Update April 4, 2016
I want to make sure readĀers see this feaĀture update announced today so Iām putting it here at the top (and to hell with SEO optiĀmizaĀtion!).
Today, Stash Invest introĀduced āAuto-Stashā. Itās a way to autoĀmate investĀing small amounts regĀuĀlarĀly. This is so imporĀtant to buildĀing wealth one-day at-a-time for modĀest investors.
What are you waitĀing for, grab $5 (thatās all you need to get startĀed) and go check it out! (iOS or Android). Heck Stash will even give you the $5 to help you get startĀed if you use this link to downĀload the app. What could be easĀiĀer?
Update August 2017
Stash has hit the 1,000,000 cusĀtomer mileĀstone! Crazy and good for Stash.
Overall
Man if this is the future, itās excitĀing. Stash is pleasĀing to the eye, approachĀable, and very easy to get startĀed.
Their posiĀtionĀing on purĀpose is interĀestĀing and unique:
The @StashInvest way: Buy, Hold, Add #Investing #Retirement Click To TweetThe Stash Way: Buy, hold, add.
Stash is designed for holdĀing investĀments over the long term ā not for freĀquent tradĀing. Why? Itās easĀiĀer to get it right. If you try to preĀdict whether an investĀment will go up or down in the short term, thereās a good chance youāll get it wrong. Long term investĀing is also less stressĀful, since you donāt have to obsess over daiĀly or weekĀly price flucĀtuĀaĀtions of your investĀments. Over the long term, the marĀket has grown about 10% per year*. So make some investĀments, hold onto them, and make more investĀments on a regĀuĀlar basis. And rememĀber, every dolĀlar you put toward growĀing your Stash is a dolĀlar you are savĀing, and not spendĀing.
Pros
- Encourages buy & hold
- Easily, very easĀiĀly, invest small amounts regĀuĀlarĀly
- Low fees, and fees align to their core valĀue of buy, hold, add (this is very imporĀtant because it means their incenĀtive are aligned to their cusĀtomers ā meanĀing, they are sucĀcessĀful when their cusĀtomer are sucĀcessĀful)
- Well designed UI
- Allows you to invest in alignĀment to your valĀues
My book and Stash are two difĀferĀent ways to get to the same place ā finanĀcial secuĀriĀty and famĀiĀly wealth.
Cons
- Theyāre enabling only Mutual Funds & ETFs, no indiĀvidĀual stocks. For someĀone just tryĀing to get startĀed, this shouldĀnāt be a barĀriĀer to entry. Stash is not a good app for creĀatĀing an Elephantās Paycheck portĀfoĀlio. Otherwise, go for it! If, like me, you preĀfer to buy indiĀvidĀual stocks ā hereās $5 to get startĀed with Stockpile. Using Stockpile you can buy fracĀtionĀal shares and reinĀvest divĀiĀdends, and even buy stocks for your kids and relĀaĀtives and track them all in one place.
- The only trackĀing metĀric is portĀfoĀlio valĀue. Which is realĀly not a healthy way to build a regĀuĀlar investĀing habit (Iāll disĀcuss this in detail below). Users emoĀtions get killed by expectĀed (and norĀmal) marĀket volatilĀiĀty. If youāre interĀestĀed in readĀing about difĀferĀent ways to meaĀsure sucĀcess have a look at: what else to meaĀsure and why.
- The app doesnāt work offline. If I want to check on my portĀfoĀlio staĀtus on my comĀmute (NYC Subway) or airĀplane, Iām out of luck. This is a pet peeve about bankĀing apps; and frankly, it shows poor care for expeĀriĀence that doesnāt endear me to the soluĀtion.
- Fee disĀcloĀsure wasnāt very clear durĀing the sign up process (though they are very clear in the FAQ).
