Brokerage Accounts for Kids: Custodial vs. Regular (and How to Choose)
A brokerage account holds the investments — the real question is which kind for a kid. Custodial vs. Roth vs. regular, costs, and how to open one.
Key takeaways
- For a kid the question usually isn't whether to open a brokerage account, but which kind.
- A custodial account (usually a UTMA) is the flexible all-purpose choice, managed by an adult until the age of majority.
- A custodial Roth IRA adds tax-free growth but requires earned income.
A brokerage account is simply the account that holds investments — stocks, ETFs, and funds — and lets you buy, hold, and sell them. For a kid, the question usually isn't whether to open a brokerage account, but which kind.
The three options for a child
| Account | How it works | Whose money it is |
|---|---|---|
| Custodial brokerage (UTMA) | An adult manages it until the child reaches the age of majority, then it's theirs | The child's |
| Custodial Roth IRA | A retirement-flavored account with tax-free growth; needs the child to have earned income | The child's |
| Regular (individual) account | In a parent's own name, earmarked for the kid; more control, different taxes | The parent's |
Most families teaching a kid to invest start with a custodial brokerage account (a UTMA): low friction, no earned-income requirement, and the money is truly the child's. Then they add a custodial Roth once a teen has a job, for the tax-free growth.
What about costs?
Good news: most major brokers now charge no commission to buy or sell stocks and ETFs, and many offer fractional shares so you can start with just a few dollars. The cost actually worth watching is a fund's expense ratio — keep it low — not trading fees.
This explains how the account types work, not what to buy — MemoryBank is an education and display tool, not a broker or a financial advisor.
How to open one
It takes about 15 minutes online. You'll typically need the child's Social Security number and basic details, plus a way to fund it. The full step-by-step lives in How to Open a Custodial Account.
One thing to plan for
With a custodial account (UTMA), the money legally becomes the child's at the age of majority — that's a feature, but one worth preparing them for well before the day arrives. Here's what happens when your child turns 18.
Frequently asked questions
Can a kid have a brokerage account?
Yes — through a custodial brokerage account (UTMA), opened in the child's name and managed by an adult custodian until the child reaches the age of majority. A child can't open a regular brokerage account in their own name until they're legally an adult.
At what age can a child open their own brokerage account?
At the age of majority — 18 in most states, 21 in a few. Before that, the options are a custodial account (UTMA), a custodial Roth IRA if the child has earned income, or a parent's own account earmarked for the kid.
What kind of brokerage account is right for a child?
It depends on the goal. A custodial UTMA is the low-friction starting point — no earned-income requirement, and the money is truly the child's. A custodial Roth IRA adds tax-free growth once a teen has a job. A regular account in the parent's name keeps control with the parent but changes the taxes and whose money it legally is.
How much does a brokerage account for a kid cost?
Usually nothing to open or maintain — most major brokers charge no commissions on stocks and ETFs, and many support fractional shares so you can start with a few dollars. The cost worth watching is a fund's expense ratio, not trading fees.
What do I need to open a brokerage account for my child?
The child's Social Security number and basic details, your own information as custodian, and a way to fund the account. Opening one takes about 15 minutes online.
What to do this week
- Decide the goal: flexible growth (UTMA), retirement with a working teen (Roth), or parental control (regular).
- Pick a broker with no stock/ETF commissions and fractional shares.
- Open the account — it's about a 15-minute task.
- Connect it to MemoryBank so your kid can actually watch it grow.
Written by Josh Ackerman
Founder of MemoryBank. A computer scientist and M.B.A. with 20+ years of investing and technology experience, Josh built the first MemoryBank in his basement so his three kids could watch their own accounts grow. More about Josh →
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MemoryBank is a display and education tool, not a financial advisor. Nothing here is investment, tax, or legal advice. Verify program details with the IRS, your tax advisor, or a licensed financial professional before making decisions.