Stash Invest Review: Pros, Cons, and [Why] It is Best for Beginners

Investing
July 5, 2020
Written by Kim Pinnelli
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Stash Invest Review: Pros, Cons, and [Why] It is Best for Beginners
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Investing
July 5, 2020
Written by Kim Pinnelli
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Stash Invest Review: Investing is scary and expensive, right? It doesn’t have to be according to Stash Invest. They make investing seem like a walk in the park, or at least that is what they claim.

Do they live up to their promise? Can even the novice invest with confidence? Find out in our Stash Invest review.

Quick Overview: Stash Invest

FeaturesStash Invest
Minimum Investment:$0
Prices: Beginner: $1/mo, Growth: $3/mo, & Stash + $9/mo
Account Types:Taxable, Roth IRA, Traditional IRA
Platforms:iOS App, Android App, Website

What is Stash Invest?

Stash Invest isn’t your typical Robo-advisor. Is that good news? Let’s see.

Does investing sound good, but overwhelming? Do you wish you had a coach over your shoulder saying ‘do this, now do that?’ That’s Stash Invest. They don’t invest your money for you; instead, they take your information, put it into their algorithm, and guide you, rather than invest for you.

Is it scary? Sure, if you aren’t scared, you’ll likely make crazy (dumb) investment decisions. Is it reassuring to have a ‘coach’ on your shoulder? It absolutely is. Ultimately, Stash Invests main goal is to teach new investors how to start investing.

An in-depth review of Stash Invest. An investing app designed for beginners.

Source: Stash.com

How Does Stash Work?

You don’t need excessive knowledge or a lot of money. You answer a few questions about yourself, fund your account, and get to work.

Here is the fun part. YOU choose your investments. Don’t get scared, Stash puts it in such layman’s terms that even the person who’s never invested a penny will understand. Talk about hand-holding.

Stash offers close to 2,000 investments. Again, don’t get scared. They don’t suggest all of them. But knowing you have choices provides a certain level of freedom. Typical Robo-advisors restrict your options to one of a handful of portfolios.

What if you want something different? With a Robo-advisor, you’re out of luck. With Stash, the world is at your fingertips.

Stash doesn’t provide portfolios. Instead, they provide themes based on your risk tolerance (which they discover during the sign-up process). For example, if you’re interested in healthcare, companies, Stash also offers guidance on individual companies, helping you make rational decisions.

When you are ready, click ‘add to portfolio’, and you have bought your first investment.

Related: Best Online Brokers for Beginners

How Much Do I Need to Start Investing on Stash?

Stash doesn’t require a minimum amount to open an account or start investing. If you open a retirement account (Roth or traditional IRA), you need $0.01 in the account, so basically no-account minimum.

Not sure you can afford to invest? Use Stash’s round-up service and invest your spare change. Every purchase made with your debit card, Stash rounds up to the nearest dollar. They sweep the ‘spare change’ into your Stash Invest Cash balance. Once it reaches $5, Stash invests the funds for you.

Stash Invest Fees and Pricing: Is it Free?

Stash Invest charges a monthly fee and offers three pricing tiers:

  • Beginner $1/month – Includes a taxable investment account (no retirement), bank account, and free financial education
  • Growth $3/month – Includes a taxable investment account, retirement account, bank account, and free financial education
  • Stash+ $9/month – Includes a taxable investment account, retirement account, investing account for up to 2 children, bank account, free financial education, and monthly insights report
Stash Invest costs between $1/mo - $9/mon

Source: Stash.com

Stash calls their monthly fees ‘wrap fees’ and claim they include all fees, but there are a few others you may pay including:

  • Non-sufficient fund fee $0.50 each
  • ACH Notice of Correction $5
  • Paper confirmations $2 each
  • Paper statements $5 each
  • Outgoing Automated Customer Account Transfer $75

How to Sign Up for Stash:

  1. Click Here to Sign Up
  2. Enter your email and create a password
  3. Verify your identity with your name, address, and social security number
  4. Answer the questionnaire – this determines your risk tolerance and guides Stash’s recommendations
  5. Stash categorizes you based on your risk tolerance and provides suggested investments
  6. Fund your account by linking your checking account
  7. Choose your investments

Stash Invest Features

  • Stash Portfolio Builder – Stash helps you build a diversified portfolio by suggesting specific ETFs that diversify your funds. You don’t have to invest in every suggested ETF, though. You may add and remove investments as you wish.
  • Stock-Back® – If you use your Stash Debit card at companies Stash lists on their platform, you earn fractional shares in that company’s stock. If Stash doesn’t list the company’s stock (or they aren’t publicly traded), you’ll earn part of a diversified ETF. You earn 0.125% of your purchase back in stocks, but sometimes Stash pays bonuses up to 5% for certain purchases.
  • Fractional Shares – You can buy parts of a share or fractional shares starting at just $5. Stash suggests that you auto-invest small amounts of money. This eliminates the need to time the market and diversifies your risk as you buy into the market at different price points.
  • DRIP (Dividend Reinvestment Program) – Let Stash reinvest your dividends for even more substantial earnings. Note that DRIP is automatic for retirement accounts (you can’t turn it off), but you must opt-in for taxable accounts.

