What Is Stockpile?
Stockpile is an online stock service that allows average people – kids are encouraged, too – to buy fractions of expensive stocks instead of one full share. The company makes these investments easy through stock gift cards and a user-friendly app.
Stockpile CEO Avi Lele got the idea for the service a few Christmases ago when he tried to give stock to his nieces and nephews. The task was pretty much impossible because single shares of big companies like Amazon and Apple were too expensive.
So, Lele and co-founder Sanj Kulkarni created a stock brokerage (company who sells stocks) where customers could by fractions of stocks. If prices on a single share go up $10 in a year and a Stockpile customer owns 25% of a share, they get 25% of that price increase: $2.50.
“Basically, our mission is to make the stock market easy and affordable and accessible,” Stockpile CCO Dan Schatt told us. “You can’t really do anything with $50 in your wallet at a traditional broker. It would cost you probably a couple of thousand of dollars to get started.”
This new idea was even more novel because Stockpile focused on making stocks accessible to kids, an idea that was still in its infancy when, in 2010, Stockpile started filing paperwork to become a company.
As time went on, kid investors became popular because, as Steve Rosen pointed out in a 2017 Chicago Tribune article, young people who learn about investing tend to do it throughout their life.
We think it’s a great idea to educate your kids about finances and investing, but is Stockpile the right solution for helping them understand the world of stocks?
To get a better sense of the answer to that question, we researched how the company works and what other people are saying about it. What we discovered is split up into three sections in this review:
- How Stockpile Works
- Stockpile Fees and Other Considerations
- How Kids Invest Through Stockpile
- What Other People are Saying About Stockpile
Once we work through each of these areas, we’ll give you our final thoughts about Stockpile.
A Quick Word About Fractional Stocks
As we mentioned earlier, one of Stockpile’s perks is that you don’t have to buy full shares in a company. Rather, you can buy a portion of stock and earn portions of dividends.
Dan Schatt told us this works via a pretty simple process. Each day, Stockpile customers place orders for stock. At the end of the day, Stockpile gathers up all the orders and then buys stock to cover those orders.
Fractional stocks have been around for a while, Dan said, but it never made much sense for big firms to sell them because they usually dealt with clients who had tons of money to spend on stocks and the fees that firms charge.
Since Stockpile is brining on clients who are giving $25, $50 or $100 gift cards, fractional stocks are necessary.
How Stockpile Works
You have two ways of buying stock through Stockpile: purchasing a gift card for someone or selecting stock yourself.
Stockpile Gift Cards for Someone Else
The process of purchasing a Stockpile gift card for someone else is pretty easy.
Go to their website and click on the “Shop Now” button. A menu drops down and you can choose to buy an e-card or a physical gift card.
Stocks are Divided into Categories
Once you click on the link you want, you’re taken to the Stockpile marketplace. Stocks are divided up into categories like “Kids”, “Trending” and “Fashion”.
When you choose your category, you’re presented with all sorts of familiar brand logos and, underneath, the parent company who owns the brand.
For example, when you click on “Kids”, you get dozens of various brands. One of those brands is Barbie, and underneath the Barbie logo, Stockpile lists the parent company, Mattel.
Pro tip: You can buy ETFs, too, which are collections of different types of investments (currency, commodities, stocks) made into one stock.
It’s Fun to Buy Stock from Companies You Know
We like the way Stockpile organizes their stocks and ETFs because we think it’s a great way for investors young and old to put their money toward companies they like.
“A lot of people gravitate to our brokerage because they can connect with the brands they know and love and understand who the parent companies are,” Dan told us. “Buying what you understand and know is something our customers are excited about.”
Once you find the company you want, you click on it and choose the amount of the stock’s gift card you want to buy.
Gift Cards Can Be Used for Stock or Retail Cards
Dan told us the gift card you choose, even though it’s intended for a particular company’s stock, is basically a cash card you can use on the Stockpile site. That means you can redeem it for the stock on the card, other stock on Stockpile or a retail gift card.
