term planning. Those lessons can stick with them well beyond childhood.
• Building lifelong habits. Kids who grow up seeing money invested regularly may be more likely to build strong saving and investing habits as adults.

Common mistakes to avoid

While investing for kids offers great opportunities, parents should avoid some common pitfalls:

• Overcomplicating the strategy. You usually don’t need a complicated portfolio for a child. A simple, diversified approach is often the better choice.
• Ignoring fees. Monthly platform charges, account fees and fund expense ratios can all eat into long-term returns, especially when balances are still small.
• Chasing short-term gains. Trying to jump in and out of trendy investments can add unnecessary risk. Kids generally benefit more from a long-term approach than from constant trading.
• Choosing the wrong account for the goal. A 529 plan, Roth IRA and custodial brokerage account can all be useful, but they are built for different purposes. Matching the account to the goal matters.

Bottom line

Investing for kids can be one of the smartest long-term moves a parent makes.

The right account depends on what you want the money to do. If you want flexibility, a custodial brokerage account may make the most sense. If your child has earned income, a Roth IRA can offer powerful long-term tax advantages. And if education is the main goal, a 529 plan may be the better fit.

The most important thing is to get started. Even small contributions made early have decades to grow.

Frequently asked questions

• What is the best investment account for kids?

  That depends on your goal. A custodial brokerage account is one of the most flexible options, while a Roth IRA can be especially powerful if your child has earned income. A 529 plan may be best if you're focused on education savings.

• Can a child have a Roth IRA?

  Yes. A child can contribute to a Roth IRA if they have eligible earned income. Contributions generally can't exceed the child's earned income or the annual IRA limit, whichever is lower.

• What is the best way to invest $1,000 for a child?

  Many parents choose a diversified index fund inside a custodial brokerage account. If the child has earned income, a Roth IRA may also be worth considering because of its tax advantages.

• What is a custodial brokerage account?

  A custodial brokerage account is an investment account managed by an adult for a minor. The child becomes the legal owner of the assets, and control typically transfers once they reach the age of majority.

To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings as part of our fact-checking process.

Written by

Matt Miczulski

Investments editor and market analyst

Add to Preferred Sources

Matt Miczulski is an investments editor and market analyst at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions. Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on Yahoo Finance, CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University. See full bio

Matt's expertise

Matt has written 294 Finder guides across topics including:

• Trading and investing
• Broker and trading platform reviews
• Money management