How about giving a piece of Apple for a holiday gift this year?
Or maybe adding part of Google, Facebook or even Berkshire Hathaway to your next grocery run of milk and eggs?
Starting next month, you’ll be able to buy a fractional share of more than 1,000 companies, indexes and other stock market funds through gift cards sold at a number of big-name retailers.
Stockpile, a discount broker/dealer based in Palo Alto, Calif., is rolling out stock gift cards to 14,000 outlets nationwide this fall, including Kroger, Lowe’s, Office Depot, Office Max, ToysRUs and Sears stores.
The concept has already created thousands of new owners of direct stock since a soft launch last holiday season, according to Dan Schatt, chief commercial officer of Stockpile.
“We had an initial order from retailers of over 1 million cards last holiday season, and we’ve already had orders for multiples of that this year,” said Schatt.
That number is likely to increase substantially. Soon, eBay plans to launch the fractional stock-buying service and blast the news to its 20 million users, Schatt said.
Also, more than 100 banks will begin offering the stock-buying option as part of credit card loyalty programs this quarter, Schatt said.
The ease of fractional stock purchases through gift cards fills a wide gap. Currently, 86 percent of Americans don’t own individual stocks, but 93 percent have received a gift card, according to the company.
“The vast majority of our customers are getting into the stock market for the first time,” Schatt said. “Twenty percent are kids or teens.”
The gift cards will be available in denominations of $25, $50 or $100 with an added fee of $4.95-$7.95 to cover credit card fees and trading commissions. Or you can purchase an e-card online at www.Stockpile.com valued from $1 to $1,000 for a one-time fee of $1.99 for cards worth less than $100 or $1.99 plus 3 percent for e-cards more than that.
The low fees make it easier to access individual stocks, said Helen Stephens, a certified financial planner with Aspen Wealth Management in Fort Worth.
So, too, does the fractional share option, she said.
“The cards are a neat way to introduce people to the concept of investing,” she said. “And it’s really neat they’ll allow a fractional share to say an index, since one share of the IVV [an exchange-traded fund linked to the S&P 500 index] is $218.”
So, too, Stockpile offers partial shares of high-cost individual stocks, like Apple, now at about $108 per share; Alphabet, (formerly Google) over $800; or Warren Buffett’s Berkshire Hathaway B at $147 per share.
Last holiday season, Stockpile tested the gift cards in 400 stores. It found a ready market for fractional shares, particularly for younger customers, Schatt said.
“Suddenly, many 12- to 14-year-olds are interested in the business section of the newspaper,” he said. “Fifty percent of our account base is under 30 years old, and people over 30 are buying for people under 30.”
The most popular card was a “choose your own stock” card, which is now available in Tarrant County only at the Office Depot store in Montgomery Plaza on West Seventh street.
After receiving the card, recipients can go online, open up an account in a few minutes (those under 18 will need a parent or guardian involved) and choose their stock.
Disney, Facebook, Google, Apple and Tesla are among the favorites chosen, Schatt said.
“Warren Buffett says buy what you know and love, and our customers are,” he said. “People are not buying Alcoa.”
Stockpile has filed all the necessary paperwork to be registered with the Securities and Exchange Commission, the Financial Institution Regulatory Authority and is covered by the Securities Investment Protection Corp.
Schatt said they can provide cheaper fees than other broker/dealers because they are entirely paperless. (Stockpile will provide typical services like adding dividends to accounts, as well as providing 1099 tax forms if a customer sells their stock.)
Stockpile also does not have a sales force, allowing that overhead to be erased from their costs, Schatt said.
Other safeguards built into the gift card purchases:
▪ Recipients can change for free to another stock or cash out to a retailer’s gift card if they don’t want the stock. After the first change, the fee to buy or exchange additional stock is 99 cents.
▪ Cards don’t expire, and there are no inactive fees.
▪ Penny stocks are not available.
“I looked around in the fine print on the website for gotchas, but there really weren’t any,” Stephens said. “They buy in aggregate, so the price may not be exact, but that will have a negligible effect.”
Like any gift card, the biggest danger is misplacing it, Stephens said. But once the account is activated online, the card can be tossed.
And like any stock, the price will fluctuate.
“Not all stocks will be winners,” Stephens said. “I don’t ever tell people investing in equity is low risk. But at these levels, it’s pretty innocuous.”
Schatt said current account holders are taking their investments seriously by diversifying and checking their accounts frequently. And when the stock market dipped in January, more account holders invested than left the market by a 10-1 margin, he said.
“People want an easy way to buy and track and sell stock in a low-cost way in the dollar value they want,” he said. “Now you can buy milk and eggs and also buy stock.”
Teresa McUsic’s column appears Saturdays. TMcUsic@SavvyConsumer.net