Loyal3 for stock investing

Screen shot 2014-08-19 at 12.02.42 AMRecently, I’ve been talking a bit more than usual about investing.  It’s been on my mind a lot lately.  A few weeks ago (maybe a month now, I’m not so great with days during the summer) I was doing some research online, one website led to another, and I stumbled upon a company called Loyal3.  You may have heard of it, as I know some other bloggers out there were onto it well before me.  But, in case you haven’t heard, Loyal3 is a fee-free platform that allows you to buy and sell stock in a limited number of companies.  If you’ve ever paid $4.75, $6.95, or $7.95 to make a trade with your current brokerage, your ears probably perked up eyes opened a little wider with intrigue.  So, how does this work?

I was interested in knowing how they can take my money, charge me nothing, and the end result is my stock ownership.  According to the smooth-voiced CEO, they “generate revenue by providing services to companies and charging them for those services.”  They also help raise money for IPOs and increase brand engagement.  So companies pay them to raise money (maybe) and increase brand engagement (yes).   But, you as the individual shareholder benefit from this deal.  Nice.

How much do you have to invest?  “As little as $10.”  This is probably my favorite aspect of Loyal3.  It’s the one thing I can truly see making investing open and accessible to individuals with less means.  If you only have $20 or $3o bucks per month to invest, it might be very difficult for you to save up enough money to make a purchase worth it.  Ideally, you would want your fees to be around 60 basis points (0.006%).  Or that’s my preference, I should say.  If you’re paying $6.95 per trade, like you would with Sharebuilder for example, you would have to invest about $1,159 to achieve that result.  With Loyal3, you can invest $20 every month, and “100% of what you invest goes towards buying stock.”

Because you can invest such a small amount, Loyal3 also allows you to purchase fractional shares.  That is, basically less than one complete share.  So instead of waiting until you have $40 to buy a share of Coca-Cola, you can invest $20, and buy 0.5 , also known as 1/2, shares of KO.  Again, beneficial to the individual without much income who still wants to invest.

However, Loyal3 is limited.  You can’t open an IRA, you will be buying your shares in a taxable account, and buy and sell orders are done through batch trading (meaning all at one time and “typically only once each business day for sells and twice each business day for purchases. Batch trading is used so that a number of accumulated orders can be executed with fewer market interactions.”  Makes sense.  It keeps their costs down, too).  Also, the number of companies you can purchase stock in are limited, 58 at last count, but there are definitely 10 or 15 stocks that you can build a 30 year portfolio out of.

My main concern was with the security of my money and stocks.  From their FAQ section

LOYAL3 Securities, Inc., as a broker-dealer, has to comply with certain regulations regarding the requirement to have adequate net capital and asset protection. LOYAL3 segregates your securities holdings and cash in your account, meaning it keeps your assets separate from the firm’s own assets. In addition, LOYAL3 Securities, Inc., is a member of SIPC, which protects securities of the customers of its members up to $500,000 (including $250,000 for claims for cash).

I have yet to withdraw any money though.

So it seems pretty legit.  But, the big question- would I recommend Loyal3?  That really depends.  I’m currently using it to put a small amount each month into Coca-Cola and Disney.  BUT, I would definitely recommend putting your money into a tax advantaged account first.  However, if you’re maxing out those accounts, or only have $10 a month to invest and don’t want to wait 100 months to make the trading fees equivalent to a rounding error, give it a look.

It will be interesting to see how this plays out, as I can see the brand awareness being worthwhile to the companies participating, and think before long, there will be more offerings and a larger selection of companies in which you can buy ownership (that is what a stock is.  Partial ownership in a company.  Not a gamble.  Remember that).

Also, this shouldn’t need to be said, but I own KO and DIS and am very, very long on them.  I don’t anticipate selling them.  Furthermore, I am not a professional.  I encourage you to do your own research, talk to your own professionals, and more, as you and your situations are unique.  You may also be interested in knowing that I was not compensated whatsoever for this post.  In fact, I rarely receive any compensation at all from this website.  I’ll say it’s because I’m no sell-out, but really I’m just not good at monetizing a blog.

Have any of you used Loyal3?  What are your thoughts? 



  1. Never heard of Loyal3. Great tip when you are starting to dabble in investments. I am long KO in my retirement portfolio but I also would love to buy Disney!
    debs@debtdebs recently posted…I Just Paid Off my Cash Advance Credit CardMy Profile

  2. Hey Ryan. Great post summarizing Loyal3! I have just signed up with them myself and putting just credit card rewards signup bonuses into this account. Good way to grow free money :) with no fees. And yea, there isn’t the best selection, but there are at least a good dozen solid blue chip companies to choose from and alot of newer companies (which seems like that is part of their focus, by adding stocks in at IPO’s).
    Kipp recently posted…Why you should NOT Delay ParenthoodMy Profile

  3. Loyal 3 is doing some good stuff. I just wished they offer more selection, but I’m sure they will in the future. It’s weird seeing a company like Loyal3 go against the grind. I hope my broker Schwab takes notice and lower their fees even more. Competition is a good thing!

