Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.
Unfortunately, Stockpile neither operates in Canada, nor can Canadian residents convert stockpile gift cards into stock.
But there are alternatives you’d do well to consider. We’ll clarify everything you need to know below.
What is Stockpile and is it available in Canada?
Stockpile is a Palo Alto-based American financial startup that allows clients to buy fractional shares of publicly traded companies like Amazon, Alphabet and Nike. They also sell gift cards so that you may pass along a gift of a fractional share of a well-known company. Stockpile was founded in 2010 by Avi Lele, who got his engineering degree from MIT and a law degree from Harvard. After practicing law for fifteen years, Lele got the idea for Stockpile when he wanted to gift his young relatives with stocks and realized that no one was marketing fractional shares of companies with high stock prices. The company emphasizes that they seek to “democratize” stock ownership, which has traditionally been practiced mostly by the wealthy. With Stockpile, you can buy a small fraction of a share in a company that would otherwise be unavailable to small investors, like Berkshire Hathaway, a company with a stock that has lately traded at over $300,000 per share.
The company’s fee schedule on its website states, “At Stockpile, you don’t pay Wall Street fees.” Indeed, their trading fees are reasonable, at $.99 per trade. The fees associated with buying a gift card for a stock are considerably higher, however. Stockpile charges $2.99 for the purchase of one stock plus a 3% surcharge if you want to use a credit or debit card for the purchase. So buying $100 of Amazon stock on a credit card would cost $105.99, a nearly 6% fee.
Stockpile’s terms and conditions specifically state that neither buyers nor receivers of Stockpile purchases may live outside of U.S. Stockpile is somewhat equivocal in who can use the site, stating “the Service may not be available in your state or country. Stockpile does not represent that materials on the site are appropriate or available for use outside of the United States.” However, the company is more definitive in stating that anyone who wants to hold stock purchased through their brokerage “will need to provide certain information required by Federal law to open an Investment Account, including her name, address, contact information, date of birth, and Social Security number.”
An alternative to Stockpile for Canadian investors
Have you considered Wealthsimple? Hear us out.
Could there really be anything better than a tiny sliver of a great public company like Alphabet? How about a tiny slivers of hundreds of great public companies.
Toronto-based Wealthsimple is best known as a “robo-advisor,” meaning that when you invest with the company, your money isn’t actively managed by humans but rather by a computer algorithm. You may want to read more about robo-advisors, but “robots” watching over your life savings is not nearly as frightening as it might sound. The general model of robos is to keep fees low through passive investment, that is, investing exclusively in low-fee ETFs that, rather than attempting to beat the market, as stock pickers and mutual fund managers seek to do, instead mirror the returns of a sector or index. One example is the S&P 500, an index of the 500 most highly valued companies listed on American stock exchanges. Passive investing has become increasingly popular in light of tons of studies that demonstrate that nearly all professionals paid to pick stocks fail to outperform the market as a whole over the long term. In fact, perhaps the greatest stock picker of all time, Warren Buffett, has encouraged his heirs to invest the lion’s share of their inheritance in low-fee, highly diversified stock funds. Picking individual stocks, on the other hand, can be a lot like playing the lottery. Some perspective: the top performing 4% of stocks accounted for the entire wealth creation of the US stock market since 1926.
You can open a Wealthsimple account and own a well-diversified portfolio of stocks for as little as one dollar. There are no fees to open an account and all Wealthsimple clients, regardless of their account balances, receive state-of-the-art technology, unlimited human support all for a remarkably reasonable management fee.
If you would prefer to trade individual stocks and ETFs, consider Wealthsimple Trade, which, unlike many other discount brokerages, offers commission-free trading, meaning you pay absolutely no fees to trade stocks or ETFs. Zero fees or commissions means that every penny will go directly towards your stock purchase.
Wealthsimple is anything but a fly-by-night startup. Canada’s largest automated investing service, it’s received $265 million in investment from some of the world’s largest financial institutions in Canada and Europe. As of May 2019, Wealthsimple boasted more than 150,000 clients and $4.5 billion of assets under management. Wealthsimple’s brokerage Canadian ShareOwner Investments Inc., which handles all client trades, is a member of the Canadian Investor Protection Fund (CIPF). CIPF is a program that insures all accounts up to one million dollars against member firms bankruptcy.
Looking for the best robo-advisor or electronic brokerage in Canada? Take a look at Wealthsimple. Whether you’re seeking to diversify through ETFs or go big on one stock, Wealthsimple will set you up.