- Notifications are done via email, not mobile notiĀfiĀcaĀtions (Apple Watch, helĀlo). There are notiĀfiĀcaĀtions in app, but they donāt include all the notiĀfiĀcaĀtions in email so now Iām getĀting more email that I donāt want, and notiĀfiĀcaĀtions in the app that I have to disĀmiss even though Iām getĀting them in email too. This should be easĀiĀly fixĀable, if they have the priĀorĀiĀty to do so. Theyāve got to supĀport the Apple Watch, and do so propĀerĀly.
Itās not enough to make investing easy, it needs to be made motivating
Letās conĀsidĀer the trackĀing metĀric menĀtioned in the secĀond bulĀlet. (For addiĀtionĀal thoughts read: changĀing the investĀing metĀrics we track).
In the screen shot to the right, you see a loss. Forget that itās just $0.30ā¦ itās down over 1.5%. Boo! Not a very motiĀvatĀing screen.
Canāt blame the Stash team of course, this is exactĀly what it would look like on your bank stateĀment or what most adviĀsors would tell you. Of course, this sort of accountĀing is realĀly done for the IRS, and for some reaĀson everyĀone has decidĀed to meaĀsure the sucĀcess of their portĀfoĀlios based on how much tax they owe.
Thereās anothĀer good screen though, on the tab called āpotenĀtialā. A simĀple slidĀer allows you to dream about the return you might get, and what impact it will have on your wealth.
The chalĀlenge, from a motiĀvaĀtion perĀspecĀtive is that any negĀaĀtive reinĀforceĀment of the āhow am I doing?ā portĀfoĀlio screen is going to
overĀwhelm the hopeĀful feelĀings brought on the by the potenĀtial shown on the potenĀtial tab.
Letās think about that in two parts.
The negĀaĀtive reinĀforceĀment is pretĀty conĀstant. The marĀket is volatile. The volatilĀiĀty makes it uncomĀfortĀable for investors to pay attenĀtion to how theyāre doing. Even great investĀments spend a lot of time in the negĀaĀtive colĀumn.
Why is this conĀstant up-and-down, with a lot of down, a probĀlem for investors? Negative reinĀforceĀment has a bigĀger effect on our perĀcepĀtion than posĀiĀtive. Extrapolating from marĀriage and the ideĀal praise-to-critĀiĀcism ratio we can expect that investors need a posĀiĀtive āup to down ratioā. Thatās a lot to expect.
In order to realĀly reinĀforce posĀiĀtive investĀing behavĀior, Stash (and everyĀone) has to think outĀside the box for metĀrics to make investors feel good about their investĀing habit. I feel very strongĀly about this āhuman eleĀmentā of an investĀing stratĀeĀgy and changĀing peoĀpleās perĀcepĀtion about investĀing.
I have creĀatĀed a free course that you might enjoy to help you have fun as you get startĀed investĀing, and with metĀrics designed to keep you motiĀvatĀed to stick to you plan. Please check it out, I hope youāll enjoy it:
A final word
While it looks like the list of cons is more thorĀough than the list of pros, donāt read into that too much. Stash is anothĀer way to accomĀplish the same goals as the Elephantās Paycheck. Stash is a simĀiĀlar traĀdiĀtionĀal investĀing approach withĀout most of the human aspects of the Elephantās Paycheck Blueprint. Stash uses modĀern techĀnolĀoĀgy to enable peoĀple to start modĀestĀly, build long term wealth, and most imporĀtantĀly, invest in alignĀment to their valĀues.
Fees
Since I felt that the fees werenāt disĀclosed well enough in the sign up process, here you go:
$1/month, or 0.25% of balĀance annuĀalĀly (charged monthĀly, calĀcuĀlatĀed daiĀly) for balĀances over $5,000 (at $5,000 thatās just over $1/month).
Who itās for
Stash, like my book, is great for peoĀple just getĀting startĀed investĀing, or peoĀple who want an easy way to put someĀthing on autoĀmatĀic and let it accuĀmuĀlate.
