Online stock trading made its debut more than 20 years ago and has revolutionized the stock brokerage marketplace. A major missing piece of this marketplace was allowing small investors to be able to purchase a variety of stocks, even though they do not have the resources to diversify.
Enter Stockpile. Their innovative platform is making it easy for even children to get into stock trading.
Stockpile offers a host of unique services that separate them from other brokerages.
Often investors are wary of buying stock as the companies they may want to invest in have stocks priced too high. Stockpile allows investors to buy fractional shares of stock.
For example, if Amazon stocks are priced at $10,000 a share, you can buy a portion of the shares. If you buy $50 of Amazon, you can get 0.05 shares. Depending on the market trend, you can watch your stock go up or down.
But since you haven’t spent as much, the risk is far lesser even if the market is down.
There are two facets to the Stockpile gift cards. First is the buying of the gift card, the second is redeeming the card for the actual stock.
Buying the Gift Card
The gift cards, issued by Stockpile Gifts, Inc., allow the investor to buy stocks in hundreds of companies that are household names, like Google, Amazon, Netflix, etc. It can be purchased as an E-gift card or even a physical card. It has no expiration date.
You can buy the card from the Stockpile website and the company does not ask for a membership to give a gift card. The process is easy:
- Pick a stock, Apple, Inc. for example
- Choose the amount, say $10
- Provide yours and the recipient’s details
- Pay at the checkout window
The final amount includes the cost of the card, plus gifting fee, which comprises the trading fee and debit/credit card fee. Paying the fee at the checkout window means the recipient gets a card for the full amount.
Find a Store
The Stockpile stock gift cards are available at select stores in the US, a list of which is provided on their website. Some popular pickup points include the likes of K Mart, Kroger, Office Depot, etc.
Redeeming the Card
Redeeming the card for the actual stock is a little more complex than simply buying it. To redeem the card, the recipient has to set up a brokerage account with Stockpile. There are two conditions to this:
- The recipient must be a US citizen
- The recipient must be above 18 years of age
In the event the first condition is not fulfilled, the recipient can exchange the card for a retail gift card. In addition, minors can have their parents or guardians set up a custodial account.
Stockpile is a kid-friendly brokerage firm. Children and teenagers can have accounts on Stockpile, with a parent or guardian wielding legal responsibility. Once your kid comes of age, you can set up an independent account for them and transfer the stock from the custodial account.
With Stockpile (which also comes as a user-friendly mobile app), kids can track their stocks round the clock and make purchases (which the custodian must approve). The app even allows kids to create and share a wish list of favorite stocks.
Stockpile doe not charge near the fees of other online brokerage accounts. They offer a bunch of ways to fund your account and the fees are very transparent, but because they are directly charging you based on how much it costs them, the fees can get a bit confusing.
To make this easier, I broke down the fees into categories that clear up exactly what it will cost you to purchase and sell stock through Stockpile.
Funding and Withdrawal
- Incoming Funds (ACH or wire) – Free
- Incoming Funds (debit card) – 1.5% of transfer ($0.75 minimum)
- ACH withdrawal – Free
- Wire withdrawal – $25
- Paper checks – $5
- Purchase of stock, ETF, or ADR – $0.99
- Sale of stock, ETF, or ADR – $0.99
Maintenance and Reporting Fees
- Minimum balance – None
- Monthly fees – None
- Electronic trade confirmations, statements, tax docs – Free
Gift Card Purchasing Fees
When you purchase a gift card you prepay the fees for whomever you are giving it to. Since there is no option for an ACH or wire transfer you will pay the higher fees of the debit card.
E-gift purchase – $2.99 for first company stock and $0.99 each additional company stock + 3% debit/credit card fee on additional stock.
To help with this let’s think of a gift combo where you buy $50 of Ford stock along with $50 of Amazon. In this scenario you would pay:
- $2.99 for the $50 of Ford stock
- $0.99 for the $50 of Amazon stock
- $3 in debit/credit card fees
- Transfers to other brokerages – $75
- Transfers from other brokerages – Free
- Returned check or stop payment – $30
- Recall of ACH or wire transfer – $30
- Overnight mail – $30
- Request of historical documents – $0.01 per page (min $30)
- Amendment or repair of wire transfer – $30
- Notice of ACH correction – $5
With any of these fees, the great thing about Stockpile is that they are completely up front and explain exactly why you are paying for. As you can see, the vast majority are just a pass through of what it costs them.
