The stock market, indeed, is an interesting topic for a lot of us out there. And why not? It is interesting, and the risk factor adds a thrill to it. A lot of you may have wondered how old you have to be to buy stocks, and the answer is just as simple.
As long as you are 18 years old, you can easily buy stocks.
However, the stock market is a lot more than just buying stocks or being eligible enough to do so. Every time the stock market comes up in a conversation, it is generally accompanied by a substantial amount of complications.
The continuous use of technical terms like volume or margin has made the entire concept of the stock market super complex and can literally push people away from understanding the concept of it, especially bored and fickle-minded teenagers.
However, it is quite an unthoughtful and stupid decision. For the sake of their financial future, teens must be more invested in investing in stocks and fall into the trap of boredom.
When understood well, the stock market is one of the most interesting and time-consuming things that you can invest in.
So without any further delay, let us explore more about the intricacies of the stock market and test out how eligible you are to invest in it.
Key Points To Remember
- The stock market is apparently an online supermarket – the only difference is that you will buy stocks of companies instead of groceries, and the prices go up and down drastically, and you may not only sell but also buy stocks.
- When you hear people talk about the stock market, they mainly refer to an index that is only a representative portion of the stock marketplace.
- There are two major components of the stock market: the primary market and the secondary market.
- Stocks for teens are only available as long as the teenagers are older than 18 years of age, which is also the legal age for an individual to vote. However, they can have an adult get it done on their behalf.
Do You Have To Be 18 To Invest In Stocks?
Well, the answer is YES.
You cannot be a minor if you want to invest in the stock market. You have to be of the age of 18 years to be able to invest in stocks. However, the good news is that there are certain ways surrounding this rule that may allow minors to be able to invest in the stock market with parental guidance.
The first and foremost step while investing in the stock market is for you to open a stock brokerage account. This account apparently will be your access ticket to the stock market, within which companies exchange their publicly traded shares.
Companies like Schwab, Vanguard, and Fidelity provide these accounts. Every standard brokerage account is bound to have a minimum age requirement of 10 years.
Luckily, there is a special kind of account known as the custodial investment account. This account consists of two account holders: the custodian and the beneficiary.
The custodian must be 18 years old. They are the ones who actually open the account and manage it. The beneficiary, on the other hand, maybe a minor. Although they are the
technical owners of the account, they cannot exercise direct control over it.
The custodian shall remain in control of the account until the beneficiary has turned 18. At that point, the beneficiary may sell the assets and exercise full control of the account.
While a parent or guardian generally acts as a custodian for the account, there is no such mandate for it. Any legal adult can act as the custodian for the beneficiary account. This means even your grandparent or any adult from the family can open a custodial beneficiary account on your behalf.
How To Buy Stocks?
Now that you know how old you need to be to invest in stocks, let us go through some more facts on facts on stocks that will make your investment experience smoother.
The very initial step is to learn how to invest in the stock market. Well, it is impossible to make a call at the stock exchange and sell or buy stocks directly. You shall need a stockbroker who will help you to transact while acting as a middleman in between.
A broker may either be an individual or a website.
The internet has, however, made the process quite easy. The days when you would need to call up a broker, negotiate the prices, and then place an order over the phone are gone.
Now you can easily create a brokerage account with any of the many online brokers available out there, deposit your money, and then continue to purchase and sell as per your wish on your phone, laptop, or tablet.
As long as you have sufficient cash in your account, you can literally invest in shares of companies all around the world without a second thought.
Beware Of The Fluctuating Risks
If you ever question a professional about how old you have to be to buy stocks, they will emphasize the market risks more than your age.
The reason being? The sock market is quite popular for its notorious price fluctuations.
For instance, if you go to Target on Monday and see a shirt priced at $5.00, it is likely that it will remain at the same price on Friday. But unfortunately, the stock market does not function in the same way.
Once a value is assigned to each share, the price keeps fluctuating throughout the day, with buyers and sellers bargaining over the prices responding to new information or general demand.
You can either accept the quoted price, or you can place an order to sell or buy the specific shares at a price of your choice. However, there is no guarantee that your demands will be met if you choose to bargain the prices.
The Bottom Line
The stock market is no rocket science. There are many other factors to worry about than losing sleep over how old you have to be to buy stocks.
The stock market is nothing but an online market where you can purchase and sell the ownership of companies at varying prices throughout the day.
Once you get past all the complications, it is actually the most interesting thing you can invest your time and money in.
Teenagers are mostly interested in knowing about quick ways to earn money without having to break a sweat, and the stock market is the exact right place where they can go.
So, if you are a teen, trust me on this, go and learn as much as you can about the stock market, and you will definitely be thanking me later!