One of the keys to successful investing is simply how much time you have to lock up your capital in income-producing shares. If an investor can buy ASX shares and get the ball rolling in their 30s or even 20s, they will have a massive advantage over anyone who gets started in their 40s or 50s.
That's all thanks to the miracle of compounding.
So if one can start investing in their teenage years, well, they are certainly setting themselves up for a happy journey indeed.
However, buying shares if you're under 18 is not as straightforward as it is for someone who has reached the age of majority. So today, let's talk about how buying shares when you're under 18 works.
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How can teenagers buy ASX shares?
Unfortunately, it is not possible for a minor to buy, sell or own shares in their own name. No Australian brokerage service will accept the membership of someone who is under 18 on their own.
Saying that doesn't mean owning shares is out of reach for young investors who want to start building a portfolio as soon as possible.
It is possible for a minor to start investing before they turn 18. They will need an adult to invest on their behalf, though. This normally works through a 'trust' structure, where the adult holds the shares in the child's name as a beneficiary.
When the child turns 18, the shares can then be transferred to full ownership.
Commonwealth Bank of Australia (ASX: CBA)'s CommSec brokerage platform offers this service, as do a number of other brokers.
Never too early to start learning
Teenagers who want to start investing have other options too. There are a number of investing apps that can help anyone under 18 get started with shares.
One such option is the Raiz app, run by Raiz Invest Ltd (ASX: RZI). If you're under 18, you will still need an adult's consent to open an account, but services like these can make that first step relatively easy.
There can be tax implications for investing on behalf of a minor. Thus, both parents and teenagers should talk to a tax professional before engaging in any investing activity.
Unfortunately, investing for someone who is under 18 can be a little more complicated than it is for adults. However, it is still possible to get started on your investing journey before you turn 18. So what are you waiting for?
