Stash Invest Review 2021 – Best Micro-Investing App?
Editor’s Rating: 8/10
Stash invest is an app that was first launched in 2015 where the founding creators (from Stash Financial Inc.) wanted to help the average American learn how to invest. The founders wanted to encourage people to be more involved in investing by allowing investors to start investing with as little as $5.
They realized that the reason that most people are afraid to invest because they find it expensive and intimidating to start. Thus, the founders of Stash invest created this to allow investors to buy fraction of shares to make investing more affordable and less intimidating for everyone.
Stash wants to help people grow their wealth by offering personal tips and guidance from professionals to help people get started with investing. Stash Invest simplifies the steps to investing and allow people to invest based on their personal investment risk level. Stash Invest will only guide you through the steps of investing, but it will not manage your accounts for you.
- How much do I need to start investing?
- Am I Eligible to use Stash Invest?
- Stash Banking
- Stash Retire
- 5 easy steps to get started
- What To Love About Stash
- What Not to Love About Stash
- When You Should Use Stash
- Final Verdict
How much do I need to start investing?
You can start investing with Stash Invest with as little as $5. Such low minimum requirement allows anyone who is new to investing an opportunity to venture into investing at a low cost. You do not need to save up a lot of money before investing and can start investing immediately. This is great as the sooner you start investing, the more money you can build up in the end.
How much does it cost?
There is no fee charged for the first month of using the app. However, Stash do charge a small amount of service fee as they do provide professional advice and guidance through the app. Their service also includes finding the right investment plan for you and giving you proper advice before diving in.
Despite, needing to pay for a service fee, Stash makes it very affordable for everyone. Accounts with less than $5,000 will be charged $1 while accounts with more than $5,000 will be charged an annual fee of 0.25%. There are no extra fees such as commission fees for stock traders or bank transfer fees on deposits and withdrawals. $0.50 is charge only when a cheque is returned due to insufficient funds.
There is no account maintenance fee for electronic statements and trade confirmations. However, a small fee of $2 and $5 is charged for paper confirmations and paper statements. A $75 fee is charged when a customer wants to transfer account and $5 is charged for a change notice.
Am I Eligible to use Stash Invest?
There are three requirements that one must meet in order to join Stash. Firstly, investors must be at least 18 years old and above. Secondly, investors must be a resident of the United States. Thirdly, investors must have an active checking account.
Stash recently launched a banking feature on its app partnering with Green Dot Bank. Stash Banking is seamlessly connected to the Stash Invest, allowing you to manage your money for easily. They are offering a debit account with zero overdraft or monthly maintenance fee. You can also use the account to access many free ATMs nationwide. There is a feature in Stash banking called ASAP Direct Deposit where they allow customers to get their pay 2 days earlier than scheduled. They also included a unique reward system called Stock Back, rewarding customers with stocks every time they spend.
This is a retirement account option for investors where Stash offers both Traditional and Roth IRAs along side with the basic investment choices with Stash Invest. Stash retire cost a little more than the basic Stash Invest as it is $2 a month for accounts less than $5,000.
For the traditional IRA account, you can deduct contributions from taxable income for up to $5,500 per year and $6,500 per year if you are age 50 and above. Besides, investors prior to age 60 are subjected to income tax and a 10% penalty but investors after 60 will be subjected to income tax only but no penalty.
As for the Roth IRA account, you do not need to pay any tax on investment earnings. Anyone age 60 and above will not get any penalty or tax for withdrawals but anyone prior to age 60 will be subjected to income tax and a 10% penalty.
5 easy steps to get started
Step 1: Sign up
Anyone can sign up for free from the Stash app on the app store or on the desktop. The whole registering process will only take 2 minutes. You just need to sign up with an email address and a password. Furthermore, you will be given a free $5 investment upon signing up to start their account.
Step 2: Creating investor profile
Upon your sign up, you will be asked to complete a questionnaire that requires information such as your goals, age, income resources and desired risk level. Information gathered from your questionnaire will be used to evaluate your risk tolerance. This is to ensure that the company provides investment advice and recommendation that is relevant to you.
Stash categorizes its users into three types of risk levels, conservative, moderate and aggressive. Investors with conservative risk level will be given low risk-low reward investment plans while investors with aggressive risk level will be given high risk- high reward investment plans.
Completing the questionnaire allows Stash to categorize you into one of these three risk levels. This allows Stash to cater the right investments to the right investors. Your personal risk level cannot be manually changed, but you can change your personal details to do so.
After evaluating your personal risk level, the Stash app will recommend a list of investments relevant to your personal interest. Similar to a robo-advisor, Stash provides recommendations but with more investment options.
