Loyal3 may not have the most well known name or strongest brand in the online investing space, but its platform is picking up steam with each passing day. What really appeals about the platform is that you can invest in certain stocks for FREE. Yes, free. That’s a great deal and may appeal to many investors.
However, there are some drawbacks that hold investors back, and it’s one of the reasons why we rate Loyal3 just 3 out of 5 stars.
Here is how Barry Schneider, the company founder, describes Loyal3:
An Introduction to Loyal3
With the Loyal3 platform, individuals can invest in stocks and IPOs. While similar in function to other platforms, such as Scottrade, there are two things that set it apart:
- Invest with small amounts of money (as little as $10)
- No fees to buy or sell
The option to invest with such a small amount of money helps the platform attract a larger audience. Those without thousands of dollars can use this service to get started.
The real game changer is the ability to buy or sell stocks without any fees. With no fees, 100% of every dollar goes toward buying stock. Subsequently, your money grows faster and you reach your goals in a shorter period of time.
Below is a screenshot comparing Loyal3 fees to those charged by other brokerages:
Is it too good to be true? Yes and no. This pricing is for equity trades only. Furthermore, there is a maximum monthly purchase cap of $10,000 per transaction. This may be a big deal for some, such as those who buy and trade often, but those who hold onto stocks over the long haul find that this never causes a problem.
Note: there are a limited number of stocks available through the Loyal3 platform (more on this below).
Can I Really Invest With $10?
The minimum investment with some brokerages can reach $1,000 or higher. This is never the case with Loyal3. The company is able to offer this benefit by selling fractional shares.
There is only one downside to this: since fractional orders are batch purchased, you will not receive real-time pricing on your orders. This means you could pay more for a stock than the quoted price at the time of purchase.
How to Get Started With Loyal3
The simplicity of the Loyal3 platform is a big reason why it has gained some much traction in a short period of time. There aren’t many bells and whistles. There aren’t many backend tools that get in the way. Instead, it was built with the user in mind. Even more so, it was built to help customers invest easily and make money.
Getting started is as simple as choosing a stock. Here are your choices:
As you can see, some of the biggest and most popular publicly traded companies are on the list. Just a few of the most popular include: Apple, Facebook, Electronic Arts, Kohl’s, Microsoft, Monster, Pepsi, Starbucks, Target, and Twitter.
Do you see the companies with “two hearts” listed next to them? Here is what Loyal3 wants you to know:
“Reflect companies that pay or have paid fees to LOYAL3 in exchange for services for certain offerings. The offerings include Social Stock Plans, as well as IPOs and follow-on offerings we have underwritten, each of which was subject to a prospectus and registration statement filed with the SEC.”
This has nothing to do with you as an investor, but Loyal3 must make it clear that they have a business relationship with the company.
Once you choose a stock, you are taken to the investing page. For the sake of this article, let’s assume you are interested in purchasing Apple stock.
Here is what you will see:
This page is an example of just how simple it is to use the Loyal3 platform. You are presented with the following information:
- Share price based on the previous day’s closing price.
- A description of the company, if you are interested in learning more before investing.
- The ability to choose from three predetermined investments, or the option for a custom amount.
- Upon choosing your amount, the option to make a one-time purchase or setup a recurring monthly investment.
Once you make these selections, follow the prompt to move onto the next page. This is when you finally begin to realize just how close you are to your dream of investing. This section consists of three parts:
- Profile information, such as your name, address, email, and employment details.
- Payment information. It is here that you will provide your bank routing and account number, as well as your tax information.
Last, but certainly not least important, is the ability to review your order and place your investment.
Note: upon completing your first order your account will be created. The profile information you created in the first section is what you will use to sign in and review your account, including your balance.
Loyal3 doesn’t want its users to be confused. Instead, it strives to provide a stress free experience that is both simple and convenient.
Upon logging into your account, you are presented with a variety of information, with this snapshot showing what is most important:
Not only does this show your total account value, but it also keeps a running tally of your available funds. In the event that you want to transfer funds, such as back to your bank account, you can do so with a couple clicks of the mouse.
You can do many other things from your dashboard, including but not limited to: buying stock, selling stock, tracking your past investments, and viewing statements. All of this information is laid out in a clear format, allowing you to jump around from one section to the next without any distractions getting in your way.
Benefits of Buying Stocks with Loyal3
You already know you can invest with as little as $10. You also know there are no fees for investing in the stocks you love. There are a few other details that you need to consider before getting started with Loyal3:
- Fractional shares. You have the option to purchase full shares, but Loyal3 also allows you to buy fractional shares, which puts you in position to get more value when you have the money to invest.
