Investing with a trusted firm like Fidelity can be a smart move for building wealth, but age requirements are often a key consideration. Whether you're a young adult eager to start your investing journey or a parent looking to set up a financial future for your child, understanding Fidelity's rules is crucial. Let's dive deep into the various account types and their associated age limits.
Step 1: What's Your Investing Goal? (And Your Age!)
Before we get into the nitty-gritty, let's figure out why you're looking to invest with Fidelity. Are you:
A teenager (ages 13-17) wanting to learn about investing and manage your own money?
An adult (18+) looking to open an individual brokerage account, retirement account, or a managed portfolio?
A parent or guardian who wants to save and invest for a child's future, such as college or general financial well-being?
Your answer will guide us to the most relevant Fidelity account types and their specific age requirements. So, take a moment to consider your current situation and your financial aspirations!
Step 2: Understanding Age Requirements for Adults (18+)
For individuals who have reached the age of majority (typically 18 years old in most states in the U.S.), opening an investment account with Fidelity is generally straightforward.
Sub-heading: Individual Brokerage Accounts
Age Requirement: 18 years old or older.
How it Works: These are versatile accounts that allow you to invest in a wide range of securities, including stocks, bonds, mutual funds, and ETFs. There are often no minimums to open or maintain these accounts at Fidelity.
Key Feature: You have full control over your investment decisions and can withdraw contributions or earnings at any time without age-related restrictions (though capital gains taxes may apply).
Sub-heading: Retirement Accounts (IRAs, 401(k)s)
Age Requirement: Generally 18 years old or older to open an individual retirement account (IRA). For a 401(k), the age requirement is typically tied to your employment, as these are employer-sponsored plans.
How it Works:
Traditional IRA: Contributions may be tax-deductible, and taxes are paid upon withdrawal in retirement.
Roth IRA: Contributions are made with after-tax money, and qualified withdrawals in retirement are tax-free.
401(k): An employer-sponsored retirement plan where contributions are often pre-tax and grow tax-deferred.
Important Note: While you can open a Roth IRA at 18 (or even younger if you have earned income – more on that below!), there are specific rules around withdrawals without penalties, typically after age 59½ and after the account has been open for at least 5 years.
Sub-heading: Managed Accounts (Fidelity Go, Fidelity Managed FidFolios®)
Age Requirement: 18 years old or older.
How it Works:
Fidelity Go: This is Fidelity's robo-advisor service. You answer a few questions about your financial goals and risk tolerance, and Fidelity's algorithms manage your investments for you. There is no minimum initial investment to open a Fidelity Go account.
Fidelity Managed FidFolios®: These are professionally managed portfolios. They typically have a higher minimum investment requirement (e.g., $5,000) and come with an advisory fee.
Benefit: These accounts are great for those who prefer a hands-off approach to investing.
Step 3: Age Requirements for Minors (Under 18)
Fidelity offers several excellent options for parents and guardians to help younger individuals start their financial journey.
Sub-heading: The Fidelity Youth® Account (Ages 13-17)
Age Requirement: Teens between the ages of 13 and 17.
How it Works: This is a groundbreaking account that allows teens to own and manage their own brokerage account with parental oversight.
Teen Control: The teen makes all the investment decisions, giving them valuable hands-on experience.
Parental Oversight: Parents or guardians with a Fidelity account can open this on behalf of their teen and have access to view account activity, oversee trades, and transfer money.
Features: The account comes with a debit card, no account fees or minimums, and access to a dedicated app with educational content and tools.
Conversion to Adult Account: When the teen turns 18, the Fidelity Youth® Account is eligible to convert to a regular Fidelity brokerage account with expanded features.
Sub-heading: Custodial Accounts (UGMA/UTMA)
Age Requirement: No specific age requirement to open for a minor; can be opened for children of any age, from birth up to typically age 18 or 21 (depending on the state).
How it Works: These accounts are opened and managed by an adult (the "custodian") on behalf of a minor (the "beneficiary"). The money held in the account is an irrevocable gift to the child.
Custodian Control: The custodian manages and invests the money until the child reaches the "age of majority" in their state (which can be between 18 and 25).
Transfer of Control: Once the child reaches the age of majority, the assets in the account must be transferred to their control, and they can use the money for any purpose they choose.
Consideration: Because these assets are legally owned by the child, they can sometimes impact financial aid eligibility for college.
Sub-heading: Roth IRA for Kids
Age Requirement: No age requirement to open. However, the minor must have earned income in the year they contribute.
How it Works: Similar to an adult Roth IRA, contributions are made with after-tax money, and qualified withdrawals in retirement are tax-free.
Earned Income is Key: This is the most critical requirement. If a child earns money from a job (e.g., babysitting, mowing lawns, summer job), a parent or guardian can open and contribute to a Roth IRA on their behalf. The contribution limit is either 100% of their earned income or the annual IRS limit (whichever is less).
Custodial Management: A parent or other adult must open and serve as the custodian for the Roth IRA for Kids, managing the investments until the child reaches adulthood (age 18 or 21, depending on the state).
