[Fidelity Announces new Youth Account]

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typical.investor
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[Fidelity Announces new Youth Account]

Post by typical.investor »

[Title was "Teen brokerage accounts" --admin LadyGeek]

Fi­delity said Tues­day it will is­sue debit cards and of­fer in­vest­ing and sav­ings ac­counts to 13- to 17-year-olds whose par­ents or guardians also in­vest with the firm. The ac­counts will let teens buy and sell U.S. stocks, Fi­delity mu­tual funds and many ex­change-traded funds.

Any takers?
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firebirdparts
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Re: Teen brokerage accounts

Post by firebirdparts »

Sounds good. Although I don't know I'd want a debit card. No leverage, ha ha.
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tenkuky
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Fidelity Youth Account

Post by tenkuky »

[Thread merged into here --admin LadyGeek]

https://www.fidelity.com/go/youth-account/overview

What would be a reason to add this for a teen? Looks like the youth account is just a starter for a standard brokerage.
One concern I have is "the Youth Account is a teen-owned brokerage account. It is owned by the minor, who make all the investment decisions. This is unlike an UGMA or UTMA Account where the custodian makes the investment decisions".

For example, I have started a Roth IRA for our 17 year old and otherwise they have a standard checking account where the food service job paycheck goes. Debit card linked to that account. The Roth is a UTMA style which transfers to minor when they hit specific age (18-21)
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Re: Fidelity Youth Account

Post by sureshoe »

To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent. If Fidelity can lock these people in, that's 60-80 years of a high net worth individual. Pretty good stuff.
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Re: Fidelity Youth Account

Post by FIBoston »

There's a few fintech startups out there that are trying to move into the financial education space by having kids manage their own money and learn along the way. Till Financial is a recently launched example. This looks like Fidelity is trying to match this competition early. To be honest, it's pretty refreshing to see one of the big incumbents be out in front with the disruptors for once.
runninginvestor
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Fidelity New Youth Account

Post by runninginvestor »

[Thread merged into here --admin LadyGeek]

Fidelity has announced a new account for youth. Ages 13-17 can open an investment account without any fees with parents permission. They are looking to provide education and other resources. I don't have any skin in the game to promote this, and don't personally have any Fidelity accounts.

But I do find it interesting and It doesn't claim to be an UTMA account either. Just thought I'd share since I've seen posts recently about getting their kids into investing and saving.

Do other brokerages have these kinds of accounts?

https://www.fidelity.com/go/youth-account/overview
"
A brokerage account owned by teens 13 to 17 that's built to start their investing journey. They can trade most US stocks, ETFs, and Fidelity mutual funds in their own accounts.

No subscription fees, no account fees, no minimum balances, no debit card domestic ATM fees.

Dedicated Youth Learning Center with materials developed specifically to help teens develop good financial habits.
"
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Re: [Fidelity Announces new Youth Account]

Post by LadyGeek »

I merged multiple threads into here.

(Thanks to the member who reported the posts and linked to the duplicate threads.)
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runninginvestor
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Re: Fidelity Youth Account

Post by runninginvestor »

sureshoe wrote: Tue May 18, 2021 9:11 am To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent. If Fidelity can lock these people in, that's 60-80 years of a high net worth individual. Pretty good stuff.
It is a decent marketing, we can see how it plays out in reality. It's a good move by them to try and take the positive clout that apps like Robinhood have brought to young adults, and putting in safeguards for the negative clout that those same apps have received for lack of oversight by bringing them to a better perceived name brand. Also to note, parents need to have an account at fidelity to sign their kids up, although they don't have to maintain that parent account. But if their kids are interested due to other kids at school, it could benefit fidelity twofold.
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WarAdmiral
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Teens can trade for free with fidelity

Post by WarAdmiral »

[Thread merged into here --admin LadyGeek]

Saw this post today and thought i would share.

https://www.cnbc.com/2021/05/18/teens-c ... -know.html

Looks like a good introduction for teens.

- Zero fees, no minimum balance
- $30,000 amount cap
- No options or margin trading
- Parents able to monitor activity
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Re: Teens can trade for free with fidelity

Post by sschoe2 »

As long as they can't gamble away their college fund because the folks on reddit/r/wallstreetbets told them to put it all in $GME Gamestop stock.
Last edited by sschoe2 on Tue May 18, 2021 1:15 pm, edited 1 time in total.
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Re: Teens can trade for free with fidelity

Post by miamivice »

As a Boglehead, I don't buy and sell, just buy on occasion.

Risk with teenagers is they try to time the market, i.e., buy low and sell high which often turns into buying high and selling low.
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Re: Teens can trade for free with fidelity

Post by WarAdmiral »

miamivice wrote: Tue May 18, 2021 1:15 pm As a Boglehead, I don't buy and sell, just buy on occasion.

