Best Custodial Accounts for Kids

When planning for your child’s financial future, custodial accounts are excellent options to consider. 

The two main ways to save are through the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts. Each one allows an adult, usually a parent or guardian, to manage assets on behalf of a minor until they reach the age of majority, typically 18 or 21, depending on the state.

UGMA accounts are limited to financial assets like cash, stocks, bonds and mutual funds, while UTMA accounts can hold a broader range of assets, including real estate and other tangible property. 

Once funds are contributed, they are an irrevocable gift to the minor, and the custodian cannot reclaim them. Custodians control investment decisions, but all withdrawals must be for the minor’s benefit.

Whether you’re looking for lower costs, ease of use or giving your kids real-world investing experience, these five providers are among the best.

How We Chose the Best Custodial Accounts for Kids

We evaluated the best custodial accounts for kids based on their cost, account types, parental controls and investment options.

Best Custodial Accounts for Kids

Vanguard — Best for Low Cost

Vanguard’s straightforward UGMA/UTMA custodial accounts are great for parents who want a long-term, low-cost investment strategy for their children. They’re ideal for parents to favor passive investing and broad market exposure. Vanguard’s commitment to minimizing cost and promoting disciplined investing makes it an excellent choice for building a minor’s wealth over many years.

Key Features: 

• Account Types: Vanguard offers UGMA and UTMA accounts. 

• Parental Controls: The custodian has complete control over investment decisions until the minor reaches the age of majority.

• Investment Options: Vanguard is focused on low-cost index funds and ETFs. It’s renowned for its proprietary, low-expense ratio mutual funds and ETFs, making it an excellent choice for long-term buy-and-hold investing strategies. You can invest in a range of equities and fixed-income products. 

• Fees: Zero commissions on online stock and ETF trades. Vanguard is also known for its overall low expense ratios on its funds.

• Why It Stands Out: For parents prioritizing ultra-low-cost, long-term investing, particularly through broad market index funds, Vanguard is a premier choice. It’s not as flashy on trading tools, but its commitment to cost-efficiency is unmatched. 

Acorns — Best for Automated Investing 

Acorns’ Acorns Early account is ideal for parents who want an automated, low-effort way to invest for their children. Its Round-Ups feature automatically invests spare change from everyday purchases, making it effortless to contribute consistently. The hands-off approach can be ideal for those who prefer not to make active trading decisions.

Key Features: 

• Account Types: Acorns Early, which is a UGMA/UTMA custodial account. 

• Parental Controls: The custodian manages the account, which includes the Round-Ups feature that automates contributions. 

• Investment Options: Acorns offers a diversified portfolio of low-cost ETFs, automatically managed by a robo-adviser based on a chosen risk tolerance. This makes Acorns hands-off for parents who prefer an automated approach.

• Fees: Acorns operates on a subscription model, with custodial accounts typically available as part of the Acorns Gold or Acorns Premium tiers that cost between $5 and $9 per month. Although it’s not commission-based, the monthly fees can eat into small balances over time. 

• Why It Stands Out: The Round-Ups feature (investing spare change from linked purchases) is an easy way to start saving and investing for a child. It’s ideal for parents who want an automated, low-effort way to build wealth for their kids.

Fidelity — Best for Teens

Fidelity offers UGMA/UTMA custodial accounts for parents who want to invest in their children’s future. With no account minimums and access to a variety of commission-free investment options, it’s easy to get started. 

Fidelity also offers a Youth Account for teens, providing them with direct trading experience under parental oversight. Its research tools and educational resources empower custodians to manage funds effectively and older children to learn about investing firsthand.

Key Features: 

• Account Types: Fidelity offers both UGMA and UTMA accounts, depending on state regulations. It also has a dedicated Fidelity Youth Account for teens ages 13-17, which gives the teen direct trading control with parental oversight.

• Parental Controls: The designated custodian has full control over investment decisions with UGMA/UTMA accounts until the child reaches the age of majority. For the Youth Account, parents have visibility into the teen’s activity and can approve certain actions. 

• Investment Options: Fidelity offers a range of investment choices, including commission-free stocks, exchange-traded funds (ETFs) and options. It is particularly strong for mutual funds, including the popular Fidelity ZERO expense ratio index funds. Fractional shares are available, allowing investing with as little as $1.

• Fees: Offers commission-free investing with no minimum for opening a UGMA/UTMA account. Options have a standard $0.65 per contract fee.

• Why It Stands Out: Fidelity is known for its research tools and extensive educational content, which can benefit both the parents who are managing the account and their older children who are beginning to learn about investing.  

Charles Schwab — Best for Customer Service

The Schwab One Custodial Account is a brokerage account that allows adults to contribute to a minor’s future while providing an opportunity for them to learn about investing. The account is managed by an adult until the child reaches the age of majority, at which point control is transferred to the child. Any funds used before the child reaches the age of majority must be solely for their benefit. Clients can access Charles Schwab’s customer support 24/7 through multiple channels, including online and by phone. The brokerage offers access to support for everything from account setup and investment goals to complex trading strategies and portfolio reviews.

Key Features: 

• Account Types: Schwab One is a brokerage account.

• Parental Controls: An adult establishes and manages the account. The account’s management transfers to the child once they reach the age of majority.

• Investment Options: With the Schwab One Custodial Account, you can buy and sell stocks, mutual funds and ETFs as well as other securities.

• Fees: Zero commissions on online U.S. stock and ETF trades. Options trades are $0.65 per contract. There are no minimums required to open an account. 

• Why It Stands Out: Charles Schwab is highly regarded for its customer service, providing comprehensive support for parents managing accounts on behalf of their children. Its educational resources also excel in fostering financial literacy. There are no restrictions on the amount you can contribute to the account, and you can purchase fractional shares of S&P 500 companies with investments as low as $5 per slice.

Ally Invest — Best for Integration

Ally Invest offers UGMA and UTMA custodial accounts that allow an adult to manage investments on behalf of a minor beneficiary until they reach the age of majority in their state. Users can access their Ally Invest accounts with a single login, eliminating the need to jump between different websites or apps. 

Key Features: 

• Account Types: Ally Invest offers UGMA and UTMA accounts.

• Parental Controls: The custodian maintains complete control over the investments in the account until the minor reaches the age of majority.

• Investment Options: Ally Invest offers self-directed trading, giving the custodian full control to buy and sell stocks, bonds, ETFs, options and mutual funds. It also offers automated investing for people who prefer a hands-off approach. 

• Fees: Ally Invest has zero commissions for eligible U.S. stocks and ETFs. Options trading incurs a $0.50 per contract fee. There are no account minimums for self-directed investment accounts and no monthly maintenance fees. 

• Why it stands out: Ally Invest integrates with Ally Bank, which allows for easy transfers between investment accounts and Ally’s high-yield savings or checking accounts to provide a consolidated view of your finances.

Choosing the Best Custodial Accounts for Kids

Selecting the best custodial account for your child comes down to your investment goals, desired level of involvement, and fee sensitivity.

Vanguard is ideal for long-term investors seeking ultra-low-cost index fund exposure. Acorns caters to hands-off savers with its automated Round-Ups and easy account setup. Fidelity stands out for teen accessibility and robust education, especially with its Youth Account. Charles Schwab delivers excellent customer service and fractional share investing. Ally Invest is a strong choice for parents who want low fees and integration with online banking. 

Whether you're investing spare change or setting up a long-term portfolio, the right custodial account can help you build wealth on your child’s behalf while teaching them the value of investing early.

Frequently Asked Questions