Once you've moved beyond the piggy bank and committed to investing for your child, the next step is choosing the best custodial brokerage account. These platforms should blend $0 commissions, education, and low or no minimums so both parent and child can learn together.
The Top 4 Custodial Brokerage Accounts
1. Charles Schwab — Best Overall & Educational Resources
| Pros | Cons | Fees & Minimums |
|---|---|---|
| Extensive free education, research, and client support. | Intelligent Portfolios robo service requires a $5,000 minimum. | $0 account minimum, $0 commissions on online stock/ETF trades, $0 maintenance fees. |
| Wide investment menu, including mutual funds, ETFs, and options. | Fractional shares are limited to S&P 500 stocks. |
Ideal for: Parents who want a trusted brand with deep learning resources and the flexibility to manage accounts alongside their kids.
2. Fidelity Investments — Best for Low Fees & Fractional Shares
| Pros | Cons | Fees & Minimums |
|---|---|---|
| $0 trading commissions and thousands of no-transaction-fee mutual funds. | Non-Fidelity mutual funds may trigger a ~$49.95 purchase fee. | $0 account minimum, $0 commissions, $0 maintenance fees. |
| Fractional shares allow investing any dollar amount into individual stocks. | Research tools can feel overwhelming the first time you log in. |
Ideal for: Families starting with small contributions who want fractional shares and ultra-low-cost index funds.
3. Acorns Early — Best Robo-Advisor & Round-Ups
| Pros | Cons | Fees & Minimums |
|---|---|---|
| Automation through Round-Ups and scheduled deposits keeps investing effortless. | Monthly subscription fee ($3–$12) can eat into small balances. | $0 to open (need $5 to start investing). |
| One subscription can cover multiple children’s custodial accounts. | Less control over individual holdings; pre-built portfolios only. | Subscription fee covers trading costs. |
Ideal for: Busy parents who prefer a set-it-and-forget-it experience with a modern mobile app.
4. Vanguard — Best for Index Fund Investors
| Pros | Cons | Fees & Minimums |
|---|---|---|
| Industry-leading low expense ratios on index funds and ETFs. | No fractional shares for stocks/ETFs, making small deposits harder to deploy. | $0 brokerage minimum, $0 Vanguard ETF and stock commissions. |
| Simple “buy and hold” experience for long-term investors. | Interface feels dated compared with Schwab or Fidelity. | Many mutual funds still require $3,000 initial minimums. |
Ideal for: Families committed to long-term, passive investing with minimal fund costs.
Critical Considerations Before Opening
1. The Real Cost: Expense Ratios vs. Commissions
- Commissions are usually $0 today.
- Expense Ratios (ERs) remain the silent cost. A fund with a 0.03% ER versus 0.80% can save your child thousands of dollars over decades of compounding.
2. Custodial Roth IRA vs. UGMA/UTMA
| Feature | UGMA/UTMA | Custodial Roth IRA |
|---|---|---|
| Earned income required? | No | Yes |
| Usage restrictions | Flexible (college, car, business, etc.) | Qualified retirement/education withdrawals |
| Tax treatment | Dividends/gains taxed annually (Kiddie Tax applies) | Contributions and growth can be withdrawn tax-free in retirement |
If your child earns income (babysitting, part-time job), prioritize a Roth IRA for the tax-free growth potential. Otherwise, UGMA/UTMA remains the most flexible option.
Ready to Choose and Fund Your Account?
Whether you value education (Schwab), fractional shares (Fidelity), automation (Acorns), or rock-bottom fund costs (Vanguard), the most important step is taking action. Align the broker’s strengths with your family’s habits, then automate consistent contributions.
👉 Action Step: Open a custodial account with the provider that matches your goals, set up auto-deposits, and let compound interest work for your child.
Want to teach your child how money grows?
Try the Kids Savings Calculator
Let kids dream up a goal, plug it into the calculator, and watch the timeline shrink with smart habits.