The big advantage here, Dan said, is that you have flexibility. If your kid isn’t interested in buying a quarter-share of Apple stock, they can redeem the card’s amount for a Best Buy gift card.
You can also buy Stockpile gift cards in retail stores around the country. We used the company’s store locator to figure out where we could by some gift cards in Seattle. One hundred different Safeway and Kroger locations sold the cards.
Pro tip: You don’t have to have a brokerage account with Stockpile in order to buy someone a gift card.
Buying Stock for Yourself Through Stockpile
If you aren’t in the giving mood and you want to buy stock for yourself, you have the ability to do that through Stockpile’s website.
You’ll have to open an account with Stockpile – the industry lingo for this is “brokerage account”, which means the account you use to buy stock. Buying actual stock happens two ways:
- Pick stock, buy it and open an account with a linked bank acct.
- Open an account, link bank acct. & buy stock
According to Stockpile’s FAQ section, if you place your orders before 3 p.m. EST, you’ll have the stock in your account by the end of the day.
How Kids Invest Through Stockpile
The thought of helping kids invest in the stock of companies they love is a great idea, but how does it work, exactly?
“We actually allow kids to have their own log in, and they can request a trade as long as they have their parent’s permission,” he said. “Kids get to track their stocks and it gives them an opportunity to get their toe in the water at a very low price.”
These accounts are what’s known as custodial accounts – the kids own the stock but the parent opens the account and is responsible for it until the child turns 18.
When the child wants to make a trade either for stock or to exchange their stock gift card for a retail gift card, a notification is sent to the parents, who then decide if they’ll approve or deny the trade.
Stockpile Fees and Other Considerations
Stockpile’s fee structure is pretty simple. They have sets of fees for buying and selling stock.
Fees for Buying a Stockpile Gift Card
When you purchase a gift card, you’re paying all the fees associated with the card so that the recipient doesn’t have to.
Stockpile will charge you $2.99 for the card, as well as a 3% fee of the value of the card. So, if you buy a $50 card for Apple stock, you’ll be charged $2.99 and $1.50 (3% of $50) for a total of $4.49.
Some might argue that paying almost $5 for $50 worth of stock is too much, but we’ll get to that in a minute.
Fees for Making Trades on Stockpile
Any time you buy or sell a stock for yourself on Stockpile, you’ll pay $0.99 per transaction. That fee is really low compared to what you’d pay a big brokerage firm or a financial advisor, and, in that sense, Stockpile is making trading affordable for everyone.
They aren’t the only app/website offering low-fee stock trades, though. Robinhood lets you trade stock for free. However, the site doesn’t allow minors to trade stocks, something that sets Stockpile apart.
Insurance on Your Purchases
All stocks held by Stockpile customers are protected by something called SIPC, which is an acronym that means: Security Investors Protection Corporation.
SIPC-insured stocks mean that, if Stockpile goes under and the company disappears, SIPC will reimburse you up to $500,000 for the stock you owned.
Why will they reimburse you for stock you lost? Because Stockpile is a member of the SIPC. This is an important designation that adds to the company’s credibility.
What Are Other People Saying About Stockpile?
The reviews of Stockpile have been pretty positive and impressive, as heavy-hitting sites praise the company for making the world of investing accessible to people under 18 years old.
A 2015 article from Consumer Reports noted that merging stock and gift cards was a great idea, and that it could have an impact on kids if they actually caught on during the holidays.
“But if the marriage of gift cards and stocks catches on, this could be a novel way for kids to start investing,” reporter Chris Horymski wrote. “It wouldn’t be bad for the online brokerage firm, Stockpile, either, which is behind the stock gift cards. The company could end up with some new, long-term customers.”
On the other hand, Seeking Alpha’s Reuben Gregg Brewer said you should avoid Stockpile's gift cards.. His main criticism is the cost of buying a card for someone. When you’re paying a nearly 10% total fee for a $50 worth of stock, it’s just not worth it, he said.
