Roughly one-third of Americans have saved $0 for retirement. And it’s hardly a surprise when you consider how complex and intimidating investing can appear to be. Recognizing this challenge, the Stash founders set out on a mission to make investing accessible to everyone. They launched Stash in 2015, delivering financial education resources to simplify investing and offering theme-based investment options so people can invest in companies that they believe in rather than the stock market at large.
Several years later, Stash has garnered praise and attention for its unique approach to investing. Stash has certainly carved out a niche for itself in today’s jam-packed fintech scene, leaving just one question: is Stash right for you?
With that in mind, let’s take a look at Stash to see if the micro-investing app that gives millennials an opportunity to invest in their passions and interests is right for you.
What is Stash?
Stash is an automated micro-investing app designed to make investing more appealing and accessible for beginners. With affordable minimum initial investment requirements, Stash lowers the barrier to entry and makes it easy for investing newbies to get their feet wet. The app also provides personalized guidance and recommendations to make investing easier to understand. With a variety of cleverly themed investment options to choose from, Stash takes what can be an overwhelming process and makes it simple and more relatable.
Who is Stash for?
Stash is good for people who don’t just want to invest, but want to invest in companies and causes that they’re passionate about. While I’m skeptical of this approach to investing, there are certainly those who believe that their investment portfolio should be a reflection of who they are and what they value. Stash makes that type of investing strategy a reality.
Stash is a good fit for anyone who:
- Is at least 18 years old
- Wants guidance with selecting personalized investments
- Is interested in a customizable, but low-maintenance way to build and manage their investments
- Likes free money just for opening an account
What Does Stash Have to Offer?
When Stash launched in 2015, they offered just Stash Invest which only allowed users to contribute to taxable investment accounts. In my opinion that did a major disservice to their target population – new investors. That’s because I generally encourage new investors to maximize contributions to tax-advantaged accounts (e.g., IRA, 401(k), HSA) rather than taxable accounts.
In 2017, Stash addressed that issue by introducing “Stash Retire” accounts. Stash Retire allows users to open a Roth or Traditional IRA with as little as $15. One small catch – you have to have a Stash Invest account before you can open an account with Stash Retire.
How Much Does it Cost?
There aren’t any trading fees or add-on expenses for electronic statements, deposits, or withdrawals. Instead, both Stash Invest and Stash Retire feature fairly straightforward fee schedules.
Stash Invest. You’ll incur a flat monthly service fee of $1 if your account balance is less than $5,000. Once your balance reaches $5,000, you’ll pay an annual fee of 0.25%. That’s $12.50 a year if your portfolio totals $5,000.
Stash Retire. You’ll incur a $2 a month subscription fee if your account balance is under $5,000. For accounts of $5,000 and up you’ll pay an annual fee of 0.25%.
Fees are drawn from your “Stash Cash” (investment portfolio) and will only be drawn from your linked bank account if your Stash Cash drops below $1.
A dollar or two a month might not sound like much, but it’s actually quite high compared to fees charged by similar investment services like M1 Finance, Wealthsimple, or Acorns. In fact, Stash’s fees are extremely high in light of the additional features that other companies offer at no extra cost (e.g., robo-advisor services, automatic rebalancing, and tax-loss harvesting).
When evaluating investing costs, users should also consider the average expense ratios for the ETFs that Stash makes available. Those expense ratios range from 0.07% to 0.95% with an average of 0.39%. That’s a touch higher than the ETFs that most robo-advisors will curate. Bu, in all fairness, Stash offers some unique funds that millennial investors may find exciting and inspiring. Although these niche funds often come with higher expense ratios, they offer investors an opportunity to invest in companies with missions that they believe in, which providing an intriguing alternative to more traditional low-cost funds from brokerages like Vanguard.
How to Get Started with Stash
The account opening process with Stash isn’t much different than what you’d go through when opening an investment account with a mainstream brokerage. To be eligible, you must be at least 18 years old. You’ll also need to provide your Social Security number and link your bank account so you can fund your investments. If you meet those basic requirements, the rest is easy! Just complete these four simple steps to get started:
2. Complete Your Investor Profile
Stash will guide you through a brief questionnaire to help build your investor profile. The questions are designed to assess your risk profile based on your age, financial resources, and investment goals and objectives. This information helps Stash provide you with investment advice that is tailored to your specific situation.
3. Provide Basic Personal Information
Stash will ask you basic questions to safeguard your identity and ensure that nobody else opens an account in your name.
4. Link a Bank or Credit Union Account
Link your bank credit union account to begin saving and investing.
Building Your Portfolio with Stash
One of Stash’s goals is to help investors hand-pick portfolios that reflect their unique passions and interests. To help users select their investments, Stash divides investment options into three categories: I Believe, I Want, and I Like.
In addition to grouping investment options into easy-to-understand categories, Stash also renames each of the 30 ETFs it offers so users can “get to the heart of what each investment stands for.”
For example, the iShares MSCI USA ESG Select Fund is renamed Do the Right Thing and consists of equities in companies that are trying to make “positive impacts on environmental, social, and governance issues.” The investment overview also makes it easy for users to quickly identify information such as:
- the investment’s risk level
- the investment’s top holdings
- the investment name
- the ticker symbol, last price, and expense ratio
- the investment’s performance
Stash also offers a social component by allowing users to link their contacts or Facebook account. By doing so, users can share their investments (but not their balances, contribution amounts, or performance) with their contacts.
Stash’s user-friendly, intuitive design may be its strongest feature. Users can access Stash on their mobile device or by using a desktop web browser.
Low Minimum Deposit. It only takes $5 to get started with Stash Invest and $15 for Stash Retire. Plus, right now Stash is offering Dollar Build readers $5 when they sign up!
Fractional Shares. The low minimum deposit is made possible by fractional shares which allows Stash to buy ETFs and split them among investors.
Investment Guidance. With just a few questions, Stash will help you start building an investment portfolio that’s right for you.
Themed Investment Categories. Unlike a traditional investing app or brokerage, Stash helps make investing relatable by renaming ETFs in a way that better reflects what you’re investing in.
Monthly Subscription Fees. The monthly fees are rather expensive, especially for investors with lower balances.
Expense Ratios. You’ll pay a premium to invest in your interests with Stash.
Is Stash Right for You?
Accumulating the initial capital to open an IRA can be a major obstacle that prevents a would-be investor from saving for retirement. Stash Invest knocks that barrier down by allowing users to open an account with just $5. And the $15 minimum initial deposit to launch an IRA with Stash Retire is manageable as well!
In addition to the affordability, it’s hard to ignore Stash’s unique approach to financial education and its niche-focused funds that make investing more accessible and personal. Those features alone may be enough to help investing beginners pick up some basics and start building a well-diversified investment portfolio. So, when it comes to Stash’s objective to appeal to individuals who had previously shown little interest in investing — I’d say mission accomplished!
At the same time, investors should recognize that Stash’s ongoing monthly fees are a significant drawback for investors with small account balances. And Stash’s more expensive fund options can be a turn-off as well.
On the bright side, users may be able to offset some of those monthly costs by taking advantage of the $5 sign up bonus and referral program. These programs make it possible for users to try Stash without feeling the pain of those higher-than-average fees. And if you decide Stash isn’t for you, it won’t cost you anything to close your Stash account or transfer funds elsewhere.