Stockpile Investing: A New Way to Help Your Child and Family Invest

Stockpile Investing Review
Image Courtesy: Stockpile.com

Have you been looking for a way to give a financial gift to your children, nieces, or nephews but do not want to give them a boring check or savings bond? With Stockpile, you can now give them the gift of stock for their favorite companies including Apple, Amazon, or Disney. And, you can even gift them partial shares.

What is Stockpile?

Stockpile is a brokerage founded in 2011 that allows you to buy full or partial shares of individual stocks like Apple or Google and ETFs. With Stockpile, you can trade for as little as 99 cents (most brokerages cost at least $4.95 per trade). Trading costs are kept low because all trades are executed after 3 p.m., instead of real-time.

You can also reinvest any dividends received for free, and trades can be funded with cash in your account or your credit and debit card.

 

Fractional Investing

If you are new to investing, most brokerages only allow you to buy company stock and ETFs in whole shares. If a single share costs $100, you need $100 to buy the share. The brokerage won’t let you buy 0.95 shares if you only have $95 or half a share if you have $50. That money sits idle and earns a minuscule amount of interest until the share price drops to $95 or you find another $5 to invest.

This is why many investors with small amounts of capital go with mutual funds. If a mutual fund ABCDX costs $100 per share and you only have $75 to invest, the entire $75 gets invested and you own 0.75 shares of ABCDX.

With Stockpile, you can buy shares of any stock or ETF for the amount you have to trade. One stock that has been in the headlines recently is Amazon. A single share of AMZN currently costs $964 (as of this writing). Let’s assume I (or you) don’t have $964 to only buy a single share at the moment. If I only have $100 to invest, Stockpile will allow you to purchase a fractional share of $100 of the retail behemoth. Assuming I want to invest $100 again next month in Amazon, I will be able to buy another fractional share worth $100.

Gift for Children

As a child, I received savings bonds and gift checks for my birthday and Christmas. With historically low bank interest rates, putting money in a savings account is about as financially lucrative as the piggy bank on their dresser. At least with the piggy bank, your child, niece, or nephew can physically see the money they own.

Stockpile is an exciting way to give the gift of money. It is a great way to help tomorrow’s future generation begin investing today as you can tell them they own stocks like Apple, Google, or Amazon. Companies their parents or friends might talk about on a regular basis. They can track the performance of the stock and (hopefully) watch the initial investment grow in value.

Plus, when it comes to giving birthday and Christmas gifts to our loved ones, most of us don’t have the spending flexibility to gift a $300 or $1,000 stock. Now, even the most expensive stocks can be given as a gift.


By opening a Stockpile account through Money Buffalo, you can get $5 free.


 

How Much Does Stockpile Cost?

It is free to create an account with Stockpile. And, there are no monthly balance fees or minimum balance requirements.

Buying Stocks or ETFs for Yourself

If you want to buy stocks or ETFs for yourself, you will pay 99 cents ($0.99) for each stock or ETF you buy or sell.

There is an additional 3% transaction fee if you use a credit or debit card to purchase your stock, but no additional fee if you pay for your purchase using cash in your Stockpile account.  You can get cash into your account for free by linking your bank.

Gifting a Stock

When you buy a stock gift card, you will pay the following amount:

  • $2.99 for the first stock
  • $0.99 for each additional stock
  • 3% credit/debit card fee

If you decide to make a future gift to the same person, you will need to pay the $2.99 fee for the first stock each time, even if you buy the same stock each time.  If you give gifts to a few people at the same time, you only pay the $2.99 fee once.

The person receiving the gift card can redeem the stock for free. All they need to do is visit the Stockpile website to enter the gift card number.

If they don’t like the stock, they can also swap the stock for free to another stock they’d rather own.

Why I Like Stockpile

I like Stockpile because it is an affordable way to buy individual stocks or ETFs. As a young investor, I primarily invested in mutual funds that invest in hundreds of companies because you could buy fractional shares and get instant diversification.

While I still think diversification is crucial to investing and index mutual funds or ETFs. You can buy ETFs from Vanguard, Charles Schwab, Fidelity, and iShares that allow you to gift a diversified investment, but, since most brokerages offer commission-free ETFs, this isn’t always the best deal.  You can also buy ETFs from Stockpile.

The real value is for individual stocks. I own very few individual stocks but the ones I trade yield dividends. This can be a good way to buy partial shares (for myself or my loved ones) of stocks that are above my normal price range.

For example, I can buy partial shares of Johnson & Johnson (JNJ: $131/share), AT&T (T: $39/share), or 3M (MMM: $207/share). These are all “Dividend Aristocrats” that have increased dividend payouts for at least 25 consecutive years and cost more than the $25 gift I might want to make for my nephew’s upcoming birthday.

Stockpile Investing Review

Source: Stockpile.com

How to Start Investing with Stockpile

Investing with Stockpile is easy.

Clicking on my special Stockpile link will give you $5 free to make your first trade.

Children just need an adult to serve as their custodian. And, adults can create their own accounts as well.

Once you begin investing, Stockpile will send you monthly statements and any tax documents. Plus, you can also track your portfolio performance as well.

 

12 Comments on "Stockpile Investing: A New Way to Help Your Child and Family Invest"

  1. Very cool. I great way to peak the interest of children in the market. I’m going to show this to my three this weekend. Thanks for sharing!

  2. This is super interesting and something I need to look into. Seems like a great Christmas gift and much better than giving savings bonds. Thanks for sharing!!!

    • It’s a great Christmas gift idea for all of us money nerds. Some kids might think it’s the equivalent of getting a pair of new underwear, but, I’d be happy if people gifted me stock as an adult. As you mentioned, it’s a much better idea than savings bonds at the moment.

  3. This is interesting! I hadn’t heard of them before – thanks, Josh!

  4. Cool way of teaching a kid about stock with a low minimum. While I like mutual funds, individual stocks (especially of household names) are a much easier concept to grasp for a young investor.

    • I like mutual funds and ETFs for the instant diversification, but, when I heard you could buy fractional stock shares, my ears definitely popped open. I want to do this for my own children for that same reason, although, a large portion of their investments will still be in index funds.

  5. Cool idea. My sister in law is graduating college next year. This might be a cool gift to get her interested in investing. Something kind of special about individual stocks vs index funds.

    • Index funds aren’t exciting to talk about, but, they do have exciting returns. I like Stockpile because you can get individual stocks at index fund prices. You don’t have the built-in diversification but can get better returns (dollar for dollar) if you pick the right ones and a good option to fill part of anybody’s portfolio.

  6. It’s interesting how many adults these days received savings bonds as children! I mean, it’s nice to cash in a savings bond but a share of an index fund or even a moderately successful company would be worth so much more. We are planning on giving one share of my company stock to my cousins when they graduate high school (still a number of years out) and who knows how much it will be worth then.

    • That sounds like a great idea for your cousins. I used to think investing was only for the rich. Now I know you can get rich by investing.

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