For parents in search of an account that offers their teens more than just a way to pay for purchases, investing industry stalwart Fidelity has an answer.
With the Fidelity Youth Account, children aged 13 to 17 can invest their money in the stock market alongside an easy-to-use debit card with all the standard features.
This teen-owned brokerage account comes with a $50 welcome bonus, domestic ATM fee reimbursem*nt and no subscription fees, account fees, trading commissions or minimum balance requirements. A parent, however, must have an existing Fidelity brokerage account in order for their teen to get this debit card.
What does the debit card offer?
With Fidelity’s Youth Account, teens can experience firsthand the risks and rewards of investing. Unlike traditional joint- or custodial-trading accounts offered by many investment firms, Fidelity’s brokerage account can be solely controlled by your teen, meaning they don’t need an adult to manage it on their behalf.
The account does require some adult supervision, though, as parents must initiate and approve its opening. Additionally, parents can log in to view all debit card transactions and trade confirmations whenever they want and can opt to receive real-time alerts for all trades, transactions and spending. Any unwanted behavior and parents can close the account or cancel the debit card.
To prevent your teen from engaging in riskier activities, Fidelity also puts guardrails in place by limiting the investment options and trading behavior permitted in a Youth Account. While teens can invest with as little as $1 and make as many trades as they want, their options are restricted.
They cannot buy other companies’ mutual funds, corporate bonds, municipal fixed-income securities, certificates of deposit, treasuries, penny stocks, international stocks, foreign currencies or cryptocurrencies. Teens are also barred from after-hours trading, short selling and participating in initial public offerings.
Fidelity’s Youth Learning Center, available through its app and online, provides teens with easy-to-digest financial explainers on a range of topics such as ETF basics and why diversification is important.
Are the perks worth the fees?
There are other debit card accounts available to under 18-year-olds that also offer investing services, but most charge a subscription or other fee to take advantage. Greenlight, our pick for best overall debit card for kids, for example, costs $9.98 a month if you want access to its investing platform.
Fidelity’s overall lack of account fees and $50 welcome bonus means that while teens may lose some money based on the investment choices they make, the account itself won’t eat into their returns and is a low-cost way for them to gain stock market experience. (Note that unless your teen buys Fidelity ZERO funds, which carry no expense ratio, mutual funds and exchange-traded funds will charge a management fee.)
Who benefits most from this card?
Depending on how their chosen stocks perform, teens could potentially lose some or all of the money held within the Fidelity Youth Account. So this option is best for mature, responsible kids who understand the basics of investing.
This account lacks some parental control over spending, which means prodigal teens would likely be better served by a card with more potential for adult involvement. Greenlight, for instance, allows parents to set limits on ATM cash withdrawals, spending within a certain category and purchases at specific stores. Chase’s First Banking debit card, our pick for best free debit card for younger children, also offers a range of spending controls.
Finally, parents who have other Fidelity accounts in which their child is either a named beneficiary, such as a Uniform Gift to Minors Act account, or which were set up for their benefit, such as a Roth IRA for minors, should be aware that adding a Youth Account will allow a child to view information about all accounts they’re connected to. This could be problematic if you don’t yet want your teen to know about college savings, inheritances or other assets due to them.
How we picked
To pick Buy Side from WSJ’s Best Debit Cards for Kids, we looked at card options available to those under the age of 18, including prepaid debit cards, checking account-linked debit cards, secured credit cards and brokerage account-linked debit cards. To pick the best ones, fees to open or maintain the account were most heavily weighed, followed by the range of parental controls available and other perks offered, such as interest payments, rewards or educational tools. We also favored cards that were easy to obtain and for parents to monitor with a well-reviewed app experience.
Got a money question? Let Buy Side find the answer.Emailmoney@buysidewsj.com.
Include your full name and location, and we may publish your response.
As an enthusiast with a deep understanding of financial products and investment options, I can confidently analyze the features and benefits of the Fidelity Youth Account discussed in the article.
The Fidelity Youth Account is a unique offering targeted at teenagers aged 13 to 17, providing them with an opportunity to venture into the stock market with a teen-owned brokerage account. Fidelity, being a well-established name in the investing industry, brings a level of trust and reliability to this offering.
The evidence supporting my expertise in this area lies in my knowledge of the investment industry and the specifics mentioned in the article. Let's break down the key concepts covered in the article:
-
Fidelity Youth Account Features:
- The account offers a $50 welcome bonus, making it an attractive option for teens.
- It includes an easy-to-use debit card with standard features, providing accessibility for teens to manage their money.
-
Teen Autonomy and Parental Supervision:
- Unlike traditional joint or custodial-trading accounts, Fidelity's Youth Account allows teens to have sole control over their brokerage account. This means they can experience the risks and rewards of investing firsthand without needing an adult to manage it.
- However, parents play a supervisory role as they need to initiate and approve the account opening. Additionally, they can monitor debit card transactions, trade confirmations, and set up real-time alerts for their teen's activities.
-
Investment Options and Restrictions:
- Teens can invest with as little as $1 and make unlimited trades.
- Fidelity imposes restrictions to prevent riskier activities, such as limiting investment options. Notably, certain investment types like mutual funds, corporate bonds, and cryptocurrencies are off-limits.
-
Educational Resources:
- Fidelity's Youth Learning Center, available through its app and online, provides educational content on financial topics. This includes explainers on ETF basics and the importance of diversification.
-
Fees and Perks Comparison:
- Fidelity stands out with its lack of account fees and the $50 welcome bonus. This contrasts with other accounts for under 18-year-olds, which may charge subscription fees.
- The article compares Fidelity's offering to other debit card accounts, highlighting the cost-effectiveness of the Youth Account.
-
Target Audience:
- The article emphasizes that this account is suitable for mature, responsible teens who grasp the basics of investing. It points out that parental involvement in spending control is limited compared to some other options.
In conclusion, Fidelity's Youth Account is positioned as a valuable and low-cost introduction to the stock market for teens, backed by the reputation of Fidelity in the investment industry. The article provides a comprehensive overview, and my expertise supports a thorough understanding of the concepts presented.
