Teaching Your Teen to Invest: 5 Ways to Get Started

Key Takeaways

• You can teach your teen how to start investing with as little as $1.
• Learning to invest wisely can have a positive impact on your teen throughout their adult life. 
• Parents can set up age-appropriate investment accounts and use apps and other tools to get their teens started.
• Investing involves risk, so you should explain that your teen can potentially lose all the money they invest.

If you have a teenager, there’s a good chance you’ve heard them talk about investing. In fact, in a study published in April 2026, a whopping 95% of teens said they were interested in learning about this topic.

Why are teens so eager to invest? It’s a mix of factors, including new investing platforms built for teens, viral meme coin trends and influences like #RichTok, a TikTok trend where influencers show off expensive lifestyles. According to 55% of Gen Z’ers (ages 14 to 29 in 2026), social media is their top motivation for investing. 

As a parent, the idea of letting your teen invest money is probably a little scary, especially if they’re going to social media for advice. You might even picture your teen losing all of your hard-earned money overnight. 

But teaching your teen to invest doesn’t have to mean letting them ruin your finances! There are ways to give teenagers some sound guidance and help them learn the basics without investing more than $1. Here’s how you can set them up for success.

Explain how investing fits into money management

The first thing your teen should know about investing is that it’s not a shortcut to getting rich. In fact, there’s no magic trick that will suddenly give them enough money to buy designer handbags and private flights.

With investing, it can take years or even decades to see significant returns, and you can lose everything overnight if you don’t invest wisely. Many of us saw young investors learn this lesson in 2021 when GameStop shares crashed after a run-up and in 2022 when Luna crypto crashed. These could both be good examples to discuss with your teen!

Your teenager should also understand that learning to invest is not the same as knowing how to manage money. While it’s useful to understand how investing works, they also need to learn financial basics like how to save money and avoid debt. 

In short, the main role of investing is not to become wealthy overnight, it’s to create a financial safety net for your future: meaning years or even decades from now, not months. 

Go over investing basics with your teen

Before your teen invests their first dollar, help them understand the basics of how investing works. Learning the following investing principles can help them make safer choices and avoid costly investment decisions:

• Consider risk levels: With most investments, there’s a chance you can lose money. However, some investments are high-risk (think trending cryptocurrencies) while others are very low risk (think certificates of deposit or CDs). 
• Give it time: It’s normal to see the market go up and down, and the fluctuations can be stressful. But the market generally trends upward over time, so it’s best to invest for the long-term, meaning years versus months.  
• Don’t panic: When an investment loses value, it’s easy to panic and sell. But selling investments during a dip means locking in your losses. Instead of panicking, teach your teen to be patient and focus on their long-term financial goals. 
• Avoid FOMO: The fear of missing out (FOMO) can come into play when a stock or coin suddenly becomes trendy or goes viral. But acting on FOMO can lead to buying overpriced assets and losing money fast.
• Diversify: If your teen invests everything in one company’s stock or only invests in one industry, there’s a bigger chance they’ll lose all their money at once. To reduce that risk, teach them to “diversify,” or to spread their money across different types of investments, such as stocks, bonds and real estate investment trusts (REITs).
• Consider taxes: If they have more than $2,700 in unearned income (such as interest and dividends from investments) in 2026, your teen may need to file their own tax return and pay taxes on the earnings.

Show your teen how compound returns work

One of the best reasons to start investing at a young age is that your teen can use compound returns to their advantage. Compounding is what happens when your investment earns returns (or makes money) and then the money you invested, plus your returns, generate more returns.

For example, if your teen invests $100 and earns a 7% return in their first year, they would have $107. If they earn another 7% the second year, they would have $114.49.

Over long periods of time, the impact of compound returns is even greater. Let’s say your teen invests $25 a month and earns an average of 7% a year starting at age 15. By age 40, they would have about $18,975. But if they wait until age 30 to start investing that amount, they would only have $4,145 by age 40. 

Note that 6% to 7% is the historical average for returns on certain stock market investments, however this rate of return is not guaranteed.

Have your teen start investing with small amounts

If your teen is asking for hundreds of dollars to start investing, let them know they don’t need that much. There are brokerage accounts, or accounts that let you buy investments, where you can start with as little as $1. Once you transfer money into the account, your teen can buy exchange-traded funds (ETFs) and trade “fractional shares” of stocks. Whatever amount they put into the account, make sure it’s money your teen can afford to lose.

Explore investment accounts for teens

For most investment accounts, your teen will need you to open the account for them. Once you’ve gone over the basics of how investing works, you can explore accounts that are available to teenagers, including:

• 529 plans: A 529 plan can help your teen save for college. These accounts let you invest money and then make tax-free withdrawals for qualified education expenses, such as tuition and books.
• Custodial brokerage accounts: Custodial brokerage accounts let you invest on your child’s behalf. Once your teen reaches the age of majority in your state (often 18), they must take over the account.
• Custodial IRAs: If your teen earns taxable income, you can open a custodial traditional IRA or a Custodial Roth IRA and your teen can contribute either their full annual income or the annual contribution amount allowed by the IRS, whichever amount is less. As the guardian, you’ll be the manager of the account until your child reaches the age of majority.

For details on how contribution limits and how these accounts can impact your taxes, we highly recommend speaking with a Certified Public Accountant (CPA) or tax attorney.

Use investing apps and online tools for teens

There are many apps and online tools that are geared toward teen investing. To find the best tool for you and your teenager, make sure it has low or no fees and has parental controls that let you oversee your teen’s choices.

For example, one option is to set up an investing account for your teen on Greenlight. With Greenlight’s Core plan ($5.99 a month), you and your teen investor can choose exchange-traded funds (ETFs) and stocks, and invest starting with as little as $1. However, your teen has to request your permission to make trades.

Another safe option is “paper trading,” which lets you simulate trading without using money. With paper trading tools, which are available online for free through some brokerages, your teen can choose a few companies they’re interested in and track them to see how their investments would perform.