Stash Invest Retirement Account

Stash offers both traditional IRA accounts and Roth IRA accounts. Start with $1 and even invest $1 at a time, Stash has no minimums. Set up a Set Schedule and take the thinking out of retirement savings. Stash automatically transfers the funds on the schedule you create.

Even just $10 a week adds up over 30 years (assuming you start young). While you can’t predict what your investments will do, it’s not uncommon to double your cash invested just by setting up regular investments.

Stash Banking

Subscribe to Stash and get a free banking account. Want more benefits?

  • Get access to your direct deposits 2 days early
  • Earn stock-back rewards when you use your Stash debit card
  • Pay no fees including overdraft, monthly maintenance, minimum balance, or in-network ATM fees
  • Set up automatic bill pay
  • Deposit checks from your mobile phone
  • Use touch less payments
  • Split your money into goal categories (separate from your spending cash)
  • Earn stock-back rewards

Stash Invest Pros:

  • Start investing with as little as $0.01
  • Plenty of educational opportunities for the beginning investor
  • Renames ETFs to reflect their theme or mission, making it easier to choose investments
  • You can buy fractional shares with as little as $5
  • Earn ‘cashback’ as stocks for certain purchases

Stash Invest Cons:

  • The monthly subscription fees are a high percentage of assets under management when you start with small amounts (1 year with $100 invested costs you 12% with the basic account)
  • High ETF expense ratios (this is in addition to your monthly fees)

Who is Stash Invest best for?

  • Beginner Investors

  • Those who want Practical Advice

  • Socially-Responsible Investors

  • Teenagers

  • College Students

Stash Invest is for anyone, BUT, we think beginners benefit the most. Its hand-holding model helps you invest with confidence. They do not ‘force’ you into a portfolio like robo-advisors do, but they show you options and provide you with the tools needed.

If you have never invested before or you only have a little money to invest, Stash Invest will guide you, turning you into a seasoned investor one dollar at a time.

Is Stash Invest Secure and Safe?

Stash Invest employs bank level security, which includes 256-bit encryption, a robust bug bounty program, TLS, blometric recognition, and two factor authentication. Your investments are protected by the Securities Investor Protection Corporation (SIPC), and your if you elect to utilize the banking feature, then your bank account is insured by the FDIC.

Stash Invest Review: Three Reasons Why We Like Stash Invest

  1. You have choices! Honestly, we don’t love having limited options. Yes, guidance to a particular portfolio based on risk tolerance is excellent, but what if we want to tweak things here and there? That is why we love Stash Invest so much.
  2. You can earn stock-back! Cashback is magnificent, let’s face it, you likely spend it rather than invest it, right? Stash’s stock-back program eliminates that risk. More money invested without thinking about it? Yes, please.
  3. You can see your progress. Stash Invest can’t see the future, but based on today’s factors, it can predict where you’ll be 5, 10, or even 30 years down the road. Chances are you haven’t looked that far ahead. Still, Stash helps you see beyond the trees, which is essential when investing, especially for retirement.

Alternatives to Stash Invest:

M1 Finance 

M1 offers a free investment account. They don’t charge monthly fees or trading fees. Here’s the trade-off – you manage your investments. You can buy M1’s predetermined ‘pies’ or diversified ETF portfolios, but you handle everything. If you’re a hands-on investor and don’t need hand-holding or education, it could be a good option.

Related: M1 Finance Review

Acorns

Acorns is for the novice investor too. They focus on investing your ‘spare change’ by rounding up your purchases. You may also set up regular contributions on a weekly, bi-weekly, or monthly basis. Acorns charges between $1 – $3 a month, but Acorns manages and re-balances your portfolio. It’s great for the hands-off beginning investor.

Related: Acorns Investing Review

Betterment

If you want straightforward advice and goal-based financial planning, Betterment is a good option. They charge 0.25% of your assets under management. They do not require a minimum balance to open or invest (but obviously you need money to invest). Betterment re-balances your portfolio when it gets ‘off.’ If you are looking for a traditional robo-advisor, it’s Betterment.

Wrapping Up: Stash Invest Review

Our Stash Invest review bottom line is if you’re just starting, Stash is great. It holds your hand through the process. You’ll get educated while learning to manage your own portfolio, but you’ll be hands-on.

It’s not a traditional robo-advisor that takes your risk-tolerance, builds, and re-balances your portfolio. You’ll come out of your Stash Invest experience with knowledge and power to manage your own investments, or at least with a better understanding of the different portfolios and how they’ll affect you long term.

 

Kim Pinnelli
Kim Pinnelli
Kim is a personal finance expert with a Bachelor’s degree in Finance from the University of Illinois at Chicago. She has been freelance writing for 13 years for a number of large publications. Kim thoroughly enjoys helping people take charge of their personal finances.