Solving Investor Problems – A Stockpile Review
In this blog post, I’m going to do a thorough Stockpile review so that you can decide whether or not Stockpile is the brokerage you want to use to invest in stocks. (This post contains affiliate links)
Whenever I ask people why they don’t invest their money, I usually get 1 of two responses:
- I don’t have any money!
- It’s too complicated!
Hopefully my blog has done something to assuage the second rejection (“it’s too complicated”). However, you can’t actually invest in the stock market if you have zero dollars. Luckily however, you don’t need a large amount of money to invest in the stock market. You can do so for as little as $10 with Stockpile.
The solution: Stockpile – Investing by the dollar
Normally, the stock buying process involves the following:
- You put a few thousand dollars into a brokerage account
- You pay $5-$10 commissions to trade your stock
Unfortunately, not everyone has thousands lying around and paying $5-10 in commissions is not ideal if you are starting out. This typically deters small investors from starting. However, Stockpile aims to solve this problem by allowing people to invest as low as $10 (their minimum ACH transfer) and trade for as low as $0.99.
Stockpile accomplishes this by allowing you to purchase fractional shares. This means that if a stock cost $100 and you can only invest $10, Stockpile will allow you to purchase 0.1 shares.
Now, let’s get into my Stockpile Review
My Stockpile review will cover quite a few things. First I’ll cover 3 technical things in this Stockpile review:
- The mechanics of stockpile (how stockpile works) and how it compares to other brokerages
- What sets Stockpile apart from the competition
- Where Stockpile falls short from its competition
Next, I’ll give you a brief summary and describe the type of investor Stockpile is best suited for.
Finally, I’ll give you a step by step guide (with screen shots) that show how to get started with Stockpile & get $5 free dollars worth of stock.
Typically every single brokerage company allows you buy and sell stocks. However, there are a few nuances in trading that you want to be aware of including the following:
- Commissions (how much it costs to make a trade)
- Execution timing (when your trade happens)
- Offering variety (how many different stocks you can buy)
Stockpile has a unique trading environment that features the following:
- The ability to purchase fractional shares
- Low $0.99 commissions per trade
- Delayed trading execution (trades occur at the end of the business day)
- Medium offering of over 1000 stocks & ETFs
Most brokerages do not allow you to purchase fractional shares. This is a huge win for Stockpile because you can put 100% of your money to work. In addition, the commission for placing trades is extremely low at $0.99. Other brokerages charge between $5 to $10 per trade.
However, Stockpile does have its disadvantages in that they only offer the most popular stocks & ETFs. As a result, you won’t see some obscure stocks like NNA on their platform.
In addition, Stockpile will not execute your trade until the end of the day. They do this in order to batch process everyone trades to reduce cost on their end. Basically, this means that you have less control over the exact price that you sell at.
Trading Pro / Con Summary
Some stocks pay you money for being a stockholder. The money that stocks pay you is called a dividend. When dealing with dividends, you want to pay attention to whether or not you can reinvest the cash straight back into the stock. You also want to note if there are any fees associated with reinvesting dividends.
Stockpile allows you to reinvest dividends for free by toggling a switch in your dashboard. However, you can’t selectively reinvest dividends. You can either reinvest dividends on all of your stocks, or none of your stocks.
Being able to reinvest your dividends without paying any fees is a plus for Stockpile. Some brokerages like motifinvesting charge you monthly fees in order reinvest dividends. However, most brokerages offer this feature free of charge and with greater selectivity (the option to choose what stocks you setup to reinvest).
Dividends Pro / Con Summary
Research refers to the resources that the brokerage has available for you to research stocks to purchase. For example, a brokerage may have data about a stocks price history, earnings, financials, and more. You can use this information to decide whether or not you want to purchase a stock.
Stockpile allows you to research basic information including price history, P/E ratio, dividend yield, and recent news associated with a company.
The information shown on Stockpile is bare-bones. Most other brokerages provide detailed financial information whereas Stockpile simply provides basic information.
However, this makes sense for Stockpile as they are trying to appeal to newer investors who may not necessarily have a use for advanced financial details.
Research Pro / Con Summary
Financial services includes the following:
- Reporting of tax information
- Ability to borrow money “on the margin”
All brokerages report tax information directly to the IRS (that’s why they collect your social security number). However, some brokerages allow you to borrow money secured by the stocks that you own. This is called “borrowing on the margin”. Its a high risk, high reward maneuver that people use to gain significant returns during bull markets.
Stockpile Financial Services
Stockpile creates a PDF copy of an IRS 1099 tax form that you can view in your documents. This makes paying taxes easier as all you need to do is download the form.
Stockpile does not offer 1 key service that nearly all other brokerages provide: margin lending. This means that you can only trade with your own cash.
Again, it makes sense for Stockpile to not offer this service since it is geared towards more experienced investors.