Risk with teenagers is they try to time the market, i.e., buy low and sell high which often turns into buying high and selling low.
Agreed. Some of them learn by reading, other have to learn by doing and failing miserable before they stop. The sooner they learn and fail the better for them. God forbid, they start trading at 13-14 and hit a jackpot like $GME within first 2-3 years - that would be the most unfortunate and this strategy would backfire
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Re: Teens can trade for free with fidelity

Post by IMO »

WarAdmiral wrote: Tue May 18, 2021 1:19 pm
miamivice wrote: Tue May 18, 2021 1:15 pm As a Boglehead, I don't buy and sell, just buy on occasion.

Risk with teenagers is they try to time the market, i.e., buy low and sell high which often turns into buying high and selling low.
Agreed. Some of them learn by reading, other have to learn by doing and failing miserable before they stop. The sooner they learn and fail the better for them. God forbid, they start trading at 13-14 and hit a jackpot like $GME within first 2-3 years - that would be the most unfortunate and this strategy would backfire
Actually the worst thing a young "investor" trader could do is commit suicide because of an apparent poor outcome on trading: https://www.forbes.com/sites/sergeikleb ... ecfabc1638

We let our teen get involved with investing and he's amazing picked a fund that's been on fire. It's a learning decision because he's been advised on the boring aspect that what only matters is the long long term end result when you finally need to pull out the money.

I don't know if I agree that letting teens get involved in speculative trading of individual stocks is such as great thing. Isn't that a concept that this forum advised isn't a smart long term play?
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Re: Teens can trade for free with fidelity

Post by Fallible »

Why do I feel uneasy about this?

From Fidelity:
Introducing the Fidelity® Youth Account
The account where teens 13 to 17 can learn to spend, save, and invest. Your teen will get a free debit card—with no account fees or minimums.1
Maybe I’d feel less uneasy if Fidelity had put “save” first and “spend” last?
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Re: Teens can trade for free with fidelity

Post by txhill »

IMO wrote: Tue May 18, 2021 1:51 pm
WarAdmiral wrote: Tue May 18, 2021 1:19 pm
miamivice wrote: Tue May 18, 2021 1:15 pm As a Boglehead, I don't buy and sell, just buy on occasion.

Risk with teenagers is they try to time the market, i.e., buy low and sell high which often turns into buying high and selling low.
Agreed. Some of them learn by reading, other have to learn by doing and failing miserable before they stop. The sooner they learn and fail the better for them. God forbid, they start trading at 13-14 and hit a jackpot like $GME within first 2-3 years - that would be the most unfortunate and this strategy would backfire
Actually the worst thing a young "investor" trader could do is commit suicide because of an apparent poor outcome on trading: https://www.forbes.com/sites/sergeikleb ... ecfabc1638

We let our teen get involved with investing and he's amazing picked a fund that's been on fire. It's a learning decision because he's been advised on the boring aspect that what only matters is the long long term end result when you finally need to pull out the money.

I don't know if I agree that letting teens get involved in speculative trading of individual stocks is such as great thing. Isn't that a concept that this forum advised isn't a smart long term play?
I think it could be a net positive. What you're doing with your teen is probably the best approach, but the Fidelity product sounds better than the more common alternative, where parents just pretend like investing doesn't exist at all, leaving their kids to figure it out entirely for themselves. Early and measured exposure is a good way to learn how to responsibly do something, whether it's investing, drinking, etc. And at least margin / options are disabled, which are the biggest sources of risk for new traders.
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Re: Teens can trade for free with fidelity

Post by ResearchMed »

Does Fidelity offer a "practice account" so the teen (or other "investor") can, well, *practice* for a while to see how it all works, before using/risking real money?

RM
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Re: Teens can trade for free with fidelity

Post by student »

sschoe2 wrote: Tue May 18, 2021 1:15 pm As long as they can't gamble away their college fund because the folks on reddit/r/wallstreetbets told them to put it all in $GME Gamestop stock.
True and funny. On the other hand, they could make a million... Too risky.
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Re: Teens can trade for free with fidelity

Post by txhill »

Kids these days are savvier investors than you think! https://twitter.com/TikTokInvestors/sta ... 24992?s=20
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Re: Teens can trade for free with fidelity

Post by XacTactX »

This is a good idea but I think it would be nice to have the teen sit through a class that is sponsored by Fidelity where they teach basic concepts like the efficient market hypothesis, diversification, and the difference between investing, speculating, and gambling, and then allow teens to invest. And they should only let teens pick from a curated list of mutual funds and ETFs so they can't mess up too badly. I think this level of paternalism is necessary because lots of parents don't know anything about financial markets, not any more than their high-school-aged kids.
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Re: Teens can trade for free with fidelity

Post by TomatoTomahto »

“First puff is free.”
I get the FI part but not the RE part of FIRE.
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Re: Teens can trade for free with fidelity

Post by helloeveryone »

WarAdmiral wrote: Tue May 18, 2021 1:12 pm Saw this post today and thought i would share.

https://www.cnbc.com/2021/05/18/teens-c ... -know.html

Looks like a good introduction for teens.

