One of the biggest challenges to being a stock investor is having the money to invest. If you invest with most brokers, you can only buy whole shares of stock. So in order to buy one share of Amazon, you need $950 plus the trading fee.
That puts stock investing out of reach for many people. Who has $950 lying around on a regular basis just to own one share of stock? Luckily Wall Street realized this and introduced mutual funds. With a mutual fund, you could invest more efficiently.
For $950, you would get to invest in thousands of companies at a time for no fee. Many poured money into mutual funds and for good reason. It was an easy way to start investing and to get diversified at the same time.
But there was still a problem. Some investors weren’t interested in owning thousands of companies in a mutual fund. They wanted to own a handful of companies.
This is especially true if you are a dividend income investor. You research stocks to find the best ones paying a healthy dividend and invest in these stocks.
What are these investors to do? Well today I have the answer for you. And it is called Stockpile. What is Stockpile?
It’s a new program that allows you to invest in individual stocks for less than a dollar. And you can own fractional shares too!
I know, it sounds too good to be true. But it really isn’t. Here is more detailed information about Stockpile
What Is Stockpile?
Stockpile was created a few years ago by Avi Lele. He wanted to buy his nieces and nephews something other than toys. He wanted to give them something that would benefit them. He landed on stock.
So he set out to buy them some stocks. The problem was the stocks he wanted to invest in were too expensive to buy for a gift. And for stocks he found not to be too pricey, he found it was a major hassle just to buy the stock.
He ended up giving up and buying them toys. But he didn’t give up on the idea. And from that idea, Stockpile was created.
How Does Stockpile Work?
To get started with Stockpile, you open up a free account. From there, you choose the stock you want to invest in and pay for the stock plus the $0.99 trade commission with your debt or credit card. That’s it.
It’s so simple, anyone can do it!
To open your account and get free $5 to start your investing journey, click this link.
Here is a short video interview Avi Lele did on Mad Money with Jim Cramer.
More About Stockpile
I know you probably have questions about Stockpile, so I am highlighting a bunch of common questions you have and answering them. As time goes by and I get asked new questions, I’ll add them to this list.
What stocks can I buy? There are over 1,000 stocks, ADRs and ETFs you can buy. You can buy any stock in the S&P 500 and many others that are listed on the Nasdaq or Dow Jones. To see a full list of stocks, you can check out this link.
Can I reinvest dividends? Yes. You can reinvest dividends. As a default, any cash dividends you receive will be put into your account as cash. But if you elect to reinvest dividends, any dividends you earn will get reinvested for you at no cost.
Is it only $0.99? Are there monthly fees? It only costs $0.99 to trade stock. There are no monthly fees.
How much is it to sell stock? To sell a stock, you would pay the $0.99 commission.
How do I pay for stock I buy? You can pay for stock with any cash you have in your Stockpile account, with a debit or credit card or through PayPal. If you link your bank account, you can transfer money directly to you Stockpile account as well either as a one-time transfer or as a recurring transfer.
How do I give stock as a gift with Stockpile? There are two ways to give stock as a gift through Stockpile. You can give a physical gift card. These can be bought at stores you shop at or you can buy direct from the Stockpile website and have them mail you the gift card. Currently there are over 10,000 stores where you can buy the gift cards at.
Alternatively, you can pick a stock and invest a dollar amount for someone as a gift.
Is there a limit to how much stock I can buy at one time? Yes. You can buy up to $1,000 using your debit or credit card.
What price do I get when I buy stock? If you place a trade before 3pm, you buy stock at the closing price for that day. If you place a trade after 3pm, you will get the closing price the following trading session.
For example, if you place an order to buy General Electric at 2pm, you will own the stock based on the closing price that day.
However, if you place your trade at 3:30pm on a Tuesday, you will own the stock at the closing price as of Wednesday.
Will I receive a 1099 for taxes? Yes. After the year end, usually in January, Stockpile will create a 1099 for you that you can access on your account online.
Advantages And Disadvantages To Stockpile
Now that you know more about Stockpile, I want to run through some things I like and dislike about them so you can better think through things and make the best decision for you.
Cost. Hands down, this is huge. Paying only $0.99 for a stock is amazing. If you are a long term investor, you can buy stock on a regular basis and not have trading fees eat you alive.
Selection. With over 1,000 options to invest in, you shouldn’t have an issue. Sure if you want to invest in some penny stock you might have an issue, but for dividend investors, every stock you would want to invest in is most likely there.
Reinvesting dividends. One of the great ways to build long term wealth is to reinvest dividends. By doing this you easily add to your return on your investment. In fact, this is so important it is one of the steps I talk about in my book, 7 Investing Steps That Will Make You Wealthy.
Automatic investing. While you can’t set up an automatic investing plan just yet, it is in the works. By investing consistently over time, you will build wealth.
Gifting. If you were to try to buy stock for you kids, grandkids, nieces or nephews from traditional brokers, the process is drawn out. You will need their Social Security Number, address, date of birth, etc. With Stockpile, you just buy a gift card and are done.
Pricing. This is a disadvantage but not a major one. You can’t place a market order. This means that if a stock is trading at $10 when you place your order, you don’t get that price. You get the closing price.
Is this a big deal? It shouldn’t be. First off, by investing for $0.99 you have to concede on some things and market orders is one. If you are a long term investor, buying a stock for a little more than where it was trading when you placed the order isn’t the end of the world.
Buying stock. If using a credit or debit card, you can only buy $1,000. Again, the reason for this is logical. Credit card fees add up quickly. And if you buy too much on a credit card and can’t pay off your balance, you are going to lose money by paying sky high interest rates.
The reason I list it as a negative is for those people who want to invest more than $1,000 at a time using their credit or debit card. It just makes the process a little longer by having to place more trades in the future.
Alternatives To Stockpile
Are there any other options out there other than Stockpile for stock investing? There are a couple. Here is a short list:
- Motif Investing: You can invest in a basket of up to 30 stocks of your choosing at a time for just $9.95. This is a great option if you have more money to invest and want to buy a handful of stocks at once. You can learn more about Motif Investing here.
- Loyal3: This option is very similar to Stockpile with a couple of differences. First, you can invest for free. That’s right, there are no trade commissions. However, there are only around 70 stocks you can invest in.
- Robinhood: Like Loyal3, you can trade for free with Robinhood. The difference though is that you can choose many more companies with Robinhood than with Loyal3. However, Robinhood does not have a dividend reinvestment option like Stockpile.
Now that you know all there is to know about Stockpile, is it a good place to invest your money? For anyone who is just starting out and has little money to invest, it is a great choice. Low fees, dividend reinvestment and many stocks to pick from make it a leader in this category.
For investors looking for market order trading or to trade obscure stocks, you are best to look elsewhere. You can start your search off with my online broker comparison chart.
But for those that are looking to get started, you can’t go wrong with Stockpile. If you sign up through this referral link, you will get a free $5.
Stop procrastinating and start investing. Stockpile makes it easy and affordable.