Everyone likes to get something for free, and that includes investors. What if I told you that you could get free stocks from some brokerages? It is a little hard to believe at first, but it makes sense.
Before the rise of discount online brokerages, buying and selling stocks was expensive. Trades could cost as much as $20+ only just 20 years ago. Discount online brokerages succeeded in grabbing market share and investor dollars by competing on price and execution. But now, nearly $0 commissions or even $0 commissions are commonplace.
This is a good thing since costs and expense ratios affect returns. Furthermore, the number of brokerages and online trading platforms is rising, and thus competition is increasing. Brokerages are now competing in other ways. One way to attract investors to an investing platform is to offer free stocks.
How to Earn Free Stocks?
How do you earn the free stocks? Actually, it is fairly easy. In most cases, all it takes is just signing up for a new brokerage account using a promotion code or referral link and meeting the minimum requirements. Some brokerages only require you to open an account, while others require a deposit or placing a trade. Make sure that you read what you are signing up for at the individual sites and the terms before you do. In some cases, you get free cash in your account instead of stock directly, but you can use the cash to buy free stock. There are also minimum funding and other requirements at some sites.
There may be tax consequences of receiving free stocks since it counts as other income in your tax return. You also may have capital gains if you later sell the stock at a higher price than when you received it. This requires you to pay the capital gains tax.
These Brokerages Will Give You Free Stocks
Robinhood – Free Stock Between $3 and $225
Robinhood is one of the more popular investing apps, especially for beginners. It is well known for allowing investors to buy and sell cryptocurrencies, which I do not recommend. You can also trade stocks, options, ETFs, and gold. The platform offers commission-free trades. Robinhood makes money from uninvested cash, a premium service, margin interest, and other ways.
Robinhood will give you between $3 and $225 in one free stock just for downloading their app and opening a free account. The nice part is that you don’t need to deposit any money into your account.
According to the apps’ website, about 98% of people who open an account will get a free stock valued between $3 and $10. Only 1% will receive one free stock valued at $10 – $50, and another 1% will receive one free stock valued at $50 – $225. Essentially, the stock is randomly selected from Robinhood’s inventory. To actually receive your one share of free stock, you need to claim it within 60 days.
Robinhood also lets you receive free stocks by inviting friends. This is a separate rewards program. By inviting friends, you can get up to $500 in each calendar year of free stocks. This program is interesting, especially if you have many friends or are a blogger with many followers. The offer for free stocks is capped at $500 per calendar year, so it may not be worth your time. However, it is still more than what many other investing platforms are offering.
Stash – Micro-investing
Stash is a different type of investing platform for two reasons. First, it is an automated investment subscription service. The platform lets you invest in a risk-adjusted portfolio of stocks through exchange-traded funds (ETFs) or individual stocks. The second reason is that Stash is a micro-investing platform. You can buy fractional shares of companies with high share prices. This is useful if you try to buy shares of a stock like Amazon (AMZN), which is trading at ~$3,349.15, or other companies with high share prices.
Stash requires you to pay a monthly service fee of at least $1 for the basic plan. There are other plans too at $3 and $9 per month. If your account is over $5,000, then there is a 0.25% annual fee of your account balance. This is fairly high, in my opinion.
Stash does offer $5 cash for signing up and depositing $5 in your account. You can take the $5 and buy free stocks with it. Since $5 is not much, you will likely be buying fractional shares. Overall, this offer may not be worth it since you only receive $5 in free stock, and the cost of accounts over $5,000 seems high to me.
Acorns – More Micro-investing
You may have heard about Acorns since the investing app has received a lot of press for planting oak trees and is backed by big-name investors, including some actors and athletes.
Acorns is similar to Stash in that it is a micro-investing platform, and it is also an automated investment subscription service. However, that is where the similarities end. Acorns lets you link your credit or debit card to your investment account. When you make a purchase, Acorns rounds up to the next $1, and the spare change is routed to your investment account. Once it reaches $5, the spare change is invested in a diversified portfolio of ETFs.
As a subscription service, you need to pay for Acorns monthly. There are plans at $1, $3, and $5 per month.
You can receive free cash of $5 for signing up and making your first investment. You can take the $5 and buy free stocks with it. Acorns also has a rewards program where you can earn $5 for inviting friends. Lastly, Acorns gives free stocks for spending with their partner brands in their Found Money program. These companies deposit a small quantity of free stocks in your account when you spend with them. Overall, the concept for Acorns is different and may be worth looking at despite only $5 in free stocks. Investing with a little money can still be a way to build wealth.