As I said earĀliĀer, itās not a good comĀpleĀmenĀtary app for Elephantās Paycheck investĀing. Though is a good way to diverĀsiĀfy some of your holdĀing from indiĀvidĀual stocks (that I recĀomĀmend for the Elephantās Paycheck portĀfoĀlio) into funds.
The app itself doesnāt do anyĀthing to help you learn more about investĀing to build masĀtery around your deciĀsion makĀing and habit. It would be great if each fund option linked to inforĀmaĀtion / news about the fund. Because theyāre funds, theyāre too abstractĀed from the indiĀvidĀual holdĀings to link to 10Qās or quarĀterĀly conĀferĀence calls, so that you can learn about your investĀments. I donāt believe funds have quarĀterĀly calls or the equivĀaĀlent of 10Q filĀings. (Two othĀer reaĀsons I preĀfer indiĀvidĀual stocks.)
The app is also amazĀing for peoĀple who want speĀcifĀic investĀments that align to their valĀues. I love their focus to this goal. I know itās imporĀtant.
What I bought
Maybe I should have a disĀcloĀsure page on this site, but I donāt. Mostly because I donāt make investĀing recĀomĀmenĀdaĀtions (Iām not advisĀing, just eduĀcatĀing). But for the review, I thought it would be fun to tell you what I did.
I have put $20 in a Berkshire Hathaway trackĀing fund. Of course, as I was writĀing this post I noticed that I lost $0.31 this week. You can see how by givĀing me no othĀer way to describe my results, Iām forced to share someĀthing negĀaĀtive. To evalĀuĀate my perĀforĀmance in a way that might disĀcourĀage you to give it a try. A shame, because you should.
If youāre curiĀous how I track my perĀforĀmance, youāre going to want to have a look at this free email course on trackĀing investĀments for peoĀple who are just getĀting startĀed investĀing (and may not be investĀing very much to get startĀed):
I hope you like this review. I welĀcome comĀments below and priĀvate mesĀsages to disĀcuss.
If you enjoyed this reviewā¦ read my Robinhood review too. Youāll like it, as you would my book. And donāt forĀget to downĀload Stash to give it a look. If you, like me, would rather buy indiĀvidĀual comĀpaĀnies (like Apple, Tesla, Google, or Snap, and more), try Stockpile. Theyāll even give you $5 if you start with $10 or more. Read my Stockpile review here.
Disclosure: The links in this post are affilĀiĀate links. That means if you decide to invest with Stash I get paid. My integriĀty is worth more than any affilĀiĀate payĀment ā I recĀomĀmend Stash because itās comĀmendĀable not because itās comĀmisĀsionĀable.
Hello, this sounds enticĀing. Though I am livĀing payĀcheck to payĀcheck. Is stash a good idea for someĀone like me? I worĀry about my future.
Hi Kay,
Thanks for visĀitĀing. I worĀry about my future too, so we have that in comĀmon.
Stash is realĀly good for creĀatĀing a regĀuĀlar investĀing habit, espeĀcialĀly if you have only a small amount to invest. With Stash, you can invest a speĀcifĀic dolĀlar amount, withĀout worĀryĀing how many āsharesā you buy. With othĀer apps that allow you to buy stocks, you have to buy āwhole sharesā and so if you are investĀing small amounts, and canāt buy a whole share, youāre stuck.
I feel, the best way to use Stash is to put away monĀey on a regĀuĀlar monthĀly basis every sinĀgle month and let it accuĀmuĀlate.
One down side to Stash is the cost. Itās $1/month. That doesĀnāt sound like a lot, but if youāre investĀing a small amount ā say $10/month, thatās 10%. In othĀer words, in order to make up your fee, you have to grow your investĀment by 10% (thatās a lot of growth). The way to think about this fee thereĀfore is not as a comĀmisĀsion, but as an opporĀtuĀniĀty to parĀticĀiĀpate in creĀatĀing a safer future. Without Stash, itās hard to put away small amounts of monĀey on a regĀuĀlar basis.