    Henry @ Living At Home recently posted…Building An Emergency FundMy Profile

    • I know Henry! I just tweeted at Sharebuilder the other day to see if they were planning on lowering their $6.95 per trade fee, but they said they didn’t have anything in the works. But hopefully this is the impetus the other brokers need to lower the fees some. It’s hard to invest smaller amounts when 3 or 4 percent of it will be eaten by fees.

  4. I have never actually heard of Loyal3, but it makes sense that they are limited in the shares that they sell because they probably make money from those companies specifically. As long as they are a member of SIPC, you should be covered (although that only covers you should they go bankrupt any shenanigans in between are on your dime). I don’t personally buy individual stocks, I am more of a fund/ETF kinda gal, but I always love finding new ways to invest cheaper. Thanks for sharing!
    Shannon @ Financially Blonde recently posted…Shameless Plug Sort OfMy Profile

  5. I had never heard of them until your post Ryan but the idea is intriguing and interesting for those who want to invest small amounts to become shareholders. To satisfy my curiosity, I’ll go have a look-see :)
    Kassandra @ More Than Just Money recently posted…Financial Fire Drill – Are You Ready?My Profile

  6. I have never heard of them until this post. I will be looking into it though. Thank you.
    Brit recently posted…Changing My Daily Routine – UpdateMy Profile

  7. Loyal3 is an awesome way for a newbie to invest in the stock market. Gone are the excuses of “I have no money to invest” etc. Everyone has $10 or $20 a month if not more that can be put towards building and income portfolio. One side note about Sharebuilder is that if you make your buys with their batch processing (on Tuesdays) the commission is $4 a trade. Thanks for sharing this post.
    DivHut recently posted…Planting Dividend Seeds With Timber REITsMy Profile

    • I’ll have to take a look. I thought their automatic investing program was $4 per month, but I haven’t looked at it in a while. Thanks DivHut. But you’re totally right. Loyal3 is a game changer for a lot of folks looking to get into investing.

  8. Another reason removed on why people can’t invest because they only have 20 dollars. Great for someone starting out without 3000 to buy into a vanguard index fund
    Charles@gettingarichlife.com recently posted…Stocks I Bought, Added, And WantMy Profile

  9. Hmm..interesting. Want to build my IRA first, but sounds like it’s worth taking a look over.
    Femme @ femmefrugality recently posted…My Unconventional Travel Emergency Fund: How I Use Credit Card Rewards PointsMy Profile

  10. I’ve never heard of Loyal3, but it seems like a great option if you want to invest small amounts over a long period of time. I still need to max out my tax-advantaged accounts first.
    DC @ Young Adult Money recently posted…The Fastest Way to Get Life InsuranceMy Profile

  11. Loyal3 seems to be providing great results and a great website for investment. I’d like to try it out first with a small amount of money. Then, let’s see where it goes.
    Jayson @ Monster Piggy Bank recently posted…What is the best way to invest $10,000My Profile

  12. Wow, and I thought made tradeking fees were low!
    Stefanie @ The Broke and Beautiful Life recently posted…Apple Stock: A Lesson In PatienceMy Profile

  13. Yes I heard about loyal3 when they first started, it seems like a very convenient investing website. If you don’t mind the batch buying, then that is the cheapest place to buy certain stocks. Just be aware you might not get the price quoted of a stock when you click the purchase button.

  14. Never heard of loyal3. Haven’t really considered purchase of single stock, but for no fees and small amount to get in it doesn’t sound like a bad way to get your feet wet.
    Brian @ Debt Discipline recently posted…Summer Job FailureMy Profile

  15. For those with little to invest it could definitely be an option. It can sometimes be tough coming up with the minimum investment for some of the index/mutual funds.
    Brian @ Luke1428 recently posted…How to Pass the CPA Exam On the First TryMy Profile

  16. I had to invest $1,000-$1,500 per month with Vanguard to make the $7 per transaction commission worth it. Because of my recent career change, money’s going to tight for a while. I’m definitely going to give Loyal3 a try once I had a bit more revenue coming in! You really can’t beat free.
    Addison @ Cashville Skyline recently posted…Holding Myself Accountable: the August ReviewMy Profile

  17. I’m shocked that you can trade for so little!! There tends to be real costs associated to trading (such as producing confirmations), so i’m surprised how they can do it so cheaply!

    Make sure they don’t allow stock lending, which is where a broker will lend out YOUR stock to a short seller, in order to generate extra income.
    Mr Ikonz @ Project Ikonz recently posted…August Spare Change Challenge complete!My Profile


  1. […] about Loyal3 in his post about cheap or no fee investing.  Also Ryan at impersonal finance did a great summary about Loyal3 as well.  So if everyone is talking about it, it must be all good right?  Well […]

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