- Zero fees, no minimum balance
- $30,000 amount cap
- No options or margin trading
- Parents able to monitor activity
interesting... how good it is for the individual teen will likely be based on lessons from parents while using this new feature

I like this statement - "To be sure, there are some limits to help shield children from outsized losses. There is a $30,000 account cap, according to Fidelity."

Thinking back to my teens and college days - I was happy to have a couple hundred bucks in my checking account. Apparently outsized losses is considered > $30,000 with this new feature. I would have s#$t my pants just having my balance get down to $10 from a couple hundred.
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Re: [Fidelity Announces new Youth Account]

Post by LadyGeek »

I merged WarAdmiral's thread into the ongoing discussion.
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Re: [Fidelity Announces new Youth Account]

Post by Grt2bOutdoors »

Let’s see the details first. Including the fine print. Sounds like they are trying to compete with Schwab.
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Re: [Fidelity Announces new Youth Account]

Post by SnowBog »

I'm torn... I have a "child savings account" at another entity now, but would have considered switched over to Fidelity - especially if the default interest rate was decent (which I doubt it is). As I'd like to expose them to investing over the next year+ when they get a job.

But looking at the FAQ, this will let the youth "see" details about another accounts in their name, such as UTMA or Custodial 529 accounts.

On the one hand, it makes sense - these are in effect "their" accounts/money.

But I'm not sure I want my soon to be 13 year old knowing how much are in these accounts. From their point of view, all they know right now is how much they've saved from birthdays/etc. I'm not sure I'm ready for them to know (at 13) there's a bigger pool of money waiting for them for college...
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Re: [Fidelity Announces new Youth Account]

Post by OohLaLa »

How the heck are 13-17 year olds even allowed to invest over in the US? Isn't there some minimum age to trade securities? :confused

Little Timmy should discover everything about the birds and the bees, how to land and hold a job etc., first. He doesn't need to be dealing with the trials and tribulations of the stock market. I can just imagine him puffing on his Laramie cig while figuring out capital gains taxes on his Gamestop, Tootsie Roll and Nintendo stocks. :P

I love how the biggest brokerages pretend this is in the kids' best interests, to teach them about investing and building wealth. They could easily just allow the creation of practice accounts and call it a day. Starting off with real-money accounts and then tacking on some blog articles in the same portal just shows what the real priority is.
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Re: Fidelity Youth Account

Post by Fallible »

sureshoe wrote: Tue May 18, 2021 9:11 am To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent. If Fidelity can lock these people in, that's 60-80 years of a high net worth individual. Pretty good stuff.
No question it's marketing and "pretty good stuff" for Fidelity. Maybe that's the first lesson the youngsters need to learn, to begin building up a healthy skepticism for the overall marketing onslaught that's to come in their lives.

This is not to say this marketing scheme is bad just because it's marketing for Fidelity. Still, I might feel less skeptical if, in their marketing material, they hadn't put "trade most US stocks" first, before ETFs and Fidelity mutual funds:

"A brokerage account owned by teens 13 to 17 that's built to start their investing journey. They can trade most US stocks, ETFs, and Fidelity mutual funds in their own accounts."
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Teens can trade for free with fidelity

Post by tenkuky »

ResearchMed wrote: Tue May 18, 2021 2:01 pm Does Fidelity offer a "practice account" so the teen (or other "investor") can, well, *practice* for a while to see how it all works, before using/risking real money?

RM
+100
Freaks me out that they are playing with real money "upto $30,000".
I want to know which Boglehead is ready to have their teen get one of these.
After all it is likely to be the parents' money being invested, not sure how many 13-17 year olds have enough cash of their own to open a brokerage (excuse me, "youth") account. And if they are earning $, first priority is likely a Roth for the teen.
Lessons to learn from these accounts go beyond what happens to the cash, but also tax implications of the activity (as OohLaLa pointed out above). Will those be taught too? :shock:
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typical.investor
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Re: Teens can trade for free with fidelity

Post by typical.investor »

tenkuky wrote: Tue May 18, 2021 6:38 pm
ResearchMed wrote: Tue May 18, 2021 2:01 pm Does Fidelity offer a "practice account" so the teen (or other "investor") can, well, *practice* for a while to see how it all works, before using/risking real money?

RM
+100
Freaks me out that they are playing with real money "upto $30,000".
I want to know which Boglehead is ready to have their teen get one of these.
After all it is likely to be the parents' money being invested, not sure how many 13-17 year olds have enough cash of their own to open a brokerage (excuse me, "youth") account. And if they are earning $, first priority is likely a Roth for the teen.
Lessons to learn from these accounts go beyond what happens to the cash, but also tax implications of the activity (as OohLaLa pointed out above). Will those be taught too? :shock:
Funny yeah, I titled the thread "teen brokerage account" to reflect that but it got changed.

