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Have you ever purchased stocks for your children or grandchildren? Better yet, would you like your kids to learn about the market at a young age and develop some lifetime skills that just might be the best road to building financial wealth? Well, now you can introduce them to Stockpile, an online discount brokerage firm that will allow you and your kids to buy “fractional” shares of over 1,000 stocks and funds (ETFs) with a relatively new and simple, easy and straightforward access to the stock market.
The idea of buying stock fractions isn’t totally brand new, it’s been around for a couple of years. However, Stockpile is just a little bit different. For the first time ever, you can now set up a custodial account that your kids can use and learn all about the market and even make trades (with your approval of course)! It even gives you the ability to reinvest any dividends automatically for free, unlike any other of these types of accounts.
Designed for “the new or limited experience investor”, Stockpile may be the perfect choice for you and your “smaller” investor.
How Does Stockpile Work?
First, you establish your account online at the website with the usual required information including your name, address, and Social Security number. You next link the personal checking account you already use (if you choose) so you can move funds from it and make purchases the least expensive way possible. There is a minimum amount of $1.00 of stock value when you make a purchase and a fee of just $0.99 for every transaction you make with your cash.
Stockpile Investment accounts are all fully insured by SIPC up to $500,000, including cash up to $100,000.
Choosing to invest in fractional shares of stock is a great way to invest in some of the best premium stocks in the market without spending and laying out large amounts of money and thus reducing any risks from overextending yourself. Your potential returns and profits, however, are not limited and can give you big returns with a nice representative group of stocks and funds you can actually afford.
For example, an investment in a stock like Amazon (AMZN) which sells for near $1,000.00 per share can be purchased for an amount such as $100.00 (a 1/10th share portion). And if the stock increases by 10% for the year, your share would now be worth $110.00 and appreciate just the same as full shareholders!
What Can You Do in Your New Stockpile Account?
Here are the options you have:
- You can buy or sell any of over 1,000 stocks like Apple, Facebook and Tesla, and ETFs like the S&P 500 or Nasdaq Index
- You can buy an e-gift or physical gift card for a stock
- All cash trades (from your linked checking account) are just $0.99 per transaction
- You can use a credit or debit card to make purchases (but you will pay a 3% fee plus the $0.99 transaction fee if you do, so not my recommendation)
- You can reinvest any and all dividends you make (automatically, and free of charge – the $0.99 commission is waived)
- Kids under age 18 can access any custodial account you set up for them 24/7 and can monitor or even make trade requests (with your approval)
- You can use a free mobile app (iOS or Android) for your convenience
The easy part of making any transaction is that all you need to decide is how much you want to spend and Stockpile does all the rest of the work. If you make your trade before 3 pm daily, your investment will activate at the close of the business day the same day. If you invest after 3 pm, your transaction will activate at the end of the next business day. Selecting the free auto-invest dividend feature allows you to set it and forget it, the easy way to grow your investments long term.
When your kids are active and involved, you don’t have to fear that they may make any changes that you aren’t aware they desire. You will get a personal e-mail each time they request a transaction and you will be the only approval person for any transaction.
The Credit Card/Debit Card Options and Other Fees
I said earlier that I don’t recommend using a credit or debit card to make your purchases. That’s because Stockpile will pass on the card merchant fee of 3% if you do it. That’s a really high percentage added on to your cost. You can do it if you like for the convenience, but only do it if your card has a reward or bonus feature that will help offset part or all of the fees.
When it comes to the e-gift cards and physical gift cards, I do like the ability to use that as a gift option. There is just one drawback, however, in that the fee attached to their purchase is high. An e-gift card has a fee of $2.99 for the first stock and $0.99 for each additional stock (if you want to give a few stocks as part of a gift basket), and a physical gift card purchase has a fee of $4.95-$7.95 (the fee covers the $0.99 transaction fee and any credit/debit fees). The reason the purchaser pays the fee is so the recipient doesn’t have to pay anything when they redeem.
Stockpile is a really cool way to get you and your kids in a great learning experience that can ultimately lead to financial gains and a true working knowledge of the market. You can get a lot of information at their website and when you do, involve the kids or other young people too. The building of their financial skills and awareness can rapidly develop at a young age and that will do your children a big favor in the long run. Check it out and see if Stockpile is for you!
Plus use my link to set up your account and you’ll have $5.00 to get started!