Teen Brokerage Accounts vs. Custodial Accounts: How Much Control to Give Your Teen

The classic way to invest for a child is a custodial account, where an adult makes every decision until an age set by state law. Teenagers now have more direct options. Fidelity’s Youth Account lets 13- to 17-year-olds own a brokerage account and place their own trades, and on March 26, 2026, Charles Schwab launched the Schwab Teen Investor account, a joint account that a teen and one parent share, according to Schwab’s announcement.

Teens are interested. In a Schwab survey of 1,000 teens and 1,000 parents of teens in October 2025, 70% of teens said they were very or extremely interested in investing, and 87% wanted their parents involved to some degree. So for most families, the real question isn’t whether a teenager can invest. It’s how much control to hand over, and when. This guide compares the four setups available today, from fully adult-run to fully teen-run, so you can match the account to your teen. For how a custodial account compares with a 529 plan, a Roth IRA, and a Trump Account, see Comparing Investment Accounts for Kids: 529 vs. UTMA vs. Roth IRA vs. 530A.

Four ways a teen can invest today

Whichever route you choose, your teen can’t go it alone. At both Fidelity and Schwab, a parent or guardian has to open the teen account. What differs from one setup to the next is who owns the money and who makes the decisions once the account is open:

• Custodial account. Your child owns the money, and an adult custodian invests it until a handoff age set by state law.
• Teen-owned account. Your teen owns the account and makes every trade while you watch. Fidelity says its Youth Account is the only brokerage account that 13- to 17-year-olds can own independently, based on its own review of competitors as of March 2026.
• Joint account. You and your teen own the account together, and either of you can trade. The Schwab Teen Investor account works this way.
• Parent-owned account with kid input. You own the account, and your child proposes trades that you place or reject. Greenlight’s Investing for Kids works this way.

Here’s how the four compare, using one account of each kind as the example.

Scroll sideways to see all four accounts.

Features are as each company describes them on its website as of the date above. Check current terms before you open an account.

Custodial accounts: your child’s money, your decisions

A custodial account, set up under your state’s Uniform Transfers to Minors Act (UTMA) or the older Uniform Gifts to Minors Act (UGMA), is the traditional way to invest for a minor. Putting money into one is an irrevocable transfer to the child, and the custodian manages the assets until the child reaches the age the law sets, FINRA explains in a notice to brokerage firms. Your teen can’t trade or withdraw. In fact, the minor doesn’t get access to the account at all until the custodianship ends, Schwab notes.

That makes a custodial account a strong vault but a limited classroom. Your teen can research investments and suggest trades, but you place every one. And the handoff happens on your state’s schedule, not yours. The custodianship ends at 21 in most states and at 18 in some, and many states let the person opening the account choose a later age, typically up to 25, according to Saving for College. Wyoming allows as late as 30. UTMA vs. UGMA: What’s the Difference? explains both laws, and What Happens at the Age of Majority? covers the handoff itself.

Until then, the custodian can spend the money on things that benefit your child, such as summer programs, but can’t take it back or use it for anyone else. Because the custodian, not your teen, makes the calls, a custodial account is a good home for money that’s meant to grow for years, like birthday checks from grandparents, and a poor tool for teaching a teen to make choices on their own.

Teen-owned accounts: the Fidelity Youth Account

Fidelity’s Youth Account turns the custodial setup around. It’s a taxable brokerage account that your teen owns, and Fidelity is explicit that it isn’t a joint or custodial account. Your teen controls the account and is the sole decision maker, not you, according to Fidelity’s Youth Account FAQs.

What your teen can do

Your teen can buy most U.S. stocks, some exchange-traded funds (ETFs), Fidelity’s own mutual funds, real estate investment trusts, and some international stocks, starting with as little as $1 through fractional shares. Fractional Shares explains how those small purchases work. There are no account fees or minimums, and your teen can request a debit card to spend from the account. There’s no limit on how often your teen can trade, though Fidelity warns teens about trading violations, such as selling a stock before the purchase has been paid for with settled cash.

What your teen can’t do

The riskiest tools are off-limits. Teens can’t trade options, buy on margin, sell short, or buy into an IPO, and the account excludes cryptocurrencies, leveraged and inverse ETFs, and penny stocks priced at $5 a share or less. Less obviously, it also excludes individual bonds, CDs, Treasuries, and mutual funds from other fund companies.

What you can do as the parent

You have to open the account, and you need a Fidelity retail account of your own, such as a brokerage, cash management, or IRA account. A workplace 401(k) doesn’t count, Fidelity says. Once your teen’s account is open, you can:

• See your teen’s investments, balances, and account activity, and get statements and notifications.
• Cancel your teen’s debit card at any time.
• Close the account at any time. Any investments are sold, and the money is sent by check in your teen’s name.