Anyway, I honestly think it's a reflection on changing times. Teens certainly have access to the the internet and will know about cryptos. They can buy Amazon gift cards and exchange them for cryptos on many sites. Surveys indicate a strong interest among the young.

I guess I am in favor of treating youth like who they will become, but yeah there is always room for (and maybe you are inviting) problems when they aren't there yet.

There is a ROTH for kids too, but an adult has to serve as custodian and it can get transferred at 21 https://www.fidelity.com/learning-cente ... retirement
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Re: [Fidelity Announces new Youth Account]

Post by mvilleguy9 »

Just wondering, while the amounts are fairly small, what kind of an impact would this have on a child's college financial aid vs an UTMA, etc? Even with a $30k limit, $25-30k is still a decent chunk of change. It can buy a handful of textbooks with enough change to buy a couple of pencils :D :D
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Re: Teens can trade for free with fidelity

Post by sureshoe »

IMO wrote: Tue May 18, 2021 1:51 pm
WarAdmiral wrote: Tue May 18, 2021 1:19 pm
miamivice wrote: Tue May 18, 2021 1:15 pm As a Boglehead, I don't buy and sell, just buy on occasion.

Risk with teenagers is they try to time the market, i.e., buy low and sell high which often turns into buying high and selling low.
Agreed. Some of them learn by reading, other have to learn by doing and failing miserable before they stop. The sooner they learn and fail the better for them. God forbid, they start trading at 13-14 and hit a jackpot like $GME within first 2-3 years - that would be the most unfortunate and this strategy would backfire
Actually the worst thing a young "investor" trader could do is commit suicide because of an apparent poor outcome on trading: https://www.forbes.com/sites/sergeikleb ... ecfabc1638

We let our teen get involved with investing and he's amazing picked a fund that's been on fire. It's a learning decision because he's been advised on the boring aspect that what only matters is the long long term end result when you finally need to pull out the money.

I don't know if I agree that letting teens get involved in speculative trading of individual stocks is such as great thing. Isn't that a concept that this forum advised isn't a smart long term play?
This is where I'd have to read the actual materials. Most "investing" advertisements and programs hone in on people's innate desire to gamble, and I think it's destructive. Teenagers in particularly are susceptible to this.

Anyway, "it is what it is". We are working to come up with $6000 of earned income to open a Roth for my oldest right now, but he's pretty young and it's tough to do legitimately. From there, we sink that into some basic indexes. I think this is what most parent who want to get their kids into "investing" should be doing, but that's me.
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Re: Fidelity Youth Account

Post by FIREchief »

sureshoe wrote: Tue May 18, 2021 9:11 am To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent.
I call [expletive removed by admin LadyGeek]. I helped my kids set up Fidelity accounts when, as non-privileged people, they went out and got minimum wage jobs when they were 16. Sure, I matched some Roth contributions. Does that make them "privileged?"
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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Re: Fidelity Youth Account

Post by Bama12 »

FIREchief wrote: Tue May 18, 2021 10:18 pm
sureshoe wrote: Tue May 18, 2021 9:11 am To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent.
I call [expletive removed by admin LadyGeek]. I helped my kids set up Fidelity accounts when, as non-privileged people, they went out and got minimum wage jobs when they were 16. Sure, I matched some Roth contributions. Does that make them "privileged?"
[expletive removed by admin LadyGeek] +1. My son has been buying VTI instead of junk.
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Re: Fidelity Youth Account

Post by FIREchief »

Bama12 wrote: Tue May 18, 2021 10:53 pm
FIREchief wrote: Tue May 18, 2021 10:18 pm
sureshoe wrote: Tue May 18, 2021 9:11 am To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent.
I call [expletive removed by admin LadyGeek]. I helped my kids set up Fidelity accounts when, as non-privileged people, they went out and got minimum wage jobs when they were 16. Sure, I matched some Roth contributions. Does that make them "privileged?"
[expletive removed by admin LadyGeek] +1. My son has been buying VTI instead of junk.
8-) 8-)
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Re: Fidelity Youth Account

Post by sureshoe »

FIREchief wrote: Tue May 18, 2021 11:30 pm
Bama12 wrote: Tue May 18, 2021 10:53 pm
FIREchief wrote: Tue May 18, 2021 10:18 pm
sureshoe wrote: Tue May 18, 2021 9:11 am To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent.
I call [expletive removed by admin LadyGeek]. I helped my kids set up Fidelity accounts when, as non-privileged people, they went out and got minimum wage jobs when they were 16. Sure, I matched some Roth contributions. Does that make them "privileged?"
[expletive removed by admin LadyGeek] +1. My son has been buying VTI instead of junk.
8-) 8-)
I guess it depends on your definition of privileged. If they're paying for their own transportation, their own insurance, and chipping in on household expenses (such as food), then no - probably not privileged. The very fact that their parents have disposable income to do "Roth Matches" makes them privileged in my opinion. Your mileage may vary.

