Video source: YouTube, CNBC Television
Teenagers can now use a new no-fee service from Fidelity Investments to save, spend and invest their money.
On Tuesday, the firm unveiled its Youth Account offering, which will enable 13- to 17-year-olds to deposit cash and have a debit card, as well as buy and sell US stocks, Fidelity mutual funds and many exchange-traded funds.
Teens can make their own trades through a simplified experience on Fidelity’s mobile app, with zero fees or minimum balance requirements. The youth account requires a parent or guardian to have a Fidelity account, and account activity can also be monitored by parents or guardians.
The youth account, which will become a standard brokerage account with more options once the teen turns 18, will also offer educational resources, Fidelity said.
Fidelity noted that it is the industry’s first brokerage designed exclusively for 13- to 17-year-olds and that it hopes it will help teens develop good financial habits through hands-on experience managing money.
According to The Associated Press, younger investors in their 20s and 30s are increasingly jumping into the market, with trading volumes rising across brokerages, but they are often criticized for trading too quickly and rashly.
The most high-profile example was the GameStop frenzy earlier this year, in which a loosely organized band of investors sent the stock soaring while communicating with each other on social media.
According to CNBC, there is a $30,000 account cap and teens are not permitted to trade options or on margin.
During a pilot program of the new offering, Fidelity found that 90% of parents and guardians used the account as a “teaching moment” to discuss saving, spending and investing.
In a statement Tuesday, Jennifer Samalis, senior vice president of acquisition and loyalty at Fidelity Investments, said, “Fidelity is committed to responsibly supporting young investors.”
“Importantly, our goal for the Fidelity Youth Account is to encourage young Americans to learn through action and foster meaningful family conversations around financial topics. Designed alongside teens and parents, the account is charting a new course by providing the ability for teens to build healthy money habits through learning by doing,” she said.
Source: Equities News