Can a Minor Use Betterment? A Complete Guide

Can a minor use Betterment? This is a common question among parents and guardians looking to introduce their children to investing early. While Betterment does not allow direct accounts for minors, there are options like custodial accounts that make it possible for children to start investing under a guardian’s supervision. In this guide, we’ll explore the Betterment custodial account process, how it works, and what parents need to know about investing for their kids using Betterment.

Understanding Betterment Accounts for Minors

Betterment accounts for minors aren’t directly available, as the platform requires users to be at least 18 years old. However, parents can open Betterment custodial accounts, allowing them to manage investments on behalf of their children. A custodial account is managed by an adult, who retains control until the child reaches the age of majority. This option enables minors to benefit from investment growth while their guardian manages the account.

How to Open a Betterment Account for a Minor

To open a Betterment account for a minor, parents need to start with a Betterment custodial account. The process involves setting up the account in the guardian’s name with the child as the beneficiary. Once the child reaches the legal age (usually 18 or 21, depending on the state), control of the account is transferred to them. This allows parents to invest in Betterment while ensuring that their child has access to investment funds in the future.

Key Steps to Open a Betterment Custodial Account:

Betterment Custodial Accounts: What Parents Need to Know

Betterment custodial accounts come with specific rules. The investment account is legally owned by the child, but managed by the parent until the child reaches 18. This means any investment gains belong to the child, even though the guardian makes decisions. Betterment custodial accounts offer a great way for children to gain exposure to stock market investments while learning about financial planning early on.

Can a Child Have a Betterment Investment Account?

Technically, a child cannot directly hold a Betterment investment account. The Betterment age requirements specify that account holders must be at least 18 years old. However, with a Betterment custodial account, a parent can invest on behalf of their child until they are old enough to take control. This approach helps minors begin their investment journey early and benefit from long-term growth.

Betterment Age Requirements for Minors

Understanding the Betterment age requirements is crucial when considering investment options for children. Betterment requires account holders to be 18 or older. However, custodial accounts allow for flexibility, making it possible for minors to access the investment platform through a parent or guardian. This is a common approach for family investment planning, enabling kids to benefit from compound growth over time.

Benefits of a Betterment Custodial Account

A Betterment custodial account offers several benefits for parents looking to invest for their children’s future:

• Tax Advantages: Custodial accounts often come with favorable tax treatment, especially for minors.
• Control for Parents: Parents manage the investments, ensuring funds are used wisely.
• Early Start for Kids: Children can begin building wealth from an early age, providing a head start on financial stability.

By choosing a Betterment custodial account, parents can teach their children about investing while also building a solid financial foundation for their future.

Setting Up a Betterment Joint Account with a Minor

While Betterment doesn’t specifically offer joint accounts for minors, using a custodial account can serve a similar purpose. The parent manages the account and makes all investment decisions until the child reaches the age of majority. This approach allows the child to learn about investment management under the guidance of their guardian.

Betterment vs. Other Investment Options for Kids

Parents considering Betterment for their children might also explore other investment platforms. While Betterment custodial accounts provide automated management and low fees, alternatives like 529 plans and Roth IRAs for minors could also be considered. Comparing these options ensures that families choose the right path for their children’s financial future.

How to Invest for Kids with Betterment

Investing for your kids with Betterment involves setting clear financial goals and selecting the right investment strategy. Consider options like diversified portfolios and low-risk investments to balance growth with stability. By contributing regularly to a Betterment custodial account, parents can build significant savings for their child’s future.

Conclusion

Can a minor use Betterment? Not directly, but through Betterment custodial accounts, parents can ensure that their children benefit from early investment growth. By understanding the age requirements and exploring investment strategies, parents can provide their children with a solid start in the world of investing. The flexibility and simplicity of Betterment make it an attractive choice for families looking to secure their child’s financial future.

Frequently Asked Questions

1. Can a minor directly open a Betterment account?
No, Betterment requires account holders to be 18 or older, but custodial accounts are available.

2. What is a Betterment custodial account?
A custodial account is managed by a parent or guardian on behalf of a minor until they reach the age of majority.

3. What are the benefits of using Betterment for a child’s investment?
Betterment custodial accounts offer tax advantages, automated investment management, and a head start on building wealth.

4. How do I transfer a Betterment custodial account to my child?
Once the minor reaches the age of majority, the account ownership can be transferred to them, giving them full control.

5. Are there other investment options for minors besides Betterment?
Yes, alternatives include 529 plans for education savings and Roth IRAs for long-term growth.