Financial Services Pro / Con Summary
What sets Stockpile apart & where Stockpile falls behind
The type of person Stockpile is best suited for
Stockpile is best suited for the new investor who has very little capital to start out with (less than a few thousand dollars). In addition, it’s best suited for buy and hold investors – investors who don’t trade very often.
This is because stockpile allows you to purchase fractional shares (good for low capital) and allows you to reinvest dividends for free (good for buy & hold).
Although Stockpiles commissions per trade are low ($0.99), they do not execute the trade until the end of the day which is a deal breaker for the heavy trader.
My personal experience investing with Stockpile
I’ve personally gone through the process of investing with Stockpile and took screen shots to show you what its like. I found the user interface intuitive and easy to navigate. I ended up transferring in $100 to Stockpile and purchased a fractional share of a S&P 500 index fund (VOO).
Stockpile Review: How to get started
If Stockpile is the right brokerage for you, you can get $5 worth of a free stock by signing up with this link. All you need to do is make an account and you will be given $5 (I will also be given $5, at no extra cost to you). You do not need to purchase anything, link your bank account, or transfer money. It is commitment free.
In order to make an account, you are going to provide the following:
- Phone number
- Employment Status
- Social Security Number
Stockpile Review: (Step 1) Pick the stock
Now that we know what we need, let’s go through the process of opening an account at Stockpile.com. After clicking on this link to sign up for a stockpile.com account, you should see the following screen:
The first thing you should do is pick the stock you want to get. Simply click on the “Pick stock” circled in black. You should be taken to a search screen shown below.
Now, you’ll want to search for the stock that you want to purchase. Common stocks are shown on the front page. Because I wanted to invest in an S&P 500 ETF, I searched for VOO, which is vanguards S&P 500 ETF.
Click on the stock you want. This will show you a pop-up showing the price history of the stock you are interested in. To select it, click “pick stock”.
Afterwords, you’ll be redirected to the first screen, and the stock that you picked will show up in the middle. However, in order to get the stock you’ll need to make an account.
Stockpile Review: (Step 2) Make an account & redeem your free $5 worth of stock
After clicking “get your stock now”, a popup prompting you to log-in should occur. Simply click the “sign up” button in the lower right hand side.
At this point, you’ll need to select what kind of account you want to make. For most people, individual accounts should be satisfactory.
Following that, you’ll need to provide your personal information as shown below. Make sure that your password is secure, then click “create login”.
After pressing that button, you will be asked to verify your email. Head on over to your email!
Your email from stockpile should look something like the following image.
After clicking verify email, you will be asked to re-enter your birthday for security purposes.
After pressing submit you’ll be asked to enter in some more personal information. However, this is the last of it, you are almost done!
After pressing create account, you’ll be asked if you want to redeem your stock.
Finally, after clicking on the redeem button you become a stock holder (After the trading day)!
Stockpile Review: (Step 3) Link your bank account and transfer money
After redeeming your free shares, you may want to invest some more money. In order to do that, you need to link your bank account. To do so, simply navigate to the home page of your account and click “link bank”.
You will then be asked to select your bank. I have an account with chase, so I selected chase.
After that a pop-up will appear, so that you can log into your bank account.
If you log in successfully, your account will be linked! To transfer cash in, click “buy stock” in the lower left hand side of the screen.
Since you have no cash to trade, a pop-up will appear to warn you. Simply click “transfer cash”.
Stockpile will then ask you how much money you want to transfer in. It needs to be between $10 and $10000. I went ahead and put in $100.
Stockpile will then ask you how quickly you want to get your money. I recommend selecting 3 business days, I don’t think its worth paying $0.25 to be able to invest immediately.
After clicking next, you’ll be asked to confirm your transfer. After confirming, you just need to wait until your money comes into your account to purchase some stocks.
Stockpile Review: (Step 4) Purchasing Stocks
In order to purchase stocks, go to your dashboard and click on the “buy stock” tab on the left side of the screen.
Then, you need to pick the stock that you want to purchase.
You can do this by browsing their popular stocks or individually searching for the specific stock you want to buy. I searched for VOO, a S&P 500 index fund.
After clicking on the stock you want to buy, you’ll be given a popup with some price history. Click pick stock.
Now that you’ve picked your stock, you need to decide how much of it you want to buy. You do so by choosing the dollar amount.
You can pick one of the buttons or manually type in the amount you want to purchase. Click next to continue.
Finally, you’ll need to confirm your order. Simply click place order to finalize your purchase.
You’ll then be given a thank you pop-up, which you can close and continue with your day!
That’s how you purchase stock using stockpile!
Stockpile is an awesome brokerage catered to those who are just starting out with investing. Their user interface is intuitive and they specifically offer features such as fractional stock purchases & low $0.99 commissions to help out the new investor. If you are starting out investing, I recommend checking out Stockpile.