Step 3: Funding your account
Next step is to add money into your account so you can start investing. Each Stash account can only be linked to one bank account. You can do this by directly linking your bank account to the Stash app where you will be able to deposit and withdraw money using the Stash Deposit screen.
Another option would be to connect your account and routing numbers. In this case, a verification of your linked bank account would be needed using micro deposit. This process is slightly tedious as it takes up to six working days to complete.
Transferring money into your account is very simple and no transfer fee is charged for any form of transaction. Investors can make as many transactions as they want without worrying about any extra fee. On a side note, investors are limited to $10,000 of deposits and withdrawal per day.
Step 4: Identity verification
This is probably the simplest step out of all as you just need to verify your identity using your social security number. You can start investing once you have passed the verification test.
Step 5: Starting with your first investment
You can start choosing your first investment once your account has been fully set-up. You can start your first investment with as little as $5. If you are new to investing and do not know how to choose the right investment, do not worry as Stash with give you a list of investment suggestion based on your risk level and financial situation.
Stash makes investing simpler to understand by renaming each ETF so that beginners can have a general idea of what they are investing in without knowing the technical terms. Each investment offering is divided into three different categories which are “I believe”, “I want” and “I like”.
“I believe” includes investments that supports a specific cause such as supporting human rights or supporting renewable energy and so on. “I want” includes investments that aligns with your personal goals. For example, if you are not a risk taker and prefers something with lower risk, Stash will suggest conservative investments with low risk. Thirdly, “I like” includes investments that involves your hobbies and interest. For example, you are interested e-commerce, Stash will suggest retail related investments.
Details such as risk level, performance history and holdings can be seen on each investment. This enables investors to understand some background of the investment before investing in one. If none of the recommended investment interests you, you can add other suggested ETFs into your portfolio.
Do not worry too much about your first investment as Stash will constantly provide tips and tricks to help you make the right choices when investing.
What To Love About Stash
No minimum balance required
Investors will not be charged for having no balance in their account. Some companies require you to have at least a certain amount of balance in your account or they will charge you for going below a certain threshold. There will not be any extra fee in Stash as there is no minimum balance requirement for everyone.
Fractional shares allow investors to purchase factional shares of a stock. This enables investors with all financial situation an opportunity to invest as they can invest with as little as $5. This removes the need of having a certain amount of money before you can start investing.
Stash provides educational content based on your information provided in your portfolio. This is a great learning tool for beginners as there are multiple learning source to guide them. There are 4 categories of learning materials such as ‘Teach Me’, ‘Money News’, ‘Money Talk’ and ‘Stash’. These learning resource will be enough to cover basic skills and knowledge to make the right investment decisions.
What Not to Love About Stash
Fees are costly for small accounts
There is a monthly fee of $1 for any account with less than $5,000. This may not be worth it for those who invest in a small scale as it would cost $12 a year. Imagine investing only $50 on an investment but you lose $12 over the course of a year.
Investors with small account should think carefully before jumping into Stash. However, if you are new to investing and want to try it out, I think paying $1 a month is not too bad as you will also get educational tools to help you get started.
The average expense ratio offered for an ETF by Stash is 0.34% which is pretty high compared to robo-advisors. However, this is part of the cost associated with the service that they provide. You get what you pay, and it is exactly what that is for this case.
When You Should Use Stash
You Should Use Stash If:
- You are a beginner with little knowledge in investing
- You have little money to spare for investing right now
- You just want to try out investing with a small account before seriously committing
You Should Not Use Stash If:
- You are finding for tax advantaged investments
- You are into advanced investment tools to aid with decision making
- You are seeking for an active role in the investment process
- You are an experienced investor
The Stash Invest app is very well-built catering more towards beginners that are interested in investing. It serves as a great platform allowing people with small budgets to start investing with as little as $5. Furthermore, they make investing much simpler and fun to understand for beginners by having their own theme for investments. You will never feel lost as Stash provides professional investment advices and recommendation catered to your personal preference.
However, veteran investors may find this app lacking in many ways as they have simplified many things to make it easier for beginners. There are also some people that are not so fond on the idea of linking their bank account directly to the Stash app as the idea seems risky to them. Some suggested having alternatives like paying for investments through PayPal or something similar to reduce the risk.
Overall, it is a very good platform for beginners to start investing as Stash guides you through the process making it quick and easy for beginners to use.
The privileged of building and running online businesses has allowed me to live life on my own terms. The goal of this blog is to help you achieve financial freedom with passive income streams so you could do whatever you like, whenever you like, without having to worry about money. You would still have to put in the effort, but hopefully with guidance, it will be a much easier route for you.