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Getting a child interested in investing at a young age can be one of the best ways to set them up for greater financial success later in life.
Gifting shares of individual companies that the child is familiar with – such as Disney Liquid error: internal and Apple (AAPL ) – can elicit a sense of awe at the notion that they are part owners of some of the world’s biggest businesses. It can also help to establish the basic investing principle that even small investments can grow significantly over time.
Enter StockPile.com, the company which sells gift cards that can be redeemed by others for whole or fractional shares of individual stocks.
StockPile was cultivated on the idea that certain gifts can not only carry greater meaning than traditional toys and clothes but can also help instill good habits that can last a lifetime.
The company was launched in 2015 by co-founders Avi Lele and Sanj Kulkarni. The idea for the company came about when they wanted to buy stocks for their nieces and nephews but were dissatisfied with the cost and hassle of trying to do so. They started StockPile as a means of giving people a simple and low-cost way to gift stocks to others.
StockPile has a menu of nearly a thousand stocks and ETFs to choose from. These securities can be purchased through an account using the StockPile website with either a physical gift card or an e-gift. Gift cards usually come in denominations of $25, $50 and $100, and can be purchased either individually or in packages.
One of the primary benefits of StockPile is that an investor doesn’t need to save enough to purchase a whole share of a company. For many stocks, this isn’t a big deal since they’re often priced under $100 but for people who wish to buy into Google Liquid error: internal or Amazon Liquid error: internal with prices well over $800 per share, this is an important feature. StockPile allows folks to purchase fractional shares of a company. This means that anyone with at least $25 can buy stock in any company that StockPile offers.
Find out why e-commerce companies don’t pay dividends.
The company is able to offer this feature by buying shares in the marketplace and slicing them up into fractional shares within their own platform. An individual that chooses to invest $50 into a stock with a $500 share price would end up owning 0.1 shares of the company. That fractional share would change in value just like any other share of stock and would earn any corresponding fractional dividend that the company may pay its shareholders.
StockPile makes its money by charging a fee on top of the value of the gift card. For example, a $100 gift card would cost the buyer $107.95. The extra $7.95 helps to cover the cost of credit card processing fees and commissions so that the gift recipient doesn’t have to pay anything when buying shares. It also includes a small revenue for the company.
In addition to the gift card service, StockPile also offers a more traditional brokerage account if you wish to simply trade for yourself. In this account, StockPile charges $0.99 per trade for both buying and selling shares.
Unsure about which stock to choose? Check out some of our Dividend Stock tools that can help. Try the Dividend Portfolio tool to help identify higher-yielding lower-risk stocks based on your personal investing goals. The Monthly Income Generator helps build a portfolio that can produce your desired passive-income stream.
Watch StockPile’s CEO talk about gift cards with Jim Cramer.
StockPile gift cards for both individual companies and ETFs are available in thousands of stores across the country, such as Toys ‘R Us, Office Depot, Target and Sam’s Club. They are also available online at their website, StockPile.com.
If buying online, the purchasing process is similar to that of most retail websites. Buyers choose the denomination of the gift as well as the security. You can choose cards for individual stocks, such as Facebook Liquid error: internal and Nike (NKE ), or cards for any stock or cards for a specific sector (for example, “Choose your favorite fashion stock”). Physical gift cards or e-gifts can be purchased online. Payment can be made using credit cards, PayPal or Amazon.
Which stock to choose depends on the risk tolerance and life stage of the investor. Any investment in the stock market comes with risk. A high-growth company like Tesla Liquid error: internal may be more appropriate for a younger investor who is comfortable with volatility and has many years to ride out the highs and lows of the market. A conservative dividend-paying company like AT&T (T ) may be more suitable for someone who is nearing retirement and looking to generate a steady income from their portfolio. The choice ultimately comes down to individual preferences.
Get AT&T stock’s complete dividend history here.
In order to redeem a gift card, you can go to the StockPile website or use the StockPile app. Each gift card has a scratch off code on the back. The recipient needs to either sign up or sign in to the site and then enter the code on the card. A social security number is required for legal reasons. Children under the age of 18 need to sign on with an adult. The gift card amount is then credited to the account.
Gift recipients have several options if the gift card is not to their liking. They may redeem at any time for another stock or a merchant gift card at no additional cost.
Read about other investing ideas in our Investing Ideas section.
StockPile’s aim is to take the complexity and confusion of buying and selling stocks out of the equation by making it easy and accessible for everyone. At a time when savings rates are at multi-decade lows and more families are financially ill-prepared for retirement, StockPile presents a solution for getting young people interested and active in investing. Owning the latest and greatest toy can be fun for a while, but the gift of stock can be the more meaningful gesture that lasts a lifetime.
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