What you can’t do is place trades or withdraw money. Only your teen can take money out. Fidelity also makes you responsible for supervising the account and names you its “trusted contact” if a concern about your teen’s welfare comes up. Only one parent can be connected to the account, and that can’t be changed except in cases of death or disability, which is worth knowing if you share custody.

Limits worth knowing

• A yearly deposit cap. Generally no more than $30,000 can be added in a calendar year, and Fidelity can restrict deposits and trading if that limit is exceeded.
• Gifts from relatives come by check. You can send money from your linked Fidelity account, and your teen can add money from their own bank account. Anyone else, such as a grandparent, writes your teen a check to deposit in the app.
• Investments can’t be moved out as they are. Fidelity doesn’t allow securities to be transferred in kind out of a Youth Account, so moving the money to another firm before 18 means selling first.
• U.S. residents only. The account is available only to U.S. residents with a U.S. address.

Joint accounts: the Schwab Teen Investor account

Schwab took a different approach. Its Teen Investor account is a taxable joint brokerage account for a teen aged 13 to 17 and one parent or guardian, and the parent doesn’t need to be a Schwab client already, according to Schwab’s FAQs. Because you’re both owners, either of you can place trades and withdraw money on your own.

You also keep more of the levers. You receive the statements and tax documents, you can sign up for real-time trade alerts, you decide whether your teen gets a debit card, and only you can close the account. Your teen’s debit card and check writing both need your approval.

Your teen can buy most U.S. stocks, ETFs, mutual funds, fixed income securities such as bonds, and fractional shares, with no minimum deposit, no account fees, and $0 commissions on online stock trades, according to Schwab’s announcement. The list of what’s off-limits is long: margin, options, futures, foreign currency trading, individual cryptocurrencies, leveraged and inverse ETFs, IPOs, and over-the-counter stocks, among others. Schwab does allow exchange-traded products that hold cryptocurrencies directly, and it cautions that some restrictions are enforced by “best-effort” systems, so parents should keep an eye on the account.

Each account has one adult owner. A second parent can be added only as a view-only authorized viewer, and switching the adult owner means opening a new account and moving the money. Tax forms are issued under your teen’s name and Social Security number.

The joint setup works like training wheels that both of you can reach. You can step in at any point, but so can your teen, including by taking money out.

Parent-owned accounts that let kids weigh in

A third approach keeps the money entirely yours. With Greenlight’s Investing for Kids, your child researches stocks and ETFs in the app and asks you to buy or sell. You place the trade or reject it, so you make the final decision every time, and the account is a standard brokerage account in your name, according to Greenlight’s help center. You’re the owner of record of every investment, you’re responsible for the taxes, and nothing transfers to your child automatically when they come of age.

Investing for Kids comes with Greenlight’s Max plan and higher tiers, not its starter plan, so expect a monthly subscription, according to Greenlight’s plan comparison. Because the money never becomes your child’s, this setup teaches the decision-making without making a gift. It also carries the trade-offs covered in Custodial Brokerage Accounts vs. Parent-Owned Taxable Accounts: you keep control and the account counts less against financial aid, but the earnings are taxed to you.

Taxes, gifts, and financial aid

A teen account can feel very different from a custodial account, but for taxes and financial aid, what matters is who owns the money. A teen-owned account belongs to your teen, just as a custodial account belongs to your child, so the two are treated much the same way.

Taxes

The money in a Fidelity Youth Account belongs to your teen, and its earnings may mean your teen has to file a tax return, Fidelity says. Schwab issues the Teen Investor account’s tax forms under your teen’s Social Security number, and the earnings in a custodial account count as your child’s income, too. For 2026, the first $1,350 of a child’s investment income is tax-free, the next $1,350 is taxed at the child’s rate, and amounts above $2,700 are taxed at the parents’ rate, Saving for College explains. This kiddie tax applies to children under 18, and to 18-year-olds and full-time students under 24 whose own earnings don’t cover more than half of their support, according to the IRS’s kiddie tax overview. Navigating the 2026 Kiddie Tax Thresholds walks through the math.

Two practical points. First, if your teen’s only income is interest and dividends, below an IRS limit, you may be able to report it on your own return instead of filing one for your teen. That option doesn’t cover a teen who sold shares at a profit, because the IRS limits it to interest and dividends, including capital gain distributions. Second, a parent-owned account like Greenlight’s keeps all of the income on your return, at your rates.

