Stash Invest is an automated investment app for your smartphone that lets you invest with as little as $5. We think of it as a kind of microsavings and robo-advisor rolled into one. Where it departs from robo-advisors is they make investment recommendations, but you do the actual investing. The service is growing rapidly and currently has some 50,000 users. For the purpose of this review, we are considering it a microsavings service.
After completing a questionnaire that determines your risk level, Stash presents you with a list of investment options from which to choose. The choice provided actually gives you more flexibility and control than typical robo-advisors offer.
You can invest in what is most important to you, but Stash also provides personalized guidance and recommendations to help you along the way.
According to Stash co-founder and CEO, David Ronick,
“We think the big challenge is getting people to start investing. Some people have no interest or time to learn to invest; robo-advisors are great for them. But many others truly want to become investors — to learn the ropes, choose investments, and know where their money is going. Unfortunately, most of them think investing is out of reach, because it’s too expensive, between minimums and share prices, and too complicated.
We’re tackling the expense and confusion by letting people invest as little as $5. They choose from 30 investment themes (enough for choice without being overwhelming). Most are funds from companies like Vanguard and BlackRock. Their names are a little dry, so we gave them nicknames like “defending America,” “delicious dividends” and “internet titans.” Our investors want guidance, so we also give them notifications; for example, on a day when the market tanks, we might tell them to take a deep breath and resist the temptation to sell in a panic.”
How Does Stash Invest Work?
In order to open up an account with Stash, you need to provide your Social Security number and evidence of US citizenship, along with information to link your bank account. You must be at least 18 years old in order to open an account. The service is available only in the US, though there are plans to take it international.
You will then complete a questionnaire that helps determine your investment risk level. Once established, your risk level cannot be changed, however you can go into the app and revise your suitability questions, which may or may not change your risk level.
Your risk level, either conservative, moderate or aggressive, is determined based on your age, your investment time horizon and your investment goals. Each risk level has its own recommended investments. This is exactly what other robo-advisors do, except Stash offers a lot more investment options than the competition. You will be given a choice of about 30 investments consistent with your risk level, from which you choose for your investments.
Once you have provided the required information, which should take no more than a few minutes, you can download the Stash Invest app.
As is the case with other investment platforms, your linked bank account will need to be verified using a micro deposit. Stash will make a very small deposit into your bank account, which you will need to verify. This process could take up to six business days.
Once your account is established, you’ll be able to add or subtract money to and from your linked bank account, using the Stash Deposit screen. Deposits and withdrawals are limited to $10,000 per day. You can link only one bank account to your Stash account. You will earn interest on uninvested cash balances.
|Account Fees||Free for the first three months; $1/month on account balances up to $4,999; 0.25%/year for $5,000 greater|
|Mobile App||Yes — Apple iOS and Google Android|
|Web Site Access||No|
|Promotions||Get $5 When Joining Stash Invest|
- ETFs and Stocks Used — Your investment options are usually exchange traded funds (ETFs), but unlike other robo-advisors there are some individual stocks too. Stash can choose between thousands of investments and will offer what Stash thinks is most suitable for your risk level.
- SIPC protection — Your funds with Stash are covered by the Securities Investor Protection Corporation (SIPC) through the clearing agency (see below).
- Third-party Clearing Agency — Investments with Stash are held through Apex Clearing Corporation. Apex is the firm that handles custody of assets, reporting, trade confirmation, settlement and securities delivery in Stash.
- Fractional Shares — Stash allows you to hold fractional shares; they can split a single share of a stock or ETF between several investors on the platform.
- Social Media Sharing — Stash enables you to share investments with your friends. The social sharing option is off by default. Stash limits how much of your information will be shared on social media.
- Security — Stash is a Registered Investment Advisor and is regulated by the Securities and Exchange Commission (SEC). The app uses 256-bit bank-grade encryption to secure your information. It also uses secure sockets layer (SSL) to protect information sent between Stash and their servers. In addition, Stash does not store your bank login information.
- Auto Stash (New) — Set scheduled times to make deposit into your Stash Invest account.
- More Investment Options — Most robo-advisors and microsavings services construct investment portfolios using a group of between six and 12 ETFs. Stash gives you the option to invest in up to 30 individual investments but selects them from among thousands of ETFs and also includes individual stock recommendations.
- Social Media Sharing — Stash allows you to share and discuss your investment activities via social media. If you don’t want to put your investment activities out on their social media, you can simply opt out.
- Low Fees on Small Accounts — On account balances of between $5,000 and $10,000, your annual fee is just 0.25%. By contrast, Betterment’s fee is 0.35% on account balances up to $10,000.
- Low Minimum Deposit — You can open an account for less than what it will cost you for a Happy Meal at McDonald’s.
- Delayed Trading Execution — As a long-term investor this won’t be a problem, but it could be an issue if you plan to actively trade your account. It's possible that an order placed today won't be executed until the next day.
- No Web Site Access - Currently the Stash service is only available on Apple's iOS and Android devices. Web site access is not available.
- Costly for Larger Accounts — While Stash charges across-the-board fees of 0.25% on account balances of $5,000 and higher, the pricing advantage disappears on larger accounts.
Stash Invest could be the perfect investment app for a beginner investor. Its $5 minimum initial deposit removes the single biggest obstacle to investing, which is the initial capital base. You can open an account with $5, then dollar cost average your way to a much larger portfolio.
The fact you can diversify your holdings with such a small amount of money is an incredible advantage to the very small investor. And they provide professional investment advice, including specific investment recommendations. This enables you to be involved in the investment process in a hands-on way; you can learn as you go, always assisted by the advisory service.
Stash could be the perfect investment app if they offered more competitive fees with larger deposits. While the service is very cost effective on smaller accounts, you might want to consider alternatives when looking for more advanced investment options at a possible cheaper rate.