Teenage investors on the rise in US, custodial accounts soar

American teens are increasingly investing in the stock market, with investment firm Charles Schwab noting its custodial accounts for teens jumped above 300,000 in 2023—up from 200,000 in 2022 and 120,000 in 2019.

Custodial accounts allow minors (under 18) to open brokerage accounts to invest in stock, with the assistance of adults. The accounts will be handed over to the child upon reaching legal age.

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Brokerages like Vanguard, Fidelity, and E*Trade by Morgan Stanley have also reported similar increases in teen custodial accounts.

A Fidelity study estimates about a quarter of US teenagers have started investing, based on an online survey of 2,081 respondents ages 13 to 17.

Additionally, teenagers are using trading and financial apps like Robinhood and Greenlight, with the latter seeing teen investments double from $10 million in 2021 to $20 million in 2023.

The trend reflects a broader movement of new investors entering the market, partly fueled by the COVID-19 pandemic.

The most popular investments include Apple, Amazon, chip-maker Nvidia, Tesla, Meta, Disney and Netflix.

Overall, teenagers are starting to invest earlier, driven by a desire for financial literacy and the potential for long-term wealth accumulation.