Gifting stock is not only possible, it’s easy and affordable, plus a fantastic way to get young adults interested in investing. We’ll show you how it works in our Stockpile review.
Looking for a gift idea, but not sure exactly what to buy? Now you can give the gift of stock. This is similar to the purchase of U.S. government savings bonds, except that you’re giving an opportunity to purchase stock in specific companies. If you’re tired of gifting toys, clothes, or savings bonds, this can be a welcome change.
What is Stockpile?
Stockpile is an app and online broker that also offers gift cards that can be used for the purchase of both stocks and exchange traded funds (ETFs). The gift cards can be purchased and redeemed on the Stockpile platform.
It avoids the hassle of having to purchase a single stock, which is extremely difficult to do today. After all, most companies and brokers no longer issue stock certificates. Rather than purchasing the stock directly to give as a gift, you instead purchase a gift card that will be used for the purchase of a specific stock. It’s giving the gift of stock in the easiest way possible.
How Does Stockpile Work?
You purchase gift cards for flat amounts (more on that below). But since a specific stock price is unlikely to fit neatly within a specific dollar amount, Stockpile enables the recipient to purchase fractional shares. For example, if a stock price is $100, and you give a gift card of $75, the recipient will be able to purchase three-quarters of one share.
Stockpile also serves as an investment broker, allowing the recipient to hold the share(s) or fractional shares on the platform.
It’s like buying a gift card at Amazon or a department store. You give a gift card for a flat amount, and the recipient is able to use it anyway he or she likes through the gift card provider.
The difference with Stockpile is that the recipient isn’t purchasing merchandise that can be carried out of the store, but a financial security. Instead of taking the security itself and heading home, it’s held with Stockpile.
The gift card will typically indicate stock in a specific company, or the recipient has the option to use it to purchase a different one. In fact, Stockpile offers an opportunity to purchase shares or fractional shares of more than 1,000 stocks and ETF’s.
Stockpile Features & Fees
Again, Stockpile enables you to purchase stock gift cards on their platform, but they also serve as a broker to hold the shares.
To open an account, you must be a U.S. resident or citizen, and at least 18 years of age. That means that if the gift card recipient is a minor, a custodial account will need to be opened for them by the parent or guardian.
The Stockpile app can be downloaded at the App Store or on Google Play.
Brokerage accounts have no minimum initial investment, or account balance requirements. There are also no monthly fees to maintain the account.
One other factor that is especially important in regard to gift cards is that the stock purchase with the card may not be transferable to another broker. This is because the stock will typically be in the form of fractional shares, which are not transferable between brokerages.
For a brokerage account, you can purchase or sell stocks or ETF’s for $0.99 per trade.
The fees you will pay for the purchase of gift cards will depend upon how they are given. It can either be done as a physical gift card or as an e-card purchase.
In the case of a physical gift card, denominations can be $25, $50, or $100, with fees of $4.95 for the $25 card, $6.95 for a $50 card, and $7.95 for a $100 card.
If you are purchasing an e-card, the fee structure will look like this:
- $2.99 for the first stock
- $0.99 for each additional stock
- 3% credit or debit card fee, based on the amount of the gift
For example, if you purchase a $100 e-card toward the purchase of Netflix stock, you would pay $2.99 for the stock, plus $3.00 (3% of $100) for the credit or debit card fee, for a total of $105.99.
If you were to split the e-card between Netflix and McDonald’s stock, at $50 each, an additional $0.99 would be added to the purchase for the McDonald’s stock. In that case, the total purchase would come to $106.98.
Stockpile Gift Cards
In order to make a purchase, you can go to the website, and click Buy at the top of the webpage. That will bring you to the stock selection page, where you can choose the stock you want to buy gift cards for. Once you’ve made your selection, you’ll click Next, and be brought to the Choose Amount page.
You can select $10, $25, $50, $100, or a higher amount. You’ll then enter the recipient’s name and email address, as well as an optional gift message. Upon checkout, you can pay by credit or debit card, or by PayPal. All fees associated with the ultimate purchase of stock will be included in your payment, so the recipient will be able to purchase stock with the full amount of the gift card.
The maximum amount you can purchase a gift card for is $2,000. Stockpile gift cards never expire. They can be delivered by email (the e-card option), a physical card sent by mail, or you can print a gift certificate at home, to be delivered in person.
Stockpile gift cards can also be purchased at popular retailers, such as Target, Kroger, Safeway, Lowe’s, Kmart, Safeway, and dozens of other popular retailers.
Stockpile Gift Card Redemptions
Unfortunately, while the purchase of Stockpile gift cards is fairly easy, redemption is not.
The recipient will have to open a Stockpile brokerage account. If she is under age, it will need to be a custodial account in the name of her parents. The recipient will also have to be a U.S. citizen or resident, so if you’re thinking of getting a gift card for someone outside the U.S., Stockpile won’t work.
