Online Stock Trading???

[cindermomma]

Hi there! DS13 made some money cutting grass this past summer and has decided he wants to invest in some stocks online. Maybe do some trading with it as well. First of all - not even sure if he can legally do this in his name due to his age??? I would have no problem putting it in my name for him. Also wondering if anyone here has any recommendations for companies? E-Trade? Ameritrade?

Thanks in advance!

 

[wiigirl]

I think you have to be atleast 18 to open an account for online trading?

 

[cindermomma]

I think you have to be atleast 18 to open an account for online trading?

Thinking you are right.......will have to look into it.

 

[crisi]

You can open a custodial account for him and as long as he trades under your supervision, he will be fine.

 

[Belle & Ariel]

We use Fidelity.
It costs 7.95 to buy or sell if you place order online. You can set price limit or do current trading price.
We have been very pleased with them.

 

[Belle599]

If you put it under your name, wouldn't you be responsible for the tax implication of capital gains?

 

[crisi]

If you put it under your name, wouldn't you be responsible for the tax implication of capital gains?

With a minor, you are almost always responsible for the taxes - no matter whose name its in. The government figured out long ago that letting the wealthy shield their income by passing it off as their childrens' income was an abused situation.

 

[MAJPLO]

TDAmeritrade. Great tools for looking things up and tracking changes, etc.

 

[ktmo]

Both of my girls have Sharebuilder accounts. They are minors, so they are custodial accounts. It is just "fun" money. I have it set up for automatic investment so it is a little cheaper ($4 a trade). They of course buy Disney Stock.

 

[MillauFr]

They of course buy Disney Stock.

You know that will be a winner. With the prices they are charging for the parks and cruises they have to be making big profits.

I use E*TRADE and have been very happy.

 

[DVCcurious]

Here is the correct answer for you:

Your son should set up a Roth IRA. Anybody who has earned income can set up a Roth IRA for the greater of $5,500 or their earned income. So if your son earned $2,000 cutting grass he can set up a Roth IRA for $2,000. There are no age restrictions.

Now, it's possible that companies like scottrade, etrade, ameritrade, etc may have their own rules about who can set up an account.

I would recommend looking for a local office of one of these online brokers and going in to talk to them about this. I have used Scottrade for 10 years and I am a very happy customer. They have branches everywhere. I'm sure other online brokers probably have branches as well. Take your son and head in to one of these offices, explain your situation, and see what they'll do for you.

But legally he is allowed to set up a Roth IRA in his own name. This will not affect your financial situation in the least because his account will be owned solely by him.

 

[peggster]

Anybody who has earned income can set up a Roth IRA for the greater of $5,500 or their earned income. So if your son earned $2,000 cutting grass he can set up a Roth IRA for $2,000.

Great advice here about setting up a Roth IRA. Just wanted to clarify: the maximum Roth IRA contribution is the lesser of $5,500 or actual earned income.

 

[crisi]

I'd never set up a Roth IRA for a kid interested in the stock market. An IRA isn't a learning experience - its an investment. First stocks should be bought and sold, you should buy things that you watch, individual stocks - so that you can learn.

For a kid interested in investing money towards retirement, sure. For a kid interested in learning about investing, nope.

 

[cindermomma]

Thank you all for the replies! I will definitely be setting up a custodial account for him. I also like the Roth IRA idea. Will be looking into that also. He is very interested in the stock market. He has been researching stocks, companies, ect. This should be a great learning experience for him! Thanks!

 

[DisMN]

I find it a very costly learning experience going the traditional investment route, which is by using any company that has fees. When you're a small guy anything you might make gets eaten up by the nibble here nibble there fee for this and that trading places.

There is one place I'd send a kid, or anyone really who just wants to try out simple fee free investing. Send him (or accompany him I suppose LOL) to
Loyal3.

I hope he has fun!

 

[Shelly F - Ohio]

I'd never set up a Roth IRA for a kid interested in the stock market. An IRA isn't a learning experience - its an investment. First stocks should be bought and sold, you should buy things that you watch, individual stocks - so that you can learn.

For a kid interested in investing money towards retirement, sure. For a kid interested in learning about investing, nope.

I agree an IRA is not the way to go for this kid. He might want to subscribe to Motley Fool web site. It talks about the stock market what is hot to invest in and what is not

http://www.fool.com/