“That's a huge cost, particularly when some brokers are willing to give away free trades for new business,” Brewer wrote. “True, you might need more than $25 to open an account for Junior and there are likely to be more headaches involved in the process, but I'd be loath to pay what amounts to a trading commission of that scale for anything.”
In our opinion, this criticism is pretty harsh. While brokerage firms may offer free trades in order to get business, the business they want doesn’t include under-18 investors.
They’re looking for established – or at least wealthy – individuals who have thousands to spend on their investments.
Also, as Brewer goes on to point out, a 10% fee is what you can expect when you buy a gift card from a grocery store, so Stockpile’s gift-card fees aren’t unusual.
However, Stockpile’s gift cards can buy stocks that gain value over time. Gift cards for stores lose value over time as the dollar amount on the card stays the same as inflation rises and cost of goods increase.
Our Final Thoughts About Stockpile
Stockpile is an innovative product because it allows parents to teach their kids about investing through hands-on trading.
The stock comes in a form of currency (gift card) that kids understand. Cashing in the card is as simple as typing in a code and setting up an account.
Easy for Kids to Use
The way Stockpile chose to organize their stock by categories is also pretty cool. Kids can literally shop for stock just like they’d shop for something on Target’s website. Identifying brands they like helps them choose what they want to buy.
In our opinion, this methodology is pretty amazing. It seems to be working, too. As we mentioned earlier, 25% of Stockpile’s customers are under 18.
Easy for Adults to Use
Stockpile’s kid-friendly user experience also benefits adults who are new to investing. But it’s not just about making stock choices easy.
The ease with which you can set up a brokerage account and buy stock is a low barrier that most adults can hop over without any problems.
If you’re a more advanced investor, you may not like Stockpile because stock choices are limited. You might want to check out Robinhood, as you’ll have more of a choice of stocks and trades are free.
12 out 13 people found this review helpfulUpdated review
I've been with Stockpile from the start. I had my reservations at first, but in almost two years I haven't had a single issue. I did call them once about a login problem that turned out to be my fault. I was very impressed with the quick attention, and the people I dealt with were class acts.
The only thing I hope to see improved is the selection that's limited but still a large variety. One must keep in mind that the trades only go off once a day, so it's not for traders that need in or out fast. They have improved the info section. For a long term or dividend hunter, it's very reasonable at $0.99 per trade with a bank transfer. I don't represent them in any fashion, but I am very happy with the service.
Bottom Line: Yes, I would recommend this to a friend
I've been with Stockpile from the start. I had my reservations at first, but in almost two years I haven't had a single issue. I did call them once about a login problem that turned out to be my fault. I was very impressed with the quick attention, and the people I dealt with were class acts. The only thing I hope to see improved is the selection that's limited but still a large variety. Use the search. One must keep in mind that the trades only go off once a day, so it's not for traders that need in or out fast. They have improved the info section. For a long term or dividend hunter, it's very reasonable at $0.99 per trade with a bank transfer. I don't represent them in any fashion, but I am very happy with the service.
1 out 15 people found this review helpful
About a month ago I accidentally purchased a gift card with Stockpile thinking it was an e-gift purchase through my Verizon. It was for $75, but with the fee, it came up to about $82.00.
I tried reaching out several times to see if there was a way they could refund the fee. I talked to Micheal after speaking with different reps, who assured me he would be sending me a refund, after I had to pretty much argue and was told I made the mistake and needed to take responsibility for the mistake made. I'm not arguing that. Just the way it came out by him caught me by surprise, being that this is suppose to be a professional business. I work in customer service for Verizon and I would never in a million years make a customer feel that way. Even if it is an error on their end. Everyone makes mistakes. We're human.
It's now almost a month into this nightmare, and I have not once received any type of follow up, I was able to see that the account is still active, which means nothing has been resolved. I'm at the point where I don't even want the money back but also would never recommend this company to anyone! Customer service is horrible, which is a big part of having a business. If I went to a restaurant and food was horrible but customer service was great, I can overlook that and still come back just because I felt valued. This company is unprofessional, and it's a company that I just don't feel is legit.
Bottom Line: No, I would not recommend this to a friend