Review of: Stash Invest
Reviewed by: Kevin Mercadante
Last modified: October 18, 2017
Stash Invest is a microsavings service geared toward beginning investors. Compared to its rivals, the service has more flexibility in choosing your investment options. However, it's too costly for smaller accounts, and all trades must be done via the smartphone app.
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 micro-investing and educational resource 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 500,000 users. For the purpose of this review, we are considering it a micro-investing 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 CEO Brandon Krieg,
“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-plus 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.”
Stash Invest Features
|Fees||First month FREE; $1/month under $5k; 0.25%/year over $5k|
|Mobile Access||iOS App, Android App|
|Promotions||Get $5 from 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.
- Education — Stash provides in-app and email education to help investors learn the basics.
- 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 deposits into your Stash Invest account.
Stash Invest Alternatives
|Mobile Access||iOS App, Android App||iOS App, Apple Watch, Android App||iOS App, Android App|
|Promotions||Get $5 from Stash Invest||None||None|
|Review||—||Read the Review||Read the Review|
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 U.S. 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 investment themes consistent with your risk level.
Once you have provided the required information, which should take no more than a few minutes, you can start investing.
You can link your bank account directly with your bank login and password, or connect with your account and routing numbers. As is the case with other investment platforms, if you choose to link with your account and routing numbers, 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.
Pros and Cons
- More Investment Options — Most robo-advisors and micro-investing services construct investment portfolios using a group of between six and 12 ETFs. Stash gives you the option to invest in many investment themes but selects them from among thousands of ETFs and also includes individual stock recommendations.
- Education — Stash makes sure that you learn to invest with confidence by providing information on all the basics.
- Low Fees on Larger Accounts — On account balances of $5,000 and greater your annual fee is just 0.25%.
- 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 Website Access — Currently, the Stash service is available only on Apple's iOS and Android devices. The website is available only for signup and content.
- Costly for Small Accounts — While Stash charges $1/month for accounts under $5,000, that is higher than the 0.25% annual fee Betterment charges. Effectively, Betterment is cheaper for deposits under $4,800.
Stash Invest could be the perfect investment app for a beginning 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 Stash provides 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 it offered more competitive fees with smaller deposits. The service is very cost effective on larger accounts.