The following screenshot shows how this works:
In this example, you only invested $10 in a particular stock, despite the fact the share price is $43.22. With most online brokerages this would not be possible. You would need the entire amount, $43.22, plus any money to cover fees. With Loyal3, you can purchase a fractional share, in this case working out to 0.2314 shares.
When you come across a stock you are interested in, there is a good chance you don’t want to wait. Loyal3, once again, has you covered thanks to its stock purchase timing feature. With this, your order is completed the same business day as long as you have the funds in your account to cover the trade. It must also be confirmed by 2 PM ET.
For those who don’t have the discipline to log in and purchase shares on a regular basis, the ability to setup a monthly investing plan is a big benefit. Other companies offer the ability to do the same, and Loyal3 does it just as well (or better, in some cases). You have the option to setup automatic monthly investments. If you decide to cancel, all you have to do is process the request before midnight the day before the scheduled purchase.
What about IPOs?
There is nothing more exciting than getting involved with a stock before it begins trading. If you have your eyes on an initial public offering (IPO), there is a good chance Loyal3 can help you invest. But there are some things you need to know:
- Enrollment is first come, first served. Once you decide you want to invest in an IPO, it is imperative that you reserve stock. There is no guarantee you will receive the requested amount of stock, but you have the right to place your order and hope for the best. The final determination on what you can purchase is based on the number of reservations and requested shares.
- Two hour decision window. Once an IPO price is released, you have a two hour window to decide what you want to do. During this time, you have the option to cancel your order and walk away. This comes in handy if the IPO price ends up being higher than you first expected.
Support Of All Types
When it comes to your money, nothing is more important than knowing it is safe and secure. Additionally, you want to know there is somebody who can answer your questions.
Loyal3 has you covered in this department. With live chat, for example, you can get in touch with a customer service agent at most times of the day (8 – 5 PM PST). This is a great feature for those who have questions as they open an account or attempt to buy or sell stock.
If you would rather speak with a live person over the phone, you can call the toll free number from 8 – 5 PM PST.
Of course, you also have the option to send an email for support.
In many cases, speaking with a Loyal3 agent is not necessary as the company has a robust support system in place.
On the left side of the screen you are presented with a variety of common topics, including a section listing the most popular articles. Once you click on an article, you are then provided with information and advice pertaining to the topic.
Here is an example:
In the event that you can’t find an answer via the sidebar topic search, you can type your question into the search bar at the top of the screen. This will provide you with a variety of answers based on your inquiry.
Companies Can Use Loyal3 As Well
Most people look at Loyal3 and see an investing platform for individuals. Public companies and pre-IPO companies can benefit as well. Here are some of the things a company can do via the platform:
- Implement a social stock plan. This makes it possible for individuals to buy stock directly from the company’s Facebook page or website. As always, it is fee free and costs as little as $10.
- Stock rewards program. Many companies have found they can use the Loyal3 rewards program to up-sell investors and retain their interest in the company.
At this time, companies are not benefiting from Loyal3 nearly as much as individual investors. Even so, this is an interesting side of the company that is poised for growth.
What’s Wrong With Loyal3?
Now that you understand what’s good about Loyal3, as well as some of its features, it’s time to examine the areas in which the company needs to improve.
- Limited stock selection. This is the one thing that holds many people back from using Loyal3. While there is a nice selection of popular stocks, those who want more choices must opt for another platform. If the stock isn’t offered through Loyal3 a user cannot invest in it.
- Not for people interested in retirement investing. Most competitors give individuals the option to invest in a personal or retirement account. At the present time, Loyal3 is not one of them. There is no option to invest in a traditional or Roth IRA.
- Lack of investment assistance. Some competitors, such as ShareBuilder, are packed full of information and advice for investors. Loyal3 comes up short in this department.
- Lack of power from its mobile app. Although Loyal3 finally rolled out an iOS app in late 2014, it lags behind the competition in terms of power, convenience, usability, and features.
Just the same as any investing platform, there are things that Loyal3 does well. There are also areas the company should consider improving in the near future.
Primarily for beginners, the Loyal3 platform is a big hit thanks to its fee free setup and ability to invest in fractional shares. If the company cleans up its act in some other areas, such as offering retirement investing, it could continue to climb to the top of the industry.
If you’re interested in Loyal3, sign up here and invest in your favorite company for no fees.
Have you used Loyal3? What are your thoughts?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.