Webull – Free Stocks Between $3 and $2,000
Webull is a newer online brokerage that started only in 2018. It is similar to Robinhood in that it offers the ability to buy and sell stocks, options, ETFs, and cryptocurrency. The platform also offers commission-free trades. In addition, Webull provides real-time data for stocks, extended trading hours, and other tools and reports that are similar to more traditional brokerages. Webull makes money from uninvested cash, a premium service, margin interest, and other ways.
Webull will give you between $3 and $300 in one free stock just for opening a brokerage account with them. The nice part is that you don’t need to deposit any money into your account. However, if you fund your account with $100 or more, you can get a second free stock valued between $8 and $2,000.
According to Webull’s website, you have a 100% chance of receiving two free stocks. But keep in mind that stock selection is random and from Webull’s inventory. To actually receive your one share of free stock, you need to claim it within 30 days. The website currently states that you have a 1-in-100 chance of getting free stock of Facebook (FB), Starbucks (SBUX), or Snap (SNAP). You also have a 1-in-50 chance of getting free stock of Google (GOOG), Procter & Gamble (PG), and Kraft Heinz (KHC).
Webull also has a referral program. Currently, if you refer a friend who deposits $100 or more, you can get four free stocks, each valued at between $8 and $2,000. This offer expires in a few days. This program is interesting, especially if you have many friends or are a blogger with many followers.
Webull is probably worth looking at since the free stocks offer has higher values than most other offers that I have reviewed.
M1 Finance – Invest in a Pie
M1 Finance is another popular investing platform. It differs from the other investing apps and brokerages discussed here in that M1 provides a high degree of customization to create portfolios. M1 has commission-free trades and fractional shares. The investing platform also lets you automate your investments.
M1 Finance has dozens of portfolios which M1 refers to as pies that are preset, or you can create the exact portfolio that you desire. You can analyze and compare the different portfolio incomes using the Rule of 72. As you invest or withdraw money, your pies are monitored and rebalanced. You need a minimum $100 deposit to get started.
M1 Finance gives you free cash of $30 if you refer a friend and they sign up. There are a few other requirements too. You must have a funded investment account. Your friend must deposit $100 into a brokerage account or $500 into a retirement account within 30 days and leave it there for 30 days. You can take the $30 free cash and buy free stocks with it. This is an OK offer from the perspective of free stocks, but the investing in pies concept may be worth looking at.
Nvstr – One-click Optimization
Nvstr, pronounced “investor,” is a brokerage and investing platform (note that the author of this article, Dividend Power, is an affiliate of Nvstr). Nvstr lets you place trades for stocks and ETFs. There is no account minimum. Besides live trading accounts, you can also have simulated accounts in Nvstr.
Nvstr differentiates itself in two ways. First, it has a one-click Portfolio Optimizer based on the work of a Nobel prize-winning researcher. The Optimizer tries to solve for the optimal portfolio allocation to maximize return while minimizing risk. You can read more about the Portfolio Optimizer in the article Review of Nvstr. The platform also has a social aspect with Community Thought Leaders, Viewpoint Contributors, and a social media feed with Pros and Cons. The idea is for you to get ideas from community members to make investments.
Nvstr is a subscription service for $4.99 per month, and you get 25 commission-free trades per month. You are not required to join the subscription service. Alternatively, you can pay $4.50 per trade.
Nvstr offers free cash of $10 to $1,000 if you sign up for an account and place a trade within a month. You have a 100% chance of getting at least $10, a 1-in-20 chance of getting $20, a 1-in-2,500 chance of getting $500, and a 1-in-5,000 chance of getting $1,000. You can take the free cash and buy free stocks with it.
Nvstr also has a friend referral program, and you can earn up to $1,000 free cash from that as well. In this program, you will receive at least $8 and decrease the chance of getting higher dollar values up to $1,000.
Final Thoughts on These Brokerages Will Give You Free Stocks
Other brokerages and investing platforms offer free stocks or free cash that you can use to buy free stocks. But the above are the most popular platforms and tend to have the most generous free stocks programs. That being said, do your research before you decide on signing up for an investing platform just for free stocks or free cash. Some platforms may want you to trade more, and rapid trading is known to lower long-term returns. It is much better to have an investing strategy that you research and fits your risk profile. I personally prefer the advantages of dividend growth investing.
Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.
This article originally appeared on Your Money Geek and has been republished with permission.