That said, I do disĀcuss anothĀer way to invest small amounts in my book (http://ElephantsPaycheck.com/book) often withĀout any fee/commission. If youāre curiĀous, but arenāt sure about the book ā check out this link to find out more: https://www-us.computershare.com/investor/3x/plans/planslist.asp?stype=all.
Finally, if youāre livĀing payĀcheck-to-payĀcheck, you may have to realĀly work to find even $10 or $25 a month to put away for the future. Good luck. Itās difĀfiĀcult, but rewardĀing. Drop me a line if youād like to disĀcuss more priĀvateĀly.
David
At 10,000 how much would stash get a month
Hi Eddie,
$25/year. Over $5,000 they charge %0.25 per year. Hereās the pricĀing FAQ that explains: https://www.stashinvest.com/pricing
David
Thank you David for your thoughtĀful reply. As an Android user, I see that Stash Invest will be availĀable soon. I noticed the app Acorn and wonĀdered what your thoughts on this are. Thank you.
Kay
Hi Kay,
I have Acorn on my list of apps to review. I have heard good things, but no first hand expeĀriĀence yet. Iām still workĀing through my review of Robinhood.
Thanks for the point about Android ā I can be forĀgetĀful that the actuĀal phone matĀters, and I usuĀalĀly just talk from my perĀspecĀtive and I use an iPhone.
David
David,
Is Stash a bad idea for folks on disĀabilĀiĀty. Becausei think anyĀthing you make would be countĀed as income.
Kay
Hi Kay,
I donāt know, youād have to ask a disĀabilĀiĀty conĀsulĀtant or perĀhaps a tax perĀson. I will sugĀgest that as investĀment income, I would susĀpect itās not the same as āworkĀingāā¦ but I have no expeĀriĀence to allow me to say that as anyĀthing but a specĀuĀlaĀtion.
David
Rather than income, itās declared as capĀiĀtal gains. Iām not sure on how it affects your sitĀuĀaĀtion but you should take it into conĀsidĀerĀaĀtion.
Hi Kay ā For accounts over $5,000, you pay a fee of .25%, but Iād assume youāre also payĀing the ETF fees on top of that, no? Above, your Defending America Portfolio shows an expense ratio of .43%. So, for that fund, youāre payĀing .68% a year. Stash is probĀaĀbly great for those who donāt have a lot to invest iniĀtialĀly, but one might be betĀter off with a free broĀkerĀage account.
Steve
Hi Steve,
Really glad to have you parĀticĀiĀpate. Youāre corĀrect mathĀeĀmatĀiĀcalĀly (or at a minĀiĀmum, direcĀtionĀalĀly corĀrect in regards to overĀall fees). However, a few things about Stash that I realĀly like that donāt necĀesĀsarĀiĀly comĀpare to a pure mathĀeĀmatĀiĀcal calĀcuĀlaĀtion:
1. With Stash, you can get startĀed with as litĀtle as $5. $5,000 is a lot of monĀey for many, and just savĀing that amount presents a pretĀty high barĀriĀer. For less than that, Stash charges $1/month. And, while that techĀniĀcalĀly goes against the overĀall return (again, I agree with you), I think that there is a valĀue to be had for makĀing things accesĀsiĀble for peoĀple who are modĀest investors. On one hand, you might feel that a comĀpaĀny that does that is takĀing even more than othĀers from the peoĀple who can least afford it. On the othĀer, itās a comĀpaĀny who is adding valĀue by makĀing investĀing small amounts posĀsiĀble, and that valĀue should be paid for. You can think of the $1 as āconĀtinĀuĀing eduĀcaĀtionā rather than as a ācost basisā expense if it helps to underĀstand my point of view. If all the comĀpaĀny was doing was makĀing investĀing availĀable to modĀest investors, perĀhaps Iād fulĀly agree with you ā theyāre takĀing more from the peoĀple who can least afford it. (Though, techĀniĀcalĀly the ETF fees arenāt someĀthing Stash is takĀing, the point remains). Stash does moreā¦ point #2.