It’s important to note that the recipient is not locked into purchasing stock in the company named on the gift card. You can certainly do that, but you also have the option to purchase stock in a different company. It’s basically a Stockpile gift card, available for the purchase of any securities offered on the platform.
But should the recipient decide he or she does not want to purchase stock, Stockpile provides the option to redeem the gift cards for gift cards to popular retail merchants.
Stockpile is practically alone in the stock gift space.
One competitor is Give-A-Share. They give you the ability to purchase any one of more than 110 shares in well-known companies. You can take delivery of the certificates, and even have it placed in a frame. But the cost is $39, which is of course prohibitive if you’re getting a $50 stock.
You can also purchase stock through discount brokerages, but it’s not certain if any of them will enable you to purchase a single share. Robinhood is a possibility and charges no trading commissions. There’s no account minimum, so you may be able to buy a single share of stock.
Advertiser Disclosure – This advertisement contains information and materials provided by Robinhood Financial LLC and its affiliates (“Robinhood”) and Doughroller, a third party not affiliated with Robinhood. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Securities offered through Robinhood Financial LLC and Robinhood Securities LLC, which are members of FINRA and SIPC. Doughroller is not a member of FINRA or SIPC.
But you have to be careful of heavy charges for delivery of an actual stock certificate. For example, Fidelity charges a fee of $100 for a stock certificate transfer and ship.
If you’re going to go the online broker route, you’ll likely have to set up a custodial account for a minor.
Computershare is another option, but the viability will depend upon the stock you want to purchase. You can purchase shares in hundreds of companies, but there’s a different fee structure and minimum purchase for each. For example, you need a minimum $250 to purchase Exxon stock, or $1,000 for American Express.
Still another alternative are DRIPs–dividend reinvestment plans. Some large companies enable you to purchase stock directly, and have the dividends automatically reinvested to purchase fractional shares of more stock. This can be a big advantage because they don’t normally charge a fee for the purchase. You can find out which companies offer DRIPs by going to the company’s investor relations page.
Stockpile Support and Security
Direct customer support is available only by email (email@example.com). Stockpile also offers their FAQ page to help you with the most common questions.
Stockpile protects your information using 256-bit encryption. For stocks, ETFs or fractional shares held on the platform, they provide protection from broker failure through the Securities Investor Protection Corporation (SIPC). It provides coverage for up to $500,000 in cash and securities per customer, including up to $250,000 in cash. They are also a member of the Financial Industry Regulatory Authority, or FINRA.
Stockpile Pros and Cons
Stockpile is an excellent way–maybe even the best way–to give the gift of stock.
The basic trading fee of $0.99 is just about the lowest available in the brokerage industry.
The ability to purchase fractional shares. Given that many of the most popular stocks are trading for well above the $50 or $100 of a typical gift card, the ability to purchase fractional shares is what makes the entire process work.
No minimum account balance. The gift card recipient can open an account with no more than the dollar amount of your gift card.
There are no annual fees associated with the brokerage account.
No direct customer support through either phone or live chat.
With about 1,000 stocks, and 100 ETF’s, purchases are limited to the bigger name securities.
Despite the low trading commissions, Stockpile is not a full service broker, so it won’t be suitable as an investment account, particularly for active trading.
Not available to non-U.S. citizens or residents.
The gift cards will become worthless if Stockpile goes out of business.
The whole idea of giving a gift of stock is an outstanding one. Rather than giving a toy or an article of clothing that will eventually be discarded, you’re giving a financial asset instead. It may pay dividends, or rise in price. Either way, it’s a gift that can be worth substantially more in the future than when the gift is given. That’s probably the best kind of gift to give.
The other benefit of stock as a gift is that it can help a young person become interested in investing. It’s one thing to learn about the concept of investing, but quite another to actually participate through ownership. Your gift may be the spark that gets a young person on the right track financially, and very early in life. Even better, if you periodically give stock gift cards, you can help a young person build a stock portfolio.
The cost of purchasing the gift card may seem a bit high, but only relative to the increasingly low fees available to stock market investors in general. In the pricing example given earlier, the donor pays $105.99 for a $100 gift card to purchase a single stock. That’s a 6% transaction fee, technically speaking. But the purchase of a gift card toward a stock can’t be measured entirely by the acquisition cost. As we saw in the alternatives section, giving an individual stock as a gift is expensive no matter where you do it. At a fee of 6%, Stockpile may be the least expensive way to acquire a single share of stock.
Another point worth considering is the brokerage side of Stockpile. At $0.99 per trade, it offers perhaps the lowest trading fee in the securities industry. But the platform is really primarily a gift card service, and not investment brokerage. They lack both the level of service and the diversification of investment options provided by more traditional investment platforms like Betterment (review here), for example.
If you’d like more information, or you’d like to give the service a try, visit the Stockpile website.