How to Triple Dip Your Rewards Points

by Fred Fuld III

It’s nice that you get cash back or rewards points when you use your credit card. It’s also great when you can get rewards from the company you make purchases from. It’s like double dipping.

But wouldn’t it be great if you could triple dip. How would you like to receive free stock in the companies that you buy from? Well now it’s possible.

There is a company called Bumped, which allows you to have a percentage of your purchase go towards fractional shares of stock in those companies. The percentage isn’t a lot but it adds up over time.

For example, if you buy rom Starbucks (SBUX), you get 2% of your purchase price going towards the company’s stock. If you buy from ExxonMobil (XOM), you get 0.5%. The range goes all the way up to 3% defending on the type of business.

Here are the categories and their percentages:

  • Coffee  2%
  • Gas/Convenience Stores  0.5%
  • Entertainment  2%
  • Family Dining  2%
  • Personal Care  1%
  • Quick Eats  3%
  • Vineyards  1%

So, for example, if I buy food and a beverage at Starbucks, and I pay with my cash back American Express (AXP) card, I will get the cash back bonus from AmEx at the end of the month. Plus, if I’m a member of the Starbucks rewards program, I get those benefits. Finally, if I have linked my AmEx card to Bumped, I get 2% of my purchase applied to the Starbucks stock.

My Bumped app when I just started out
My Bumped app when I just started out

There are a wide range of companies that are participating in this program. Just in the Quick Eats category alone, there is:

  • Burger King
  • Chipotle (CMG)
  • Jamba Juice
  • McDonalds (MCD)
  • Subway

Now you may ask, what about the private companies that are listed, such as Jamba Juice and Subway? Well, if you purchase from Jamba Juice, your 3% is applied towards the Vanguard Total Stock Market Index Fund ETF (VTI).

So when I bought a Jamba Juice recently, I got cash back on my AmEx card, I got more Jamba Juice  points since I’m a member of their rewards program, and I got 3% of my purchase automatically invested in VTI.

Other companies that are part of the program include Peet’s Coffee, BP (BP), Chevron (CVX), Shell (RDSA), Netflix (NFLX), Spotify (SPOT), Lyft (LYFT), Uber (UBER), plus several restaurants and other businesses.

Unfortunately, there is a waiting list for Bumped, (they don’t want to get overwhelmed as they are growing) but once they notify you that you are eligible, you can jump on the triple dip bandwagon.

Disclosure: Author owns MCD, VTI, SBUX, & XOM. I did not receive any compensation from Bumped. 

How to Invest in Spotify Before It Goes Public

Many, many years ago, I was able to buy stock in Apple (AAPL) before it went public. Around the time when Apple Computer [that was the original name] was considering going public, I noticed an article in Forbes Magazine which mentioned that many of the shares were owned by a publicly traded closed end fund called the Nautilus Fund.

So I immediately bought some shares of the Nautilus Fund, not being sure of whether the CEF would sells the shares of Apple when it went public or would spin the shares out to the shareholders.

As it turned out, Apple had its initial public offering and the fund gave its shareholders the shares in Apple.

Now there is another hot company that is planning on going public but not through an IPO.

Spotify (SPOT) is a Stokholm, Sweden based music, podcast, and video streaming service with 160 million users, 72 million of which are paying customers.

You may have already heard that the company is expected to begin trading on April 3 on the New York Stock Exchange. This will be a direct listing, which means that no underwriters will be involved.

The reasons that the company is doing this are several, and the company has laid them out in its filing with the SEC for Form FWP 1 Filed Pursuant to Rule 433 under the Securities Act of 1933.

Here is what Spotify said in that document:

Many people have speculated about why Spotify is pursuing a Direct Listing.
We think it is best that you hear directly from us why we think this is the right approach for the people at Spotify.
From where we sit, there are five key reasons.
First, to list without the Company having to sell shares.
Second, to offer liquidity for shareholders.
Third, to provide equal access to all buyers and sellers.
Fourth, to conduct the process with radical transparency.
And fifth, is to enable market-driven price discovery through the New York Stock Exchange.

So can an investor get in before the trading date? If you are an accredited investor, you can get in on some private deals. An accredited investor is someone who has a net worth of at least $1,000,000, excluding the value of their home, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and expect to make the same amount this year.

If you are not an accredited investor, there are a few other options, which involved buying shares of companies that own stocks of Spotify.

For example, Sony Music Entertainment International (SNE) owns over ten million shares or 5.7% of Spotify, according to an SEC filing. Obviously, this represents a very small amount of the Sony’s assets.

Tencent (TCEHY) did a stock swap with Spotify, so it owns a small percentage of the company. Tencent is the Chinese Internet and entertainment company.

Other publicly traded companies that own a piece of Spotify. Coca-Cola (KO) invested in the Series E round of Spotify. Goldman Sachs (GS) participated in both the Series E and the Series G round of investments.

One other way is to invest in a closed end investment company that specializes in pre-IPO investments. One closed end fund that fits this category is  GSV Capital (GSVC), which owns $32.3 million of Spotify shares based on what they show as fair market value on the GSV website. Spotify represents 15.4% of the GSV portfolio, which also includes shares of Palantir, Coursera, and Dropbox.

Just remember, even though many hot IPOs have been spectacular, not every new issue stock is successful.

Disclosure: Author owns shares of GSVC.