Now teenagers can trade stocks using Fidelity’s new youth investment accounts

A Fidelity Investments location in New York.

Scott Mlyn | CNBC

Fidelity Investments lowers the barrier to entry for a new cohort: teenagers.

The investment firm opens the Fidelity Youth Account, an investment and savings account for 13 to 17 year olds. The toll-free account allows teens to buy and sell stocks, ETFs, and fidelity mutual funds.

The accounts that Fidelity calls the first of their kind in the industry are only available to teenagers with a parent who also has a Fidelity account. Fidelity portrays the company as an educational opportunity where parents can monitor their child’s activities.

Younger investors flocked to the stock market last year as the Covid-19 pandemic created a unique climate for private investors. Millions of new customers traded the epic market comeback of the coronavirus recession in 2020, opting for an epic short squeeze in GameStop in January.

However, the onslaught of new young investors has not been without negative effects, argue critics. The popularity of the stock trading app Robinhood, which requires investors to be at least 18 years old to use its services, has been criticized for helping to create bubbles in so-called meme stocks like GameStop as well as in cryptocurrencies. Robinhood isn’t the only broker going after younger generations, however.

Of the 4.1 million new accounts Fidelity added in the first quarter of 2021, 1.6 million were opened by retail investors under the age of 35, an increase of more than 222% year over year.

Fidelity’s new youth account, first reported by the Wall Street Journal, offers customers a no minimum investment debit card when opening an account.

According to David Dintenfass, Fidelity’s chief marketing officer, young investors are not allowed to trade options and cannot trade on margins.

Ink barrel said about 30% of teenagers traded stocks during the pilot. The group that traded invested in bigger stocks like the S&P 500 index fund, Apple, and Tesla.

“Our goal for the Fidelity Youth Account is to encourage young Americans to learn through action and have meaningful family conversations on financial topics,” said Jennifer Samalis, senior vice president of acquisitions and loyalty for Fidelity Investments, in a press release.

When the teen turns 18, the account will switch to a standard brokerage account.

As of the first quarter, Fidelity has 83.4 million accounts and $ 10.4 trillion in assets under management.

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