Stockpile is currently offering anyone $5 of free stock when they sign up for a new account. This means you can invest $5 in any of the stocks they offer on the site, when you make your first trade.
Based in Palo Alto, California, Stockpile was founded by CEO Avi Lele in 2010. The brokerage service prides itself on making investments easy and accessible even to young adults and kids.
Stockpile presents an innovative concept of gifting stock cards which can be purchased on their website or at a partner retail store. The service allows investors to buy fractional shares of stocks and ETFs at a trade fee of $0.99 per trade, with no monthly fee.
The company has been hailed as the easy way for youngsters and millennials to invest in stock with only a few dollars to get started..
How it Started
It all began when founder Avi Lele was looking to buy his nieces and nephews stock in their favorite companies, as a Christmas present.
Lele, however, found that the preferred stocks – Apple and Google – were priced too high and the process of acquiring the stock was complicated. Lele eventually gave up and bought them physical presents, but it is at this moment that an entrepreneurial idea struck him.
He figured there had to be a way to make stock investments more accessible to an average American consumer and that is how Stockpile came into being.
Now, let’s look at what Stockpile’s competitors bring to the table.
A prime competitor of Stockpile, E*TRADE is a brokerage firm that caters to both seasoned investors, as well as those looking to invest for the first time. Based out of New York City, E*TRADE charges a flat trading fee of $6.95 per stock, plus $0.75 per options contract.
- Discount option for traders who execute over 30 trades per quarter, with a trading fee of $4.95 per stock and options trade, plus $0.50 per options contract.
- User-friendly interface, with concise guidelines about how to plan, invest and trade – perfect for beginners.
- Core Portfolios presents customised investment plans based on investors requirements and limitations.
- Trade fee of $6.95 is higher than other options in the market.
- A minimum amount of $500 needed to open an account.
Headquartered in San Francisco, California and founded in 1971, Charles Schwab is one of the older players in the market. Its online investing services are hosted on its web-based platform, StreetSmart, as well as its desktop-based platform, StreetSmart Edge.
- No opening or maintaining fee.
- Flat stocking trade fee of $4.95, plus $0.65 per contract – lower compared to competitors.
- Round the clock professional guidance.
- Easily accessible platforms can be used free of cost.
- Over 300 branches across the United States.
- Account minimum of $1,000 (may be waived off with an automatic monthly transfer).
- A fee of $76 on transaction-fee mutual funds.
- No customisable home screen or stock alerts in the mobile app.
Founded in 1975, Ameritrade has been around for a long time. Today, it boasts of over 6 million customers in the United States, making it one of the biggest financial broker companies. TD Ameritrade offers investments of all kinds – stocks, penny stocks, options, ETFs, Mutual Funds, bonds, FOREX, futures, etc.
- Zero minimum investment and no fee for mutual funds.
- Available through web, desktop and mobile platforms.
- Offers 300+ commission-free ETFs.
- Offers FOREX trading.
- Short-term trading fees of $13.90, on ETFs.
- The flat trading fee of $6.95, $0.75 per contract is higher than some competitors.
With so many other options in the market, why should you pick Stockpile?
- Stockpile gift cards are a unique and innovative concept.
- You don’t have to be a member to give a gift card to someone.
- Offers the lowest trading fee of $0.99.
- Allows investors to open accounts for their children.
- Supported by a user-friendly interface, both web and app.
- Offers a concise guide to investment that speaks in a language that kids will understand.
- Allows investors to buy fractional stocks.
- Is a member of Securities Investor Protection Corporation (SIPC), which protects customer account up to $500,000.
- No account minimum or maintenance fee required.
- Non-US citizens cannot become members.
- No real-time trading. The investor must carry out a purchase or trade before 3 pm for it to be processed on the same day.
- Quotes are delayed at least 15 minutes.
- Fractional shares are not transferable to another broker.
Stockpile Review Final Thoughts
Stockpile is a dynamic trading platform that speaks the language of the kids, young adults as well as older investors. It is a growing company that has brought the stock market to average Americans who were earlier too afraid to invest.
With Stockpile, middle-class Americans can have shares in well-known companies like Apple, Google etc, for a much lower value. But there are creases the company must iron out, too.
For starters, it’s a relatively new player in the market and it will be a while before it becomes as trusted as its competitors who have been around for decades.
Next, the identity of the company is uncertain – is it a gift card service or a brokerage service? But all else aside, the company seems to have a promising road-map, and without a doubt charges the lowest trading fee at the moment.