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. Luckily thanks to a new broker called Stockpile, you can now buy fractional shares of stock. Why is this a big deal?
Let’s look at Amazon as an example. In order to buy one share of Amazon, you need to have close to $1,200 plus the trading fee.
This puts stock investing out of reach for many people. Who has $1,200 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 $1,200, you would get to invest in thousands of companies at a time with no trading commission. Many people 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.
Stockpile is a new program that allows you to buy fractional shares of individual stocks for less than a dollar.
I know, it sounds too good to be true. But it really isn’t. Here is my detailed Stockpile review.
My Stockpile Review
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 for the holidays. He wanted to give them something that would benefit them. He landed on stocks.
So he set out to buy them some stocks. The problem was the stocks he wanted to invest in were too expensive to buy as 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.
Here is a short video interview Avi Lele did on Mad Money with Jim Cramer.
How Does Stockpile Work?
The process to get started with Stockpile is simple. Stockpile works in one of two ways. You can buy a gift card, either digital or physical for a share of stock and gift it to a friend or loved one. If you want to invest for yourself, you open a free account, 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 or bank transfer. 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.
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.
I have found that Stockpile is a great option for dividend investors. Most large cap company stocks are available to trade on the Stockpile platform.
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. However, if you use your credit card to buy stock, you will pay the credit card transaction fee of 3% in addition to the $0.99.
Additionally, when you make a bank transfer, the money is available to trade within 3 business days. If you want to trade stock immediately through a bank transfer, you are charged $0.25. This is in addition to the $0.99 trade fee.
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 does Stockpile make money? The first way they make money is through the $0,99 trade commission. But this is only a small part of their income. In fact, in many large brokers, they don’t make a lot of money on trading commissions. They make their money through lending.
The way Stockpile makes most of its money is through the fees they charge for gift cards.
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.
Here is a short list of retailers:
- Sam’s Club
- Toys R Us
Understand that when you buy a physical gift card, there is a processing fee that you pay. The fee depends on the value of the gift card as follows:
- $25 gift card: $4.95 processing fee
- $50 gift card: $6.95 processing fee
- $100 gift card: $7.95 processing fee
For example, if you buy a $50 gift card, it will cost you $56.95 and the recipient will have $50 to invest.
If you don’t want to buy a physical gift card, you can go to the Stockpile website and buy an e-gift card there. Here you can choose the amount you want to gift, anywhere from $1 up to $2,000.
The price for an e-gift card is $2.99 for the first one and $0.99 for each additional e-gift card. You also pay the $0.99 trade commission so that the recipient can buy stock completely free. Finally, you also pay the credit card processing fee of 3%.
For example, let’s say you buy a $50 e-gift card. Your total price is $54.49. Broken down it looks like this:
- $50 for the gift
- $2.99 for the e-gift card
- $0.99 for the trade fee
- $1.50 ($50 x 3%) for the credit card fee
Am I stuck with the stock the gift card is for? No. In many cases, you can buy a gift card that says it is for stock in Netflix or Amazon as an example. But the recipient of the gift card can use it to buy any stock they choose.
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.
What types of accounts are available? As of this writing, you can open either a taxable or custodial account. There is no option for a retirement account at this time.
Can anyone open an account? Currently Stockpile is only available to US citizens and residents.
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.
Is Stockpile safe? Yes Stockpile is safe. In addition to using the latest technology to encrypt your data, they are members of SIPC and FINRA. These are the two authorities all reputable brokers belong to.
Additionally, trades placed with Stockpile are settled and cleared through Apex Clearing Corporation, which is also a member of both FINRA and SIPC.
Are there any complaints against Stockpile? As of this writing there are zero Stockpile complaints. You can see a summary report by FINRA BrokerCheck here. Clicking on the “detailed report” link will show you any current complaints against Stockpile.
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.
Stockpile fees. 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 your kids, grandkids, or 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. Of course, they will need to open their account with Stockpile or have their parents help if they are a minor.
Perfect for beginners. Investing can be overwhelming to new investors, especially kids. But Stockpile makes it simple and easy to get started. Of course, you will still need to set up a long term investing plan, but taking the first step and investing is most important.
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 of them. 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 worth of stock at a time. 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.
Stockpile fees. The fees are a positive in terms of the $0.99 trade commission you are charged. I also list the stockpile fees as a negative because of the gift card processing fee. I just think the processing fee is a little too much. It’s not a deal breaker and they regularly offer discounts on gift cards, so it is not a reason to not use the service.
Alternatives To Stockpile
Are there any other options out there other than Stockpile for stock investing? There are a few. Here is a short list, including Robinhood vs. Stockpile.
- Stash: Stash is a new broker that allows you to invest small amounts of money into 40 ETFs. They will guide you and teach you about investing along the way. You can learn more here and get $5 for joining!
- Robinhood: You can trade for free with Robinhood. However, Robinhood does not have a dividend reinvestment option like Stockpile. As a result, it is a toss up between Robinhood and Stockpile.
- M1 Finance: M1 Finance is a new broker on the scene. They also offer free trades and offer all stocks and ETFs to invest in. I highly recommend them. The only issue is if your goal is to get your kids or nieces or nephews investing. Stockpile is hands down the best option here.
The bottom line is if your goal is to get your kids, grandkids or nieces or nephews investing, Stockpile is your best option.
If you are looking to invest as a dividend investor, Stockpile is a good choice, but M1 Finance might be a better fit.
Finally, if you are looking to invest on a regular basis, then Stash is your best choice.
Now that you know everything 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.
It is also perfect for those looking to get their kids or nieces or nephews introduced to the world of investing. And the benefits of getting them started investing young are great.
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 the other brokers I listed above and also with my online broker comparison chart.
The bottom line is you can’t go wrong with Stockpile. If you sign up through this referral link, you will get a free $5 to start investing with.
Stop procrastinating and start investing. Stockpile makes it easy and affordable.