Stash Invest is an app for both Android and iOS that was born out of the simple question: Why don’t more people invest their money? This seemingly simple question can have a myriad of answers depending on who you ask.
Stash tries to overcome these obstacles with a well-designed app that provides easily understood solutions without breaking the bank.
For many, the barrier for entry for investing in stocks can be incredibly high. Whether it’s high minimum investments or hefty fees, a lot of people find that investing is not affordable. On top of that, it can also be incredibly confusing.
There’s a lot of jargon out there and many of us don’t know the difference between a stock and a bond, let alone how to read a stock ticker. Stash aims to solve both of these issues by making investing both affordable and accessible. Intrigued? Keep reading to learn more.
Why is investing important?
Before we talk about why to invest with Stash, let’s quickly talk about why you should invest at all. Whether you know it or not, if you have a job, you are already likely investing a portion of your money.
Thanks to President Franklin Delano Roosevelt, who signed the Social Security Act in 1935 after the Great Depression, we all pay a portion of our payroll tax to reap retirement benefits later. As of 2018, you’re already paying 6.2% of your payroll check into Social Security, and your employer contributes the same amount on your behalf.
Social Security is designed as a safety net for the elderly and the disabled and is relied upon by millions of Americans as a portion of income once reaching retirement age.
According to the Social Security Administration, the average monthly benefit in 2017 is only $1,341.77. So while Social Security can certainly be helpful, it’s probably difficult for most people to survive on less than $350 per week.
According to a study by the Economic Policy Institute, almost half of Americans have no retirement savings other than Social Security. Predictably, low-income families are disproportionately affected by this trend.
Due in part to an inability to afford to save money and a lack of understanding of investment options, a large portion of our population is unprepared for their future. But it doesn’t have to be this way, and Stash is on its way to bridging the investment gap in America.
What Stash Does Differently
While Stash Invest is not the only low fee, easy to use investment app on the market, they do take care to educate their customers and show them how to invest and save money. This app is not designed for the seasoned investor.
The premise is for Stash to give you access to Exchange Traded Funds (ETFs), which are investment funds that allow you to buy a portion of stocks through a portfolio. Like similar apps, Stash charges you $1 per month until your investment reaches $5,000 and then charges you 0.25% of your total investment.
Signing up for Stash is not as easy as just signing in with Facebook. One of the main complaints about the app in Google Play is the invasive information they request.
This includes banking information, your address, and even your Social Security number. While it’s not usually recommended to hand out this type of information to an app on your phone, Stash is bound by federal law, including the Patriot Act, to collect this information.
It is a necessary evil, unfortunately, but one mitigated by the fact that they use 256-bit encryption and your securities are protected up to $500,000. Additional security features include a pin number of your choosing that you must enter every time you open the app. This is beneficial whether your phone is stolen or your toddler is button mashing your phone while playing angel investor.
How Stash Works
When you first sign up for Stash, you’ll be asked about your investing style. You can choose from conservative, moderate, or aggressive. This helps tailor your portfolio options based on the amount of risk, and potential return, that is acceptable to you.
Determining your risk tolerance is only one way Stash helps you choose your investment strategy. Next, they’ll ask you how much and how often you’d like to invest. You can choose to invest as little as $5 at a time on a weekly, bi-weekly, or monthly schedule.
In the early stages, the more you invest, the lower your percentage in fees will be. Remember that Stash charges $1 per month up to $5,000 so if you only have $100 in your account, your annual fee will be 12%. Get up to $1,000 and that fee is only 1.2%.
The Stash Investment Mantra: I Believe, I Want, I Like
One of the main benefits of Stash is that they translate the confusing world of investing into layman’s terms to help new investors sift through the jargon. One way they do this is by turning investment options into lifestyle choices.
Using three different categories labeled I Believe, I Want, and I Like, picking the companies you want to invest in becomes almost as easy as what clothes to put on in the morning.
I Believe is tailored toward the more socially conscious among us. While some reviews of Stash have labeled it has hipster marketing, it’s not a bad thing that Millennials are concerned that the money they invest is done in a socially conscious way.
Under this category, you have options such as “Clean & Green,” which will invest your money in clean energy, “Live Long & Prosper,” which invests in healthcare markets, and “Water the World,” which invests in companies providing clean drinking water.
