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Teenagers Take Charge: Investing for Future Homes and Retirement
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Published in Stocks and Investing on Tuesday, December 2nd 2025 at 1:16 GMT by The Wall Street Journal- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
The New Wave of Teen Investors: Building a Future Home and Retirement One Trade at a Time
In a world where the next generation is already on the brink of financial independence, a growing number of teens are taking control of their economic futures by investing in the stock market. A recent feature on MSN, titled “Meet the Teens Investing in Stocks for Their Future Home and Retirement,” dives into how adolescents are using modern brokerage platforms, custodial accounts, and a fresh, digitally native approach to build wealth long before their 30s. This article distills the key insights, highlights real‑world examples, and outlines the practical steps teens and their families can take to harness the power of early investing.
1. The Motivational Shift: From “Just a Hobby” to “A Life‑Changing Strategy”
The article opens with the story of 16‑year‑old Maya Ramirez from Texas, who began trading at 14 after a family conversation about home‑ownership and retirement. “I wanted to save for my own house, and I realized the only way to do that was to start investing early,” she says. Maya’s motivation—saving for a future home and building a nest‑egg for retirement—mirrors a broader trend: teens are not just dabbling for the thrill of a good trade; they are treating investing as a strategic path to financial security.
This sentiment is echoed by a cohort of teens across the United States who use apps such as Robinhood, Webull, Acorns, Stash, and M1 Finance. According to the MSN article, about 35% of high‑school students in a recent survey reported having an investment account or saving in a brokerage app. The common thread among them? The desire to create a future that goes beyond the usual college fund.
2. How Teens Are Getting Started: The Mechanics of a Custodial Brokerage Account
Because teens lack legal capacity to enter contracts on their own, most of them rely on custodial accounts. The piece explains how parents open a custodial brokerage account at firms like Fidelity, Charles Schwab, or TD Ameritrade. The funds are technically the child’s property, but the parent manages the account until the teen reaches 18 (or 21, depending on state law).
“The custodial account is a great middle ground,” says Dr. Elena Torres, a family‑finance professor at Georgetown. “Parents maintain oversight, but teens get the experience of real market dynamics.”
A handy resource cited by the article is the Investopedia guide on custodial accounts (https://www.investopedia.com/terms/c/custodialaccount.asp). It clarifies that custodial accounts can be used for various investment vehicles—stocks, bonds, ETFs, and even mutual funds—and that the child receives the tax advantages of holding securities.
3. Building a Long‑Term Investment Plan
a. Start Small, Dream Big
The article stresses the principle of dollar‑cost averaging. By investing a fixed amount monthly—say, $50—teens can buy more shares when prices dip and fewer when they rise. Over time, the volatility evens out and the power of compounding kicks in.
b. Low‑Cost Index Funds and ETFs
The MSN piece highlights that most teen investors lean toward low‑cost index funds such as the Vanguard Total Stock Market ETF (VTI) or the S&P 500 ETF (SPY). These funds offer diversification across sectors, reducing the risk that any single stock’s performance will derail their portfolio.
“I choose index funds because they’re low‑fee and I don’t need to pick winners or losers,” says 17‑year‑old Jordan Lee. “I just want a steady growth.”
c. Risk Tolerance and Age‑Based Asset Allocation
One of the standout suggestions is to maintain a “time‑in‑market” mindset. As teens are typically 10–20 years away from major life goals like buying a house, a higher equity allocation (80%–90%) is appropriate. As the teen ages, the portfolio can gradually tilt toward bonds or cash equivalents to preserve capital.
d. Educational Resources
The article recommends several educational tools: - The Investopedia “Beginner’s Guide to Investing” (https://www.investopedia.com/terms/b/beginner.asp) for foundational knowledge. - The Khan Academy finance and capital markets courses, which explain compound interest, risk, and diversification. - Brokerage‑hosted webinars such as Fidelity’s “Investing 101” series, which break down account setup, trade execution, and tax considerations.
4. Tax Considerations: Capital Gains and the Roth Angle
While custodial accounts allow teens to build wealth, the tax implications are significant. Capital gains on investments held for less than a year are taxed at ordinary income rates, while long‑term gains enjoy a lower tax bracket. The article highlights the option of a Roth IRA—another vehicle teens can use, typically with a parent as a custodian. Roth IRAs offer tax‑free growth, which can be a powerful advantage when the teen’s earnings are low but expected to increase over time.
“We opened a custodial Roth IRA for our daughter last year,” shares Melissa Harper, a mother of a 16‑year‑old. “We’re already seeing the benefits when she sells a few stocks. The taxes are minimized.”
5. Success Stories: Teens Who Are Already Living the Dream
Beyond anecdotes, the MSN article showcases concrete results. One teen, Alex Chen from Ohio, has accumulated $3,000 in a brokerage account by age 18—an amount enough to cover a down payment on a starter home in some cities. Another, 15‑year‑old Priya Singh, used her earnings to fund a small Etsy shop that now sells custom graphic tees. Both narratives underscore that investing is not only about saving; it can fuel entrepreneurial ambitions.
6. The Role of Parents: Guidance Without Over‑Control
Parents play a pivotal role in setting expectations and teaching discipline. The article outlines a collaborative approach: parents can set up “investment clubs” with friends’ kids, where each teen selects a company to research, debates its merits, and records the outcome. This exercise fosters critical thinking and a sense of ownership.
“We’re learning to analyze quarterly reports,” says Maya. “It feels like we’re actually working for ourselves.”
7. Practical Next Steps for Teens and Families
- Open a Custodial Brokerage Account – Choose a platform that offers educational resources and low minimums. Fidelity, Schwab, and E*TRADE are excellent choices.
- Set a Monthly Investment Goal – Even $25 can grow into thousands over a decade.
- Select Low‑Cost Index Funds – Begin with an all‑U.S. equity ETF, then consider international diversification.
- Learn About Taxes – Understand capital gains, dividends, and how a Roth IRA can help.
- Track Progress – Use a spreadsheet or a budgeting app to monitor returns and adjust allocations as needed.
- Engage with the Community – Join online forums like the “Investing for Teens” subreddit or local investment clubs.
8. Conclusion: The Compound Effect of Youthful Investing
The MSN feature underscores a powerful reality: the earlier a teen starts investing, the larger the potential return due to compound growth. A small, consistent contribution can translate into a substantial nest‑egg that fuels future milestones—buying a first home, starting a business, or building a robust retirement plan.
By leveraging custodial accounts, low‑cost index funds, and a disciplined approach, teens today can transform what many previously thought to be “adult responsibilities” into a manageable, rewarding financial journey. The story isn’t just about a few success stories; it’s a blueprint for a generation ready to rewrite the rules of wealth accumulation. If you’re a teen or a parent reading this, the takeaway is simple: start early, stay consistent, and let the market work for you long before you’re in the prime of your career.
Read the Full The Wall Street Journal Article at:
[ https://www.msn.com/en-us/money/markets/meet-the-teens-investing-in-stocks-for-their-future-home-and-retirement/ar-AA1RnRiY ]