Probably getting off "investing at this point". This country is built on generational wealth. As I mentioned above, I'm looking for ways to get my children (who are much younger than 16) Roth IRAs funded for no purpose other than taking advantage of our tax system. They're grossly privileged. /shrug.
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Re: [Fidelity Announces new Youth Account]

Post by Grt2bOutdoors »

I’m surprised that people don’t think this is a good idea. Or perhaps because it’s Fidelity and not Vanguard that it’s a bad idea. Read the fine print, the accounts are only available to those kids who’s parent already has a relationship with Fidelity. Now let’s read between the lines - at some point down the road it’s a good bet to believe that those youngsters who become adults may be in line for an inheritance. Folks who have an existing relationship with a trusted partner will likely bring those monies to where they are most comfortable doing business. There is nothing nefarious about this concept.
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Re: [Fidelity Announces new Youth Account]

Post by txhill »

Grt2bOutdoors wrote: Wed May 19, 2021 7:37 am I’m surprised that people don’t think this is a good idea. Or perhaps because it’s Fidelity and not Vanguard that it’s a bad idea. Read the fine print, the accounts are only available to those kids who’s parent already has a relationship with Fidelity. Now let’s read between the lines - at some point down the road it’s a good bet to believe that those youngsters who become adults may be in line for an inheritance. Folks who have an existing relationship with a trusted partner will likely bring those monies to where they are most comfortable doing business. There is nothing nefarious about this concept.
I completely agree this is a good idea. I don't like the idea of keeping kids in the dark about investing until all of a sudden they are out in the world on their own, and all they know about investing comes from Twitter / TikTok / Instagram. This at least encourages some parental participation early on.

That said execution will be key. If the Fidelity interface sprays confetti every time a stock goes up or otherwise gamifies investing, that could be bad too...
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Re: [Fidelity Announces new Youth Account]

Post by SnowBog »

txhill wrote: Wed May 19, 2021 8:34 am
Grt2bOutdoors wrote: Wed May 19, 2021 7:37 am I’m surprised that people don’t think this is a good idea. Or perhaps because it’s Fidelity and not Vanguard that it’s a bad idea. Read the fine print, the accounts are only available to those kids who’s parent already has a relationship with Fidelity. Now let’s read between the lines - at some point down the road it’s a good bet to believe that those youngsters who become adults may be in line for an inheritance. Folks who have an existing relationship with a trusted partner will likely bring those monies to where they are most comfortable doing business. There is nothing nefarious about this concept.
I completely agree this is a good idea. I don't like the idea of keeping kids in the dark about investing until all of a sudden they are out in the world on their own, and all they know about investing comes from Twitter / TikTok / Instagram. This at least encourages some parental participation early on.

That said execution will be key. If the Fidelity interface sprays confetti every time a stock goes up or otherwise gamifies investing, that could be bad too...
Overall I think it's a good idea, as you note the kids will grow up one day anyway... Our child already has a back account, and when they start working we'll set up a Roth. So this is just another step in getting their financial house ready.

My only reservation is that they'll "immediately" see any UTMA and 529 Custodial accounts in their name. As someone who's using this to save for college, I'm not sure I want my son to be 13 year old seeing those account balances when they log in. Maybe they'll be an option to hide them until they are a Junior/Senior thinking about college someday. That would be my preference.
lazyfabs
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Re: [Fidelity Announces new Youth Account]

Post by lazyfabs »

SnowBog wrote: Wed May 19, 2021 10:11 am
txhill wrote: Wed May 19, 2021 8:34 am
Grt2bOutdoors wrote: Wed May 19, 2021 7:37 am I’m surprised that people don’t think this is a good idea. Or perhaps because it’s Fidelity and not Vanguard that it’s a bad idea. Read the fine print, the accounts are only available to those kids who’s parent already has a relationship with Fidelity. Now let’s read between the lines - at some point down the road it’s a good bet to believe that those youngsters who become adults may be in line for an inheritance. Folks who have an existing relationship with a trusted partner will likely bring those monies to where they are most comfortable doing business. There is nothing nefarious about this concept.
I completely agree this is a good idea. I don't like the idea of keeping kids in the dark about investing until all of a sudden they are out in the world on their own, and all they know about investing comes from Twitter / TikTok / Instagram. This at least encourages some parental participation early on.