Long-Term Benefit: Starting a Roth IRA early can provide significant tax-free growth over many decades.
Sub-heading: 529 College Savings Plans
Age Requirement: No age restrictions for the beneficiary. Can be opened for children of any age, and there are no age limits for contributions or withdrawals (as long as they are for qualified educational expenses).
How it Works: These plans are specifically designed to save for qualified higher education expenses on a tax-advantaged basis.
Tax Benefits: Contributions are typically not federally tax-deductible, but the earnings grow tax-free and qualified withdrawals for educational expenses are also tax-free. Some states offer tax deductions for contributions.
Account Owner Control: The person who opens the 529 plan (the "account owner") retains control of the account, even as the beneficiary gets older. They can change the beneficiary to another eligible family member if needed.
Flexibility: 529 plans offer a great way to save for college without the beneficiary gaining control of the funds at a young age, unlike custodial accounts.
Step 4: The Application Process: What You'll Need
Regardless of the account type, opening a Fidelity account is typically an online process that requires some key information.
Sub-heading: For Adults (18+) Opening Their Own Account
Personal Information: Your full legal name, date of birth, Social Security number (SSN) or Taxpayer Identification Number (TIN), and contact information.
Employment Information: Your employer's name and address (if applicable).
Financial Information: Bank account details for funding your account (routing and account numbers).
Identification: A valid government-issued photo ID (like a driver's license or passport) may be required for verification.
Sub-heading: For Parents/Guardians Opening Accounts for Minors
Your Information (as the parent/custodian): All of the above personal, employment, and financial information for yourself.
Child's Information (as the beneficiary/teen):
For a Fidelity Youth® Account: The teen's full legal name, date of birth, and Social Security number.
For Custodial Accounts or Roth IRAs for Kids: The minor's full legal name, date of birth, and Social Security number.
For 529 Plans: The beneficiary's full legal name, date of birth, and Social Security number.
Proof of Relationship: In some cases, Fidelity might ask for documentation to prove your relationship to the minor (e.g., birth certificate).
Step 5: Making Your First Investment
Once your account is open and funded, it's time to start investing!
Sub-heading: Research and Education
Utilize Fidelity's Resources: Fidelity offers a wealth of educational materials, research tools, and insights on its website and within its apps. Take advantage of these to learn about different investment options, market trends, and financial planning strategies.
Start Small and Learn: Especially for new investors or teens, consider starting with smaller amounts and gradually increasing your investments as you gain confidence and knowledge.
Sub-heading: Choosing Your Investments
Diversify: Spread your investments across different asset classes (stocks, bonds, mutual funds, ETFs) to reduce risk.
Consider Your Goals: Your investment choices should align with your financial goals (e.g., long-term growth for retirement, saving for a down payment, college savings) and your risk tolerance.
Seek Guidance (Optional): If you feel overwhelmed, consider utilizing Fidelity's managed account services or seeking advice from a financial professional.
Frequently Asked Questions (FAQs)
How to open a Fidelity brokerage account if I am 18 or older?
You can open a Fidelity brokerage account online through their website. You'll need your personal information (SSN, date of birth, address), employment details, and bank account information to fund the account.
How to open a Fidelity Youth Account for my teenager?
If you are a Fidelity customer, you can open a Fidelity Youth Account for your teen (ages 13-17) through your existing Fidelity account. You'll need your teen's Social Security number and consent.
How to open a custodial account (UGMA/UTMA) at Fidelity for a child under 13?
You can open a custodial account online by providing your information as the custodian and the minor's information (SSN, date of birth). You will manage the account until the child reaches the age of majority.
How to open a Roth IRA for a child who has earned income?
A parent or guardian can open a Roth IRA for Kids on behalf of a minor who has earned income. You'll need the child's SSN and proof of earned income if requested.
How to open a 529 College Savings Plan with Fidelity?
You can open a 529 plan directly through Fidelity's website. You'll need your information as the account owner and the beneficiary's (student's) information.
How to invest for a newborn with Fidelity?
For a newborn, a custodial account (UGMA/UTMA) or a 529 college savings plan are common options. You, as the parent or guardian, would open and manage the account.
How to transfer money into my Fidelity account?
You can typically transfer money into your Fidelity account via electronic funds transfer (EFT) from your bank, wire transfer, check deposit, or by transferring assets from another brokerage firm.
How to choose investments for my Fidelity account?
Fidelity offers extensive research tools, screeners, and educational resources to help you choose investments like stocks, ETFs, mutual funds, and bonds. Consider your financial goals and risk tolerance.
How to get financial guidance from Fidelity?
Fidelity provides various levels of guidance, from free online planning tools and educational content to managed accounts (like Fidelity Go) and direct access to financial advisors for more personalized advice.
How to view my child's Fidelity Youth Account activity?
As the parent or guardian who opened the Fidelity Youth Account, you will have access to view your teen's account activity, including trades and transactions, through your Fidelity account login.