With Avi Lele, Founder of Stockpile.com
Podcast: Play in new window | Download
Steve was joined today by Avi Lele, the founder of Stockpile. This new company is really doing something innovative, circumventing the problems inherent in gifting common stocks to family or friends. Stockpile helps people of all ages and experience get into stock market investing.
An Early Advantage
The idea first came to Avi when he encountered some hassles trying to provide Christmas gifts for his nieces and nephews. This led Avi to develop an easy and affordable entry into the world of investing, particularly geared toward giving young people an early advantage.
Stockpile makes it extremely easy to purchase shares. Just as one can purchase a gift card at supermarkets and drug stores for any number of companies, you can now just as easily buy a gift card for stocks of Apple, Google, and a wide variety of other well-known companies.
Convenient And Fun
And Stockpile makes the process of stock buying convenient as well. Not only does the recipient have the option to switch the designated stock to another, but he or she also can choose to forgo the stock investment altogether, and opt to exchange for an abundance of Domino’s pizzas delivered to the kitchen of choice.
There is no pressure with Stockpile, and young people aren’t forced into the market, rather they can choose to hold and trade stock if it suits them and their guardians. By the same token, if they receive a gift card for GM and think “Tesla is a better option” then they have the right and opportunity to switch during the redemption process, putting the power to invest in the hands of the recipient.
Brokerage Account
When used as it was designed, Stockpile allows someone, instead of giving a check for $50 to a newborn niece or nephew, to make that newborn the holder of a brokerage account. This is an exciting and fun way for young people to learn about stock trading, but Stockpile has also ensured that those of a tender age are protected as well. There is a built-in safety net which prevents the over-enthusiastic child or teenager from trading stocks at their whim, without the approval of their parents.
The novel element of Stockpile is the ease with which the donor can initiate the giftee into the investment world. It allows a young person, who may not otherwise have knowledge of trading or owning stocks and bonds, to cultivate a new type of savings account, and opens up a window into a world they may never become aware of until much later in life, thus making it the perfect graduation gift.
Widely Available
This unique stock gift card has already been rather successful, enabling Stockpile to be available with a range of retailers, including Kmart, Wegmans, Giant Eagle, Safeway, Buehler’s and Toys R Us. Stockpile makes the perfect graduation gift, and is a great way of introducing the young and uninitiated to a world that may inspire them and shape their life journey.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: My next guest wanted to give some common stock to his kids and his nieces and nephews, but he found that it was too much of a hassle. What did he do? He gave up and then decided to form his own company to fix the problem. My guest is Avi Lele, and he’s with me to discuss his new company Stockpile. Hey, Avi, welcome to the show.
Avi Lele: Thanks, Steve, it’s great to be here.
Steve Pomeranz: It sounds like this prototypical “find the need and fill it” story. Fill us in with a little bit of those details.
Avi Lele: Sure. I wanted to give Christmas gifts to my nieces and nephews, as you mentioned, a few years ago, and it was just such a hassle, I ended up forming Stockpile. We’re making it easy and affordable for anyone to be able to invest in their future or help the other people in their lives, whether they’re kids, grandkids, other family and friends, get an early start on investing for their future. Now, for the first time ever, you can walk into the grocery store and buy bread and milk, eggs, and a gift card good for twenty-five dollars of Apple stock or fifty dollars of Facebook stock or lots of others. You buy it off the rack, just like any other gift card, and give it to your recipient, or you can do the same thing online at stockpile.com. We have a thousand different stocks and ETFs and ADRs you can choose from.
Steve Pomeranz: Do you have to designate a particular security?
Avi Lele: You can, but you don’t have to. We have cards that say the name of the company on the front like Apple or Google or Tesla. We have other cards that have a bunch of companies that the recipient can choose from, but there’s a secret to all of our gift cards. That is that the recipient, when they get the gift card, they enter a scratch-off code on the gift card at our site, just like any other gift card works, and then they can actually switch to a different stock if they don’t like the stock on the front of the card and don’t think it’s the right investment for them. We allow them to switch. If they don’t want to be in the market at all, we don’t force them into the market. That’s not cool. We allow them to opt out to a regular old retailer gift card for Domino’s Pizza and go shopping. If they don’t take the opt-out, and most people don’t, most people want the stock, they end up with fractional shares of real stock in a real brokerage account.
Steve Pomeranz: Let me take this through for our listeners. I decide I want to give fifty dollars as a birthday gift to a nephew of mine, and instead of sticking a check in my birthday card or some gift card to the mall or something like that, I can say, “Here’s a fifty-dollar gift card to buy Apple stock.” That person takes that card and goes to the website, scratches off, gets a code, whatever it is. Then what happens, a brokerage account is opened for that person?
Avi Lele: Yeah. At that point if this is the first time the recipient puts in their information and opens a brokerage account. It takes about two minutes. We’ve gotten it down to two minutes. You get an instant account approval. That night, if Apple is trading at a hundred dollars a share and you got a fifty-dollar gift card, you end up with a half a share of Apple stock in a real brokerage account.
