Stash is an investment app that helps new investors build their portfolios. The four-year-old company based out of New York City also offers online bank accounts and cash-back debit cards with rewards available at select merchants. Over 3 million Americans use the service, per Stash’s website. The average age of a Stash user is 29, and the average income is less than $50,000 per year, according to TechCrunch.
- Low $5 account minimum
- More flexibility than a traditional robo-advisor
- Fractional investing lets you buy into expensive stocks
- The fees add up, especially for small accounts
- ETF expense ratios eat into returns
- Primarily for ETF and stock investing
How Stash Works
Unlike a robo-advisor, which directly invests money for you in a diversified portfolio, Stash aims to guide you in the process of picking investments in ETFs and individual stocks. The platform grants access to roughly 60 ETFs and 150 stocks.
Stash repackages existing funds into easy-to-comprehend themes sorted by risk tolerance, goals, interests and values and also offers individual stocks. For example, Stash renames the iShares Global Clean Energy ETF as “Clean & Green.” The app also offers automated features such as a round-up on purchases and deposits the change in your investment account.
Stash recently introduced a debit card service for $1 per month which boasts a “Stock-Back” on purchases at more than 11 million locations. Users will earn 0.125% Stock-Back on all purchases and as much as 5% at certain merchants.
Why Stash is Worth Your Time
Stash is great for investors who want more control over their portfolios than offered by a robo-advisor but need more hands-on assistance in building it. Users can also buy fractional shares of popular companies such as Amazon.com, Apple and Facebook, without having to shell out thousands of dollars.
Additional perks of the app include tools such as a retirement calculator and a Stash Coach, which offers guidance, challenges and trivia, and an entire section dedicated to educational content.
How to Get Started with Stash
To sign up with Stash, users need to create an account in the iOS or Android App, or on the Stash website. Stash requires $5 to begin investing and $0 to open a savings account.
After answering a few questions to determine risk tolerance and goals, Stash will offer a list of suggested ETFs based on your risk tolerance, ranging from “Conservative” to “Aggressive Investor.” You will then be prompted to link your personal, non-business bank account.
How Does Stash Make Money?
Stash charges $1 per month for account balances under $5,000, and $2 per month for retirement accounts under $5,000, and a 0.25% annual fee for accounts with $5,000 or more. Expense ratios, or the annual fee charges to investors, average 0.30% for ETFs on Stash, and there is no investment fee for stocks. The retirement savings service is free for those under age 25, while its savings account has no overdraft fees.
It’s important to note that while $1 per month may seem insignificant, it can translate to a relatively high fee for smaller accounts. For individuals with a $500 balance, they will effectively pay a 2.4% rate per year on a standard investment account and a 4.8% rate on a retirement account. Many other brokers waive fees on retirement accounts.
Is Stash Legit?
Stash has been around a while in robo-advisor years. It has proven to be a safe and dependable place to stash your extra cash. In addition to having been around for a while, Stash has lots of other things going for it.
- Stash is a registered investment adviser with the SEC.
- Accounts are held by partner and custodian Apex Clearing
- All Stash investments are covered by the Securities Investor Protection Corporation (SPIC). Securities are protected up to $500,000
- The app’s new debit accounts are FDIC-insured.
- Stash ranks #30 in the Finance Category on the iTunes App Store, with an average rating of 4.7/5 based on 103,000 reviews.
Final Thoughts on Stash
Stash is best suited for new investors who want guidance on selecting their investments, as well as those seeking assistance finding thematic or impact investing opportunities. For those who do not need that guidance, you are better off finding the ETFs that Stash offers through commission-free online brokers. Others who want to build their own diversified portfolio may find the app attractive as they can do so with very little money via fractional shares.
For more on how to save, read our Micro-Investing: What It Is, Why It’s for You and How to Start.
*Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser. This material has been distributed for informational and educational purposes only and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.
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