2. Stash also, and this is realĀly imporĀtant, breaks down barĀriĀers to investĀing by explainĀing things in plain English. This is so imporĀtant. Because the comĀpeĀtiĀtion is not a āfree broĀkerĀageā as you sugĀgest, but is ānot investĀingā. āNot investĀingā is not good for anyĀone. Stash is makĀing investĀing approachĀable by letĀting peoĀple start with just $5 (point #1) but also by talkĀing in plain English and makĀing it easy for peoĀple to underĀstand what theyāre doing which gives them the conĀfiĀdence that they can do it.
I think many peoĀple underĀesĀtiĀmate how scary it is to invest if youāve nevĀer investĀed before; how off-putting the lanĀguage around it is. Itās almost as if itās designed to put fear into newĀbie investors.
One more thing Iād add ā Iām a big fan of Robinhood. In fact, I genĀerĀalĀly donāt like ETFs or Mutual Funds because theyāre opaque (itās hard to know what theyāre up to) so for me, othĀer than the fact that Robinhood doesĀnāt supĀport divĀiĀdend reinĀvestĀing, Iād perĀsonĀalĀly preĀfer Robinhood over Stash. However, as I observe the Robinhood comĀmuĀniĀty, it appears peoĀple use it to trade, not to invest. Iām a huge believĀing in long term investĀing and I share that with Stash. Theyāre on a focused misĀsion to help peoĀple build wealth, not gamĀble by tradĀing.
I think itās so imporĀtant to build habits that help peoĀple (and famĀiĀlies) to build genĀerĀaĀtional wealth, that Iām willĀing to get past the ETF/Fund thing and supĀport Stash as an alterĀnaĀtive to buyĀing indiĀvidĀual stocks (in my preĀferred way of divĀiĀdend investĀing).
Thanks again for comĀmentĀing, and sharĀing. You were very clear, and I hope helpĀful to Kay.
david
just became a memĀber can I buy MJNA CBIS AND PHOT using this app
Donāt believe so. Those are small over the counter issuesā¦ Stash offers ETFs.
Iām conĀcerned about the secuĀriĀty of Stash. I donāt have a lot ov monĀey to invest but I want to get startĀed. I got the app on my phone and startĀed the regĀisĀtraĀtion process. I stopped when they asked for my SS #. They also need my checkĀing acct. info.
Looking for some guidĀance.
Angie
Hi Angie,
The thing is, every broĀkerĀage is going to need your social secuĀriĀty numĀber.
In the case of Stash, they need your checkĀing account numĀber for a few reaĀsons, not least of which is their busiĀness modĀel and the $1/month fee which they take from your checkĀing account (though not sure how youād move monĀey in to invest withĀout doing that either).
Iāve givĀen them both, with no issues. Think of it as anothĀer broĀkerĀage.
David
I just startĀed with Stash today. Iām curiĀous to see if it leads anyĀwhere. Iām not investĀing much yet. I just want to get a litĀtle someĀthing startĀed so when I start my 10-year plan in 2 years, I have someĀthing worth getĀting me startĀed. Iām only investĀing $5 ā an amount that I genĀerĀalĀly wonāt even notice. If I like what I see, I will probĀaĀbly increase that amount increĀmenĀtalĀly. If not, my lossĀes wonāt be sigĀnifĀiĀcant enough to hurt my finances. So far, this is what I like about Stash, from day 1.
Thanks for checkĀing in! I agree with the senĀtiĀment that if you start small with an amount that you āgenĀerĀalĀly wonāt even noticeā you can learn someĀthing and start to build healthy habits.
I realĀly realĀly enjoyed this artiĀcle! Thanks I just signed up for the email coarse and lookĀing forĀward to it.
Excellent. Please let me know what you think. (And if you like it, share it please!)