Stockpile - Easy Investing for Kids - Wanderer Financial

Stockpile – Easy Investing for Kids

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Financial Lessons and Investing Basics for Kids

Starting Early - Simple Finance Lessons Build Confidence

I first heard of Stockpile from a sailing family whose ten-year-old son was interested in the stock market and had begun to use it, with very good results. I'm not talking about financial results, necessarily, but the good result of someone learning at a very young age what it means to invest, and how money can grow substantially over time. We'd all love to go back in time and start investing at ten, wouldn't we? I know I would.

What stockpile does is allows you to invest in stocks incrementally, which is great for kids and parents. For example, you might really want to invest in Amazon. You use their service practically every day, and are rarely disappointed. You believe the company will only continue to grow. You have $500 to get started with, so you look up the stock price and find, oh boy, one share of Amazon stock is currently trading at $2,000. You can't even buy one share.

This is where stockpile steps in. It allows you to buy a fractional share. It doesn't care if you only have $500, or $37, you can still buy Amazon. If you were to buy $500 worth of the stock with the price at $2,000, you now own .25 shares of AMZN stock. And it does this for only $.99 cents per trade.

I say only $.99 per trade, but I should mention, especially for very small investors, even this can be a high percentage. Let's say you were putting $20 in the account each month, and then making a trade. That would mean that you were allocating 5% of your money to fees. That 5% would need to be made up by the stock before you could begin to make a profit. A 5% profit is not an inconsequential amount. So, be aware of that. I would suggest a minimum purchase of $100, i.e. 1%, per trade. It is also $.99 cents to sell a stock. So I want to be clear that this is in no way meant to be used for any sort of active trading.

My kids have seen me trading for years, and have a very basic grasp of what I do, but have never shown any enthusiasm for it. I've got accounts for them in a traditional brokerage, but that isn't very accessible, or presented in a way that a young person would find they could understand or get excited about. Stockpile seems to solve that problem, so I moved some money over there and got started.

Just to be very clear from the start, I'm buying my kids stock in companies that they know about and like. We discuss these purchases and place our trades with the intention of holding them very long-term. My children won't gain access to any of these funds until they are at least 18, so any purchases that are made are intended to have a minimum of ten years growth untouched. Stockpile is a good way for new investors to buy-and-hold stock on a longer term basis, it is not a product that should be used to trade in and out of the markets.

Before we get started let me just mention that I don't have any financial interest in stockpile.

Signing Up

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I began by opening an individual account in my own name. Later, when the account is up and ready you can add the kids under a custodial account.

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Next up is linking a checking account so you can easily fund and transfer money—even on a recurring basis if you choose.

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They also required that I upload an image of my driver's license.

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The bank linking took about one business day before I could go in and transfer funds to the account. That transfer took three business days. One thing worth mentioning is that I later found out that I couldn't transfer money from my account to the accounts in my kids' names. This required transferring money back to my bank, and then into the kids' accounts.

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Custodial Account

Later I went in and added my kids to the account. Just click Add Account in the lower left of the screen, and it walks you right through the steps of adding them in.

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Trading

With that done, it's time to start the fun stuff, the actual trading. It's great to sit down with the kids and talk about this stuff. Talking about stocks, dividends, and long-term growth are things that should have been taught to all of us beginning in elementary school. Understanding a few of these basics very naturally leads to a better understanding of more complex economic subjects like supply-and-demand, inflation, and interest rates. And think how much easier it would be to discuss salary with a boss, or budgeting with a spouse, if you had a firm grasp of finance and economics from just a little time spent on the subjects when you were young.

My kids were really enthusiastic as they sat down on either side of me and we began talking about stocks. during our first stock-picking talk they came up with Disney and Target. We don't have t.v. and my kids don't know what Netflix is, but I was still able to talk to them about Disney's upcoming release of the Disney+ streaming service. They thought the idea of being able to watch any Disney show or movie any time was an awesome idea. We had also just returned from a trip to the States to visit Grammy, where one of the most exciting parts of the trip was going to Target (this is what happens when you live in places where visiting box stores aren't a daily occurrence). They have their own opinions when it comes to the Target vs. Wal-Mart debate, so now they own their own very tiny slice of the store.

Actually buying the stock is the easiest part of Stockpile. From the account page click the +Buy stock button.

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From there it'll take you to this screen, highlighting the most commonly traded stocks. You can also search by company name.

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After clicking the stock you'd like to buy, you enter an amount you'd like to invest. Note, you don't buy shares, you buy a dollar amount. Stockpile groups together and executes trades at the day's closing price and allocates you your factional share amount.

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Confirm your purchase, and that's it. The next day you'll find your account updated with a simple homepage showing the amount your account is up or down.

Conclusion

Stockpile is a very simple way to get kids involved in investing. That's really what it sets out to do, and it does it well. The fractional share purchases are what really sets it apart, though. Not many kids, or even young adults new to trading can afford to buy Amazon stock, but Stockpile eliminates this problem. What I find this does, in practice, is helps new traders avoid the mistake of looking for "cheap" stocks so they can buy a bunch of them. It's easy to get excited about buying 50 shares of a $2 stock instead of 1 share of a $100 stock, whether or not that is a wise decision.

The $0.99 commission is something to be aware of. In the case of my kids I'm guessing that total commissions will equal under $10/year for their accounts, which based on the amount we've got in their accounts will be reasonable as a percentage basis. However, If you ran up $10 in commissions on an account with just $100 in it, your percentage would be completely out of whack with what could be considered a reasonable return. So parents do need to consider if this will work based on how much they intend to invest in these accounts.

What Stockpile is not is a trading platform for investors. They don't offer all stocks and etfs, and they only execute trades at the end of the day. Stockpile is for very passive long-term investing.

Overall, I'm quite happy with the platform and how simple it is. It allows me to easily bring up my kids' individual accounts, and really encourages some great discussions on topics that I find fascinating, but that kids might otherwise find dull. Seeing money in their own names, and watching it rise and fall day-to-day really teaches them an incredible amount about how the economy works. Lessons that will serve them well their entire lives.