Gifts

Every dollar you add to a custodial account or a teen-owned account becomes your teen’s, and Fidelity notes that money given by a parent or anyone else may be subject to gift tax rules. The annual exclusion lets each person give up to $19,000 to each recipient in 2026, according to the IRS, and The Impact of the 2026 Gift Tax Exclusion explains how it works. A joint account is different, because you can withdraw what you put in. Schwab encourages parents to talk with a tax professional before depositing money and about any withdrawals.

Financial aid

On the FAFSA, a dependent student’s own investments count as student assets, and student assets are assessed at 20% of their value, compared with no more than 5.64% for parents’ assets, according to Saving for College. That puts teen-owned and custodial accounts in the same bucket. For example, $10,000 in your teen’s own account can add $2,000 to the Student Aid Index, the number schools use to award need-based aid, while the same $10,000 in a parent-owned account adds no more than $564. Schwab’s materials don’t say how to report a joint teen account, so if aid matters, ask the college’s financial aid office. How 529s and UTMAs Impact the FAFSA covers the rules in detail.

What happens at 18

The biggest practical difference between these accounts is when your teen takes over, and for the teen accounts, it doesn’t depend on your state’s custodial age.

• Fidelity Youth Account. On your teen’s 18th birthday, the account can’t buy new investments until your teen converts it to a regular Fidelity brokerage account, and your teen has 60 days to do that. After 60 days, deposits are blocked and the debit card is turned off until the conversion is done, though your teen can always sell. The account number and investments stay the same, and state custodial ages don’t apply. Once your teen is 18, they decide whether you keep access.
• Schwab Teen Investor account. At 18, your teen can open a full individual account and move the money there. If you both want, the joint account can stay open until your teen turns 21, when it’s restricted until your teen agrees to new account terms.
• Custodial account. The custodianship ends at the age your state sets, usually 18 or 21, and your child gets full control.
• Parent-owned account. Nothing changes. The money is yours until you decide to give it.

• An adult decides
• Your teen decides
• Either of you can
• Handoff age set by state law

Simplified. Most states end a custodianship at 21 and some at 18, and many let the person opening the account choose a later age, typically up to 25; Wyoming allows up to 30. A Schwab Teen Investor account can stay joint until your teen turns 21, and a Fidelity Youth Account has to be converted within 60 days of the 18th birthday to keep buying investments.

For many families, that means a teen account gives your child full control earlier than a custodial account would. That’s the point: the years from 13 to 17 become practice with real money while you’re still close by. The “Wealth Transfer” Conversation has a script for preparing your teen before the money changes hands.

Choosing the right setup for your teen

There’s no single right answer, and you don’t have to pick just one. A practical approach is to keep the long-term nest egg in an account an adult runs, such as a 529 plan, a custodial account, or a custodial Roth IRA, and to open a small teen account as a training ground. Comparing Investment Accounts for Kids lays out the long-term options. The vault protects the money that has to last, and the training ground lets your teen make real decisions, and real mistakes, with stakes small enough to learn from.

A few guardrails make the two-account approach work:

• Don’t drain the vault to fill the training ground. Custodial money already belongs to your child and is meant for the long run, so fund the teen account with new money, like allowance, earnings, or part of a birthday gift.
• Put earned income to work twice. If your teen has a job, money in a custodial Roth IRA can grow tax-free for decades, while a smaller amount in a teen account builds skills. Even at Fidelity, a Roth IRA for a minor is a custodial account that an adult opens and manages, not part of the Youth Account. The Custodial Roth IRA and What Qualifies as “Earned Income” for a Minor’s Roth IRA? cover the details.
• Size the training account to your teen. Start with an amount you’d both be comfortable watching rise and fall, and add more as your teen shows good habits.

Setting up a teen account well

The account is only half of the lesson. Most teens already lean patient: in Schwab’s survey, 60% said they prefer investments that grow over time and are less likely to lose money, while 18% preferred ones that make and lose money quickly. These habits help build on that:

• Agree on what the account is for before any money goes in, whether that’s learning, a goal like a first car, or long-term growth.
• Start with a core and an explore slice: most of the money in a broad index fund, and a smaller share for companies your teen wants to research. The areas teens in Schwab’s survey most wanted to invest in were artificial intelligence, video games, social media, and cryptocurrency. Index Funds vs. Stock Picking for Minors explains why the core matters.
• Turn on notifications and set a regular time, monthly or quarterly, to review the account together. Middle School (Ages 11-14) has ideas for a family portfolio review.
• Offer a match on money your teen saves from their own earnings. The “Match” Program shows how to set one up.
• Talk through taxes before the first sale, including why selling at a profit can create a tax bill and who files the return.
• Explain the trading rules, like paying for a purchase with settled cash before selling it, so a trading violation doesn’t come as a surprise.
• Put the 18th birthday on the calendar and decide together what will change. High School (Ages 15-18) covers the rest of the final stretch.