That said execution will be key. If the Fidelity interface sprays confetti every time a stock goes up or otherwise gamifies investing, that could be bad too...
Overall I think it's a good idea, as you note the kids will grow up one day anyway... Our child already has a back account, and when they start working we'll set up a Roth. So this is just another step in getting their financial house ready.

My only reservation is that they'll "immediately" see any UTMA and 529 Custodial accounts in their name. As someone who's using this to save for college, I'm not sure I want my son to be 13 year old seeing those account balances when they log in. Maybe they'll be an option to hide them until they are a Junior/Senior thinking about college someday. That would be my preference.
this is my reservation as well, kids being able to see UTMA, 529, and I believe I read also if they are a trustee (unsure of the specifics). Chase offers accounts for kids https://personal.chase.com/personal/checking starting at age 6 called Chase First banking. now the chase version is a checking account, not a brokerage, but the premise of getting them involved in the financial world is on the same path.

we opened the chase accounts for our kids, they were 11 and 12.5 at the time. the different tier accounts as they get older and controls parents have seem to be a bit more than what fidelity is planning to offer. if fidelty will give the ability to parents to 'hide' some of the other accounts thinks it's a great idea and a great way for parents to start the conversation w/ kids about investing, etc.
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HenryG
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Re: [Fidelity Announces new Youth Account]

Post by HenryG »

txhill wrote: Wed May 19, 2021 8:34 am
Grt2bOutdoors wrote: Wed May 19, 2021 7:37 am I’m surprised that people don’t think this is a good idea. Or perhaps because it’s Fidelity and not Vanguard that it’s a bad idea. Read the fine print, the accounts are only available to those kids who’s parent already has a relationship with Fidelity. Now let’s read between the lines - at some point down the road it’s a good bet to believe that those youngsters who become adults may be in line for an inheritance. Folks who have an existing relationship with a trusted partner will likely bring those monies to where they are most comfortable doing business. There is nothing nefarious about this concept.
I completely agree this is a good idea. I don't like the idea of keeping kids in the dark about investing until all of a sudden they are out in the world on their own, and all they know about investing comes from Twitter / TikTok / Instagram. This at least encourages some parental participation early on.

That said execution will be key. If the Fidelity interface sprays confetti every time a stock goes up or otherwise gamifies investing, that could be bad too...
I agree, I like it. When I looked at custodial accounts previously, I had options like Stockpile - reasonable to get started with small $, but higher fees than I prefer and no clear path to account transition into a more 'grown up' retail brokerage scenario. The Fidelity offer looks like it would provide direct experience (i.e., learning), plus time in the market, etc.
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ResearchMed
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Re: [Fidelity Announces new Youth Account]

Post by ResearchMed »

txhill wrote: Wed May 19, 2021 8:34 am
Grt2bOutdoors wrote: Wed May 19, 2021 7:37 am I’m surprised that people don’t think this is a good idea. Or perhaps because it’s Fidelity and not Vanguard that it’s a bad idea. Read the fine print, the accounts are only available to those kids who’s parent already has a relationship with Fidelity. Now let’s read between the lines - at some point down the road it’s a good bet to believe that those youngsters who become adults may be in line for an inheritance. Folks who have an existing relationship with a trusted partner will likely bring those monies to where they are most comfortable doing business. There is nothing nefarious about this concept.
I completely agree this is a good idea. I don't like the idea of keeping kids in the dark about investing until all of a sudden they are out in the world on their own, and all they know about investing comes from Twitter / TikTok / Instagram. This at least encourages some parental participation early on.

That said execution will be key. If the Fidelity interface sprays confetti every time a stock goes up or otherwise gamifies investing, that could be bad too...
By all means, don't "keep kids in the dark" about finances/investing until they are out and about on their own (or partially on their own).

But whatever is wrong with discussing some of this with them, over time, and age-appropriate... and then opening an account *with* them.
Discuss the choices, make the investments, and discuss as progress continues (or lack thereof).
Let there be losses, not just profits (unless you've got a junior soothsayer in the house :wink: ).
Give them increasing decision-making, while you - the adult - keep a hand on the emergency brake.

RM
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Ocean77
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Re: [Fidelity Announces new Youth Account]

Post by Ocean77 »

Thanks for the info! I think we will try this out. As it happens, I'm just going through a series of lessons with my teenagers about investing. So far we covered what money is, how companies are founded and financed, what a business plan is, and how the stock market works. We actually did a mock trading session, with one of us being the market maker, and the others submitting orders (some market orders, some limit orders). Then we saw in action how stock prices go up and down based on order flow.

My kids love it! There are a lot more lessons to come, until we get to Jack Bogle. If we can actually put the lessons into action with such an account would be even better. Let them get experience while they are young and mistakes won't cost much. Of course I won't give them $30k, I was more thinking of $1k. I still have to think about how we structure this. I mean if they buy an index fund and then watch it for years, it won't provide much experience or insight, will it.