Steve Pomeranz: There are these things for those who are not familiar with this called fractional shares. You don’t only have to buy one share of a stock. You can buy a half a share, a quarter or a tenth of a share. That’s what Avi is talking about. You get a fractional share. What if the recipient is under age eighteen?
Avi Lele: That’s something that’s a really neat experience that we’ve built for kids. We’ve got, as it turns out, our youngest account holder is two months old. A fifth of our accounts are owned by people under eighteen. The reason, I think, is we’ve built a really engaging experience. When a kid opens a custodial account at Stockpile, mom or dad or another adult is on the account like any other brokerage, but at Stockpile kids get their own log in. They can come in and track their stocks without ever bugging mom or dad. They can even place trades that go to mom or dad for approval, so I’ve got a fifteen-year old son and he comes into Stockpile on the app and he places a trade, let’s say, for twenty-five dollars of Tesla stock. That shows up on my phone. If I tap on the approve button it goes to the market and executes.
Steve Pomeranz: When does it actually execute, that moment or is it at the end of the day? How does that actually work?
Avi Lele: It executes at the end of the day using the Market-on-Close price. At the end of the day we take a look at the Market-on-Close price and that’s the price you get for your trade. If Tesla’s trading at two hundred dollars a share, it’s a twenty-five dollar card, you end up with an eighth of a share.
Steve Pomeranz: What if the price goes up or down between the time that the card is purchased and the time that the stock is bought? How does that work?
Avi Lele: It doesn’t matter. The key here is that we want the recipient to start off with the fifty dollars that’s on the gift card the day they redeem it. What we’re seeing here is people who get a gift card and then they wait. They decide, “I want to wait until the share price comes down so I get a little bit more for my money.” You’re in the driver’s seat when you’re the recipient of a Stockpile gift card. There’s no expiration date, so you could redeem it the very day you get the card or you can wait for a week, a month or a year. You start off with fifty dollars, and then it starts going up and down with the market.
Steve Pomeranz: While I’m not crazy about this idea of waiting to time the market, what is does, though, it sets up this idea that if you wait and prices go down, that’s actually a good thing because so many people think that when prices go down it’s a bad thing. Here’s a pure instance where a person can start out at a young age realizing that, “If I can buy this thing for less, then perhaps I’m going to get more shares.” They’re going to understand that concept.
My guest is Avi Lele. He is the co-founder and CEO of stockpile.com and that’s what we’re talking about, how to give a gift card, a very easy way to give a gift card. You mentioned that I can go into my local store. You’re located in Silicon Valley, right? What stores over the country have you been able to get your cards in?
Avi Lele: We’re in Palo Alto, but our cards are available nationwide at a variety of retailers, Kmart, Wegmans, Giant Eagle, a number of Safeway locations. We’re in Buehler’s and Toys R Us. That was all in the fall for last holiday season. Because of the success of the gift cards, because they sold so well we’re just exploding in terms of new stores this year. We’re going to be in the number one office supple company, Staples, this year, Kroger, Simon Malls, and many many more this year.
Steve Pomeranz: What if I give shares of X Y Z company, but my nephew doesn’t really want to buy that company. Can they switch?
Avi Lele: They can absolutely switch. Let’s say grandma gives you a gift card good for GM stock and you’re thinking, “I think Tesla’s a better investment, I can do that. I can switch during the redemption process. I can switch for free to any other stock.” We want the recipient to end up with what they think is a good investment.
Steve Pomeranz: How do I, as the giver of this card, pay for it? Can I use a credit card?
Avi Lele: You can use a credit card, absolutely, whether it’s an egift or a gift in a store, you’d pay for it just like any other gift card at the cashier or online. You can use your credit or debit card to make it really easy.
Steve Pomeranz: What if, at some point in the future, I want to sell this stock. I guess I have a brokerage account now. The gift portion, the card is done. Now I own this fractional share of X Y Z company and my brokerage account. Can I just sell it normally?
Avi Lele: Absolutely. You can hold onto it forever if you want to. Let’s start there. You don’t have any account minimums or monthly fees or anything like that. You can watch your stock just go up and down forever. If you want to sell it or if you want to buy more of that stock or a different stock, you can absolutely do that. We charge iTunes pricing. It’s ninety-nine cents. That makes it really really easy to do. This is real stock, so if the company announces a dividend and you own a half a share, you get a half a dividend.
Steve Pomeranz: Wow. You’re talking pennies here.
Avi Lele: Could be. Depends on how much you got.
Steve Pomeranz: That’s very clever. It seems like quite an easy way now for those of us who like to give gifts of stock to do it in a more modern way. Instead of fostering a spending attitude for these gifts, maybe you’re fostering a bit of a savings attitude, which is always very good.
My guest is Avi Lele. The website is https://www.stockpile.com./ Sounds like a great product. Thanks so much for joining us, Avi.
Avi Lele: Thanks, Steve. Thank you very much.
