It’s no secret, I love Stockpile. It’s my favorite new company/app that’s taking on the old-school world of investing. I use Stockpile. I use Stockpile for my kids. I use Stockpile to help people who read my free email course, Money Making Money, to get started investing.
I’ve written a review of Stockpile in the past, so no need to go into every feature. However, now that I’ve been using it for a while (and gotten a lot of feedback from my readers), I thought I’d share the three things that I believe they’re really doing that are innovative.
If these three things resonate with you, you’ll probably enjoy Stockpile as much as I do.
Let me share the three features, who they apply to, and who they don’t.
When considering cost, you have to consider two things:
- Are you a trader or an investor?
- How much are you investing?
Briefly, there are two ways to invest — you can trade or you can invest. (I know, I used the same word twice, to mean two different ways. Sorry.) Traders try to time the market by buying low and selling high over short periods of time. Investors have a longer time horizon and follow a buy-and-hold practice. That is, they buy a company and hold onto it for a while.
If you’re trading, you’re going to be paying attention to the market all the time and likely have a lot of trades. Traders are better off with Robinhood. Robinhood offers advanced products (stock options), puts trades through instantly, and has zero commissions.
While Robinhood is designed to be a better brokerage, Stockpile is specifically-designed for those who invest. Those who buy-and-hold, and accumulate over time. This is an important distinction, especially for those new to investing and confused by the media turning trading into a competitive sport.
If you’re buying-and-holding, especially if you’re not investing a lot of money, Stockpile is better for you. Stockpile allows you to reinvest dividends and let’s you get started by buying stock in smaller amounts — as little as $10 — and investing regularly (I put in $100/month automatically).
To do this, you have a trading cost of $0.99 (slightly more if you buy using a credit card). There are no monthly fees (like Stash has; I love what Stash are doing, but for different reasons). If you buy a stock and hold something for ten years, you pay only that one commission of $0.99..@Stockpile is democratizing investing by breaking down the barriers to getting started; incredible custodial accounts matched with fractional shares lets anyone get started on the path to building a wealthy future. Click To Tweet
While people good at arithmetic might point out that if you pay $0.99 and invest $10, you’re paying a 10% commission. They’d be right, but considering that there aren’t alternatives that allow you to invest for only $10, it’s the “best” way to get started. Especially if you’re teaching kids about investing… you can consider the commission the cost of the education rather than the cost of the investment. Measuring your success is all about perspective.
Of course, it’s not all about cost. Cost is only one aspect, and from a cost perspective Stockpile is extremely competitive and removes the barrier to getting started.
2. Fractional Shares
This is a really important feature for people who are just getting started, for parents/grandparents who want to teach their kids about investing, or people who just aren’t that wealthy but want to build a wealthy future.
Let’s consider some of the high-priced technology stocks. For a buy-and-hold investor, it’s useful to consider these stocks since technology still represents some of the best growth opportunity. If you’ve looked at these stocks recently — Apple is about $165/share and Amazon is about $1,600/share — they feel expensive. (You can’t judge a stock purely on it’s price to decide if it’s expensive, but that’s another tangent I’m not willing to go down at the moment.)
If you want to participate in Amazon’s growth with a traditional brokerage or a company like Robinhood you have to come up with at least $1,600 and do so in multiples of that number because you can only buy whole shares. For Apple, you need to invest in multiples of $165. If you have $100 to invest, you’d have to find other companies.
With Stockpile you buy into companies in dollar amounts. If you have $10 to invest, you can buy $10 of Amazon, or Apple, or Tesla. If you have $100, you can split it into 5 purchases of $20 into separate companies. You don’t have to find a company that’s share price is lower than the amount you have to invest.
Of course, that also means all your money will be working for you. Say you have $100 and you find a company whose stock costs $75/share. You’d only be able to invest $75 with a traditional brokerage or Robinhood because you’d have to buy one whole share, and have $25 left over (in our example). With Stockpile you can invest all $100 because they’d allow you to buy 1 1/3 shares.
Fractional shares are the most important (in my opinion) feature to enable anyone to get started investing. It truly opens up the stock market to kids, beginners, and people who don’t have a lot to invest but want to participate in the growth possibilities. It’s so important, because people can buy the companies they’re interested in… the interest will keep people engaged and learning.Fractional shares are important because people can buy the stocks they’re interested in regardless of stock price. Interest will then drive education. (@stockpile) Click To Tweet
If you are afraid that owning just a fractional share of a company isn’t worth it… consider that if something goes up 10%, it doesn’t matter how much you own. Whatever you have will also go up 10%. If you can afford 100 shares of Amazon, great! Congratulations. But if all you can get started with is $100, Stockpile enables you to participate in that 10% growth! That’s truly equal access.
Stockpile is for you if you are just getting started, or don’t have a lot to invest because you’re not limited to the companies you can buy only because you don’t have a lot of money.
I often hear that the tech stocks are “expensive.” It’s the wrong word. If two equal items cost different amounts, the one that’s higher priced is expensive. Just because something has a high price, doesn’t mean it’s expensive, it just means it costs a lot. If you’re not buying into a tech company because it costs a lot, perhaps you’d consider buying in at a lower amount? If so, Stockpile is also for you.
3. Custodial Accounts
I started investing before I was old enough to open my own account. Depending on the (US) state, custodian accounts are required up to 18 or 21 years of age. It means there’s an adult in control in the child’s name.
This has always been possible in regular accounts. In my book I talk about direct share purchases from companies, and the companies that run these have always enabled custodial accounts. However, their online access doesn’t integrate the custodial capabilities into the accounts. Meaning, a child would have to use their custodian’s credentials to login, and then they’d have full access to trading; when the whole point of a custodian is that the adult is in charge.
Stockpile does for stock investing what Apple has done with Family Sharing..@Stockpile has done for investing what Apple has done with Family Sharing. Click To Tweet
A custodial account knows it’s a limited account. The kids can explore on their own, but they need approval to trade.
Certainly not everyone needs this capability. Maybe you don’t have kids. However, maybe you know some? Because of my love of investing, I would often gift stocks for baptisms, bar-mitzvah’s, and other milestone gifts. But the old way, buying stock directly from companies, there usually was a $250 minimum. With Stockpile, it’s easy to give a “regular sized” gift using their innovative gift cards. Where I would have to call the parents, get social security numbers for both parent and child in order to give a gift of stock, you can buy a gift card and it couldn’t be easier.
Wouldn’t you think, what better gift than a wealthy financial future?
Money Making Money
I wrote a free email course specifically for people who want to get started investing. In it, I will teach you how to get started with as little as $10 using Stockpile, and then walk you through my unique metrics designed for you to have fun and stay motivated to build a healthy investing habit.
Course attendees can download a spreadsheet template that I’ve created to highlight these metrics. I even share a tutorial that you can use to setup your own tracker.