One question I have though: How would this be treated at tax season? Would they need to file a tax return with their gains and losses, or does it go on the parent return?
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WarAdmiral
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Re: [Fidelity Announces new Youth Account]

Post by WarAdmiral »

Ocean77 wrote: Wed May 19, 2021 1:08 pm Thanks for the info! I think we will try this out. As it happens, I'm just going through a series of lessons with my teenagers about investing. So far we covered what money is, how companies are founded and financed, what a business plan is, and how the stock market works. We actually did a mock trading session, with one of us being the market maker, and the others submitting orders (some market orders, some limit orders). Then we saw in action how stock prices go up and down based on order flow.

My kids love it! There are a lot more lessons to come, until we get to Jack Bogle. If we can actually put the lessons into action with such an account would be even better. Let them get experience while they are young and mistakes won't cost much. Of course I won't give them $30k, I was more thinking of $1k. I still have to think about how we structure this. I mean if they buy an index fund and then watch it for years, it won't provide much experience or insight, will it.

One question I have though: How would this be treated at tax season? Would they need to file a tax return with their gains and losses, or does it go on the parent return?
i would go 50% index and 50% trading. Then compare after several years how the two accounts are doing
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FIREchief
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Re: Fidelity Youth Account

Post by FIREchief »

sureshoe wrote: Wed May 19, 2021 7:34 am
FIREchief wrote: Tue May 18, 2021 11:30 pm
Bama12 wrote: Tue May 18, 2021 10:53 pm
FIREchief wrote: Tue May 18, 2021 10:18 pm
sureshoe wrote: Tue May 18, 2021 9:11 am To me, it's just marketing. Lock them in early. Let's face it, if a minor is 13-17 and already opening an investment account, they are most likely a privileged young person who will be a top % investor in their later years. This feeds into the narrative of the superior parent.
I call [expletive removed by admin LadyGeek]. I helped my kids set up Fidelity accounts when, as non-privileged people, they went out and got minimum wage jobs when they were 16. Sure, I matched some Roth contributions. Does that make them "privileged?"
[expletive removed by admin LadyGeek] +1. My son has been buying VTI instead of junk.
8-) 8-)
I guess it depends on your definition of privileged. If they're paying for their own transportation, their own insurance, and chipping in on household expenses (such as food), then no - probably not privileged. The very fact that their parents have disposable income to do "Roth Matches" makes them privileged in my opinion.
I still say it's "baloney." Any teenager who works a minimum wage job during high school while their friends are getting walking around money from their parents is not "privileged." The fact that mom and dad forgo the fancy houses, etc. that the other kids parents indulge in so that they can do some Roth matches also doesn't make anybody privileged. Some here on the forum would say it makes them all "smart." When I was in high school, my mother helped me with a crappy used car and supported me. She wasn't wealthy and didn't leave a big inheritance. She was just a good mom. I worked crappy jobs with crappy hours and many awful bosses. I think I entered college with about $2000 in savings and a car that I paid $350 for.
To your point, it depends upon your definition of privileged. Mine must be different than yours. In my opinion, the thing that makes most of us privileged is that we live in the greatest country on earth where any healthy person can work hard and make a good life for themselves. I grew up in a small rural town. About three quarters of the kids in my high school class never worked at all, yet they were going to movies and eating pizza with their friends while I was flipping burgers.
This country is built on generational wealth.
Perhaps, but there are many folks who are quite well off only because of their own hard work. Many of them probably started working crappy jobs when they were very young.... :D
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Ocean77
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Re: [Fidelity Announces new Youth Account]

Post by Ocean77 »

WarAdmiral wrote: Wed May 19, 2021 1:14 pm
Ocean77 wrote: Wed May 19, 2021 1:08 pm Thanks for the info! I think we will try this out. As it happens, I'm just going through a series of lessons with my teenagers about investing. So far we covered what money is, how companies are founded and financed, what a business plan is, and how the stock market works. We actually did a mock trading session, with one of us being the market maker, and the others submitting orders (some market orders, some limit orders). Then we saw in action how stock prices go up and down based on order flow.

My kids love it! There are a lot more lessons to come, until we get to Jack Bogle. If we can actually put the lessons into action with such an account would be even better. Let them get experience while they are young and mistakes won't cost much. Of course I won't give them $30k, I was more thinking of $1k. I still have to think about how we structure this. I mean if they buy an index fund and then watch it for years, it won't provide much experience or insight, will it.