If birthdays and holidays bring money gifts for your teen, GoodNest can help collect them. Family and friends give from your teen’s GoodNest page and send the money straight to you by Zelle, Venmo, or PayPal. GoodNest never holds or invests it, so you decide where it goes, whether that’s mostly into the long-term account with a smaller share for your teen to invest, or any other split. The GoodNest Guide to Asking for Investments Instead of Toys has scripts for asking relatives.

The bottom line

Teen brokerage accounts and custodial accounts aren’t really rivals. They’re settings on a dial of control. A custodial account keeps an adult in charge until your state’s handoff age. A parent-owned account lets your teen practice choosing while the money stays yours. A joint account lets your teen trade with you right beside them, and a teen-owned account hands over the controls entirely, with you watching. Whatever you choose, money your teen owns is theirs for taxes and financial aid, and both teen accounts let your teen take full control at 18.

A good default is to pair a protected long-term account with a small teen account that grows as your teen does. To see where custodial accounts fit among 529 plans, Roth IRAs, and Trump Accounts, see Comparing Investment Accounts for Kids.

Frequently asked questions

Can a 13-year-old have a brokerage account?

Yes, with a parent’s help. The Fidelity Youth Account is owned by the teen, and the Schwab Teen Investor account is owned jointly with a parent. Both are for teens aged 13 to 17, and a parent or guardian has to open them. For a younger child, the usual routes are a custodial account run by a parent or a parent-owned account where the child suggests trades.

Is the Fidelity Youth Account a custodial account?

No. Fidelity says it isn’t a custodial or joint account. Your teen owns it and makes the investment decisions. You can see the account, cancel the debit card, or close it, but you can’t trade or withdraw money. It converts to a regular Fidelity brokerage account when your teen turns 18, regardless of your state’s custodial age.

What happens to a Fidelity Youth Account at 18?

On the 18th birthday, the account can’t buy new investments until your teen converts it to a standard Fidelity brokerage account, which they have 60 days to do. After 60 days, new deposits are blocked and the debit card is turned off until the conversion is complete, though your teen can still sell. The account number and holdings stay the same.

Do teen brokerage accounts affect financial aid?

Yes. Money your teen owns counts as a student asset on the FAFSA, assessed at 20% of its value, the same as a custodial account. A parent-owned account is assessed at no more than 5.64%. For a joint parent and teen account, ask the college’s financial aid office how to report it.

Who pays taxes on a teen’s investment account?

In a custodial account or a teen-owned account, the earnings are your teen’s income. For 2026, the first $1,350 of a child’s investment income is tax-free, the next $1,350 is taxed at the child’s rate, and income above $2,700 can be taxed at the parents’ rate under the kiddie tax. Schwab issues tax forms for its joint teen account under the teen’s Social Security number. In a parent-owned account, the income is yours.

Sources

• Charles Schwab, “Introducing the Schwab Teen Investor Account” (March 26, 2026).
• Fidelity Investments, “Fidelity Youth” (product page, accessed October 1, 2026).
• Charles Schwab, “Schwab Teen Investor Account FAQs” (accessed October 1, 2026).
• FINRA, Regulatory Notice 20-07, “FINRA Reminds Member Firms of Their Responsibilities for Supervising UTMA and UGMA Accounts” (2020).
• Kristen Kuchar, Saving for College, “What is a UGMA and UTMA Account?” (updated July 15, 2026).
• Fidelity Investments, “Fidelity Youth FAQs” (accessed October 1, 2026).
• Greenlight, “What type of investment accounts are available through Greenlight?” (accessed October 1, 2026).
• Greenlight, “Greenlight plans for every family” (accessed October 1, 2026).
• Internal Revenue Service, “Topic no. 553, Tax on a child’s investment and other unearned income (kiddie tax)” (page reviewed September 24, 2026).
• Internal Revenue Service, “Frequently asked questions on gift taxes” (accessed October 1, 2026).
• Saving for College, “How 6 Different Assets Can Affect Your FAFSA and Financial Aid Eligibility” (accessed October 1, 2026).

This article is for general educational purposes only and is not tax, legal, investment, or financial aid advice. Account features, restrictions, and fees are as each company describes them as of the date above and can change, so confirm current terms with the provider. Custodial account rules come from state law and vary by state. Providers named here are examples, not recommendations. Investing involves risk, including possible loss of principal. GoodNest does not provide tax, legal, or investment advice and does not hold or invest funds.