I Want is a goal-oriented category that allows you to choose stocks that pay dividends or are partial to your level of risk. “Essential Europe” lets you invest in companies from across the pond. “Public Works” allows you to invest in American infrastructure. You can even “Roll with Buffett,” which gives you a piece of Warren Buffett’s Berkshire Hathaway.
I Like comes off as the more pretentious offering and is most rooted in lifestyle choices. “Retail Therapy” invests your money in food, clothing, and travel companies. “Enjoy Your Fun” gives you the chance to invest in vacation and leisure companies. Far from just lifestyle choices, however, this option gives you the chance to invest in specific industries in which you see potential.
Knowledge is Power
While we know that you didn’t install Stash just for the articles, there is a wealth of knowledge to be found here. Under the “Learn” section of the drop-down menu are dozens of well-written articles designed to teach you how to invest. Stash is designed for the beginner and these articles can show you the ins and outs of investment strategy.
From “What’s a Capital Gain?” to “How to Invest Like an Activist,” Stash spends a great deal of time into turning you into an investment professional. Many people choose apps like Stash because of their simple to use nature, and set-it and leave-it design.
This is great for those dipping their toes in for the first time, but Stash realizes that you likely want to be more than just a casual investor. Think of it like boot camp for the uninitiated.
Whether you want to learn what interest rate hikes mean to you or better understand certain investment portfolios, Stash allows you to invest your time to learn as well as your money to earn.
Navigating the Stash App
Stash’s layout and design are clutter free and easy to use. Starting with the home screen, they show you portfolio options and have article suggestions for you to read.
The top menu bar includes options such as Portfolio, Balance, and Potential, as well as a pop-up sidebar with more options.
The Portfolio section gives you a snapshot of your value and total return. Along the upper left side, you’ll see your portfolio’s value as well as your next milestone designed to motivate you to continue to invest.
On the right, you’ll see your total return in both dollar amount and percentage. This shows you your total investment earnings over and above your initial investment.
Balance shows your total account balance spanning the total time that you have been investing with Stash. It shows your Stash balance, your deposits, and your withdrawals.
Finally, Potential shows you what is possible for you to earn after one, five or ten years based on your monthly deposit.
Beginning with your current deposit amount, you can use the slide bar at the bottom to see your potential if you raise or lower your deposit amount. There is also a slide bar for Growth Potential which you can see additional earnings or losses, based on the percentage of return for your investment portfolio.
While Stash has some heavy hitters behind it, it’s still only two years old and a bit of a one-trick pony. However, Stash is now in the process of launching Stash Retire, which will add Roth IRAs into the mix. A Roth IRA is an individual retirement account that, as long as you meet certain criteria, is not taxed when you start to make withdrawals.
This option from Stash is still in development and while they appear to be reaching certain milestones, is not yet available. Still, it’s an indication that Stash is growing. Couple that with Stash’s latest funding round which saw investment from PayPal co-founder Peter Thiel, it’s easy to assume that Stash is here to stay.
You can open a custodial investment account for kids under 18 years old. Stash Custodial can be used by the child once they reach adulthood, which can be anywhere between 18 and 25, depending on the state in which they live. There’s no limit to your annual contributions and doesn’t have to be used for education. The money can be invested across stocks, bonds, mutual funds, and ETFs.
Who should invest with Stash?
Overall, Stash Invest is designed to help the would-be investor. If you have money sitting in a savings account or if you’re just starting to think about your future, Stash is a great place to start investing. They make it easy to put money into portfolios that are of interest to you. They are also adept at making the confusing world of finance and investing easy to understand.
With the inclusion of a plethora of articles designed to teach you about investing, it’s also a great place to learn. Use it not just to easily invest your money, but as a resource that allows you to grow your knowledge with your money.
Stash’s simplified fee structure can be a low gateway into the world of investing. Your first two months are free and they only charge $1 per month up to $5,000 and .025% above that number.
This is pricey if you are just starting out. If you’re investing $5 per month, that’s 20% of your investment in the beginning. Stash can be a great option if you can get your balance higher before they start charging you fees.
Stash: Bottom Line
All in all, Stash is a great app for the beginning investor. There are certainly better options out there for people already familiar with investing, but with over half of Americans having no investment at all, it could be a great start for you.
Stash is also growing and beginning to offer more investment options such as Stash Retire, so they may grow with you. If not, use Stash as a learning tool and spring board into the heady world on investment finance.