One question I have though: How would this be treated at tax season? Would they need to file a tax return with their gains and losses, or does it go on the parent return?
i would go 50% index and 50% trading. Then compare after several years how the two accounts are doing
I like this idea!
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FIREchief
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Re: [Fidelity Announces new Youth Account]

Post by FIREchief »

Ocean77 wrote: Wed May 19, 2021 2:22 pm
WarAdmiral wrote: Wed May 19, 2021 1:14 pm
Ocean77 wrote: Wed May 19, 2021 1:08 pm Thanks for the info! I think we will try this out. As it happens, I'm just going through a series of lessons with my teenagers about investing. So far we covered what money is, how companies are founded and financed, what a business plan is, and how the stock market works. We actually did a mock trading session, with one of us being the market maker, and the others submitting orders (some market orders, some limit orders). Then we saw in action how stock prices go up and down based on order flow.

My kids love it! There are a lot more lessons to come, until we get to Jack Bogle. If we can actually put the lessons into action with such an account would be even better. Let them get experience while they are young and mistakes won't cost much. Of course I won't give them $30k, I was more thinking of $1k. I still have to think about how we structure this. I mean if they buy an index fund and then watch it for years, it won't provide much experience or insight, will it.

One question I have though: How would this be treated at tax season? Would they need to file a tax return with their gains and losses, or does it go on the parent return?
i would go 50% index and 50% trading. Then compare after several years how the two accounts are doing
I like this idea!
I hate that idea, because there's always the (slim) chance that in a short time period, they'll get lucky with the individual stock trading and commit to it 100% for life. :annoyed
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Ocean77
Posts: 405
Joined: Wed Oct 23, 2019 3:20 pm

Re: [Fidelity Announces new Youth Account]

Post by Ocean77 »

FIREchief wrote: Wed May 19, 2021 4:08 pm
Ocean77 wrote: Wed May 19, 2021 2:22 pm
WarAdmiral wrote: Wed May 19, 2021 1:14 pm
Ocean77 wrote: Wed May 19, 2021 1:08 pm Thanks for the info! I think we will try this out. As it happens, I'm just going through a series of lessons with my teenagers about investing. So far we covered what money is, how companies are founded and financed, what a business plan is, and how the stock market works. We actually did a mock trading session, with one of us being the market maker, and the others submitting orders (some market orders, some limit orders). Then we saw in action how stock prices go up and down based on order flow.

My kids love it! There are a lot more lessons to come, until we get to Jack Bogle. If we can actually put the lessons into action with such an account would be even better. Let them get experience while they are young and mistakes won't cost much. Of course I won't give them $30k, I was more thinking of $1k. I still have to think about how we structure this. I mean if they buy an index fund and then watch it for years, it won't provide much experience or insight, will it.

One question I have though: How would this be treated at tax season? Would they need to file a tax return with their gains and losses, or does it go on the parent return?
i would go 50% index and 50% trading. Then compare after several years how the two accounts are doing
I like this idea!
I hate that idea, because there's always the (slim) chance that in a short time period, they'll get lucky with the individual stock trading and commit to it 100% for life. :annoyed
Good point! But I think it is human nature to explore and try things, especially when you're young. If we don't allow this now, they will simply go and trade stocks when they are 30 and have some real money, and it will take all that much longer to find the right path.
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ResearchMed
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Re: [Fidelity Announces new Youth Account]

Post by ResearchMed »

FIREchief wrote: Wed May 19, 2021 4:08 pm
Ocean77 wrote: Wed May 19, 2021 2:22 pm
WarAdmiral wrote: Wed May 19, 2021 1:14 pm
Ocean77 wrote: Wed May 19, 2021 1:08 pm Thanks for the info! I think we will try this out. As it happens, I'm just going through a series of lessons with my teenagers about investing. So far we covered what money is, how companies are founded and financed, what a business plan is, and how the stock market works. We actually did a mock trading session, with one of us being the market maker, and the others submitting orders (some market orders, some limit orders). Then we saw in action how stock prices go up and down based on order flow.

My kids love it! There are a lot more lessons to come, until we get to Jack Bogle. If we can actually put the lessons into action with such an account would be even better. Let them get experience while they are young and mistakes won't cost much. Of course I won't give them $30k, I was more thinking of $1k. I still have to think about how we structure this. I mean if they buy an index fund and then watch it for years, it won't provide much experience or insight, will it.

One question I have though: How would this be treated at tax season? Would they need to file a tax return with their gains and losses, or does it go on the parent return?
i would go 50% index and 50% trading. Then compare after several years how the two accounts are doing
I like this idea!
I hate that idea, because there's always the (slim) chance that in a short time period, they'll get lucky with the individual stock trading and commit to it 100% for life. :annoyed
If that were to happen, one could be prepared with a couple of other stocks to track over the same period of time, to compare.
And perhaps have the teen select two or three to add, to see how each of them had performed over that exact period of time.

It might also be worth doing some version of this if the stock really plummets, so they don't think that "that" is what happens, either.

I spent a bit of time about 15 years ago with Schwab's 'paper' trading, and it was really useful. It was helpful to learn "how it works", for stocks or ETFs, without worrying about losing money.

RM
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