Update April 4, 2016
I want to make sure readers see this feature update announced today so I’m putting it here at the top (and to hell with SEO optimization!).
Today, Stash Invest introduced “Auto-Stash”. It’s a way to automate investing small amounts regularly. This is so important to building wealth one-day at-a-time for modest investors.
What are you waiting for, grab $5 (that’s all you need to get started) and go check it out! (iOS or Android). Heck Stash will even give you the $5 to help you get started if you use this link to download the app. What could be easier?
Update August 2017
Stash has hit the 1,000,000 customer milestone! Crazy and good for Stash.
Man if this is the future, it’s exciting. Stash is pleasing to the eye, approachable, and very easy to get started.
Their positioning on purpose is interesting and unique:
The @StashInvest way: Buy, Hold, Add #Investing #Retirement Click To Tweet
The Stash Way: Buy, hold, add.
Stash is designed for holding investments over the long term — not for frequent trading. Why? It’s easier to get it right. If you try to predict whether an investment will go up or down in the short term, there’s a good chance you’ll get it wrong. Long term investing is also less stressful, since you don’t have to obsess over daily or weekly price fluctuations of your investments. Over the long term, the market has grown about 10% per year*. So make some investments, hold onto them, and make more investments on a regular basis. And remember, every dollar you put toward growing your Stash is a dollar you are saving, and not spending.
- Encourages buy & hold
- Easily, very easily, invest small amounts regularly
- Low fees, and fees align to their core value of buy, hold, add (this is very important because it means their incentive are aligned to their customers — meaning, they are successful when their customer are successful)
- Well designed UI
- Allows you to invest in alignment to your values
My book and Stash are two different ways to get to the same place — financial security and family wealth.
- They’re enabling only Mutual Funds & ETFs, no individual stocks. For someone just trying to get started, this shouldn’t be a barrier to entry. Stash is not a good app for creating an Elephant’s Paycheck portfolio. Otherwise, go for it! If, like me, you prefer to buy individual stocks — here’s $5 to get started with Stockpile. Using Stockpile you can buy fractional shares and reinvest dividends, and even buy stocks for your kids and relatives and track them all in one place.
- The only tracking metric is portfolio value. Which is really not a healthy way to build a regular investing habit (I’ll discuss this in detail below). Users emotions get killed by expected (and normal) market volatility. If you’re interested in reading about different ways to measure success have a look at: what else to measure and why.
- The app doesn’t work offline. If I want to check on my portfolio status on my commute (NYC Subway) or airplane, I’m out of luck. This is a pet peeve about banking apps; and frankly, it shows poor care for experience that doesn’t endear me to the solution.
- Fee disclosure wasn’t very clear during the sign up process (though they are very clear in the FAQ).
- Notifications are done via email, not mobile notifications (Apple Watch, hello). There are notifications in app, but they don’t include all the notifications in email so now I’m getting more email that I don’t want, and notifications in the app that I have to dismiss even though I’m getting them in email too. This should be easily fixable, if they have the priority to do so. They’ve got to support the Apple Watch, and do so properly.
It’s not enough to make investing easy, it needs to be made motivating
Let’s consider the tracking metric mentioned in the second bullet. (For additional thoughts read: changing the investing metrics we track).
In the screen shot to the right, you see a loss. Forget that it’s just $0.30… it’s down over 1.5%. Boo! Not a very motivating screen.
Can’t blame the Stash team of course, this is exactly what it would look like on your bank statement or what most advisors would tell you. Of course, this sort of accounting is really done for the IRS, and for some reason everyone has decided to measure the success of their portfolios based on how much tax they owe.
There’s another good screen though, on the tab called “potential”. A simple slider allows you to dream about the return you might get, and what impact it will have on your wealth.
The challenge, from a motivation perspective is that any negative reinforcement of the “how am I doing?” portfolio screen is going to
overwhelm the hopeful feelings brought on the by the potential shown on the potential tab.
Let’s think about that in two parts.
The negative reinforcement is pretty constant. The market is volatile. The volatility makes it uncomfortable for investors to pay attention to how they’re doing. Even great investments spend a lot of time in the negative column.
Why is this constant up-and-down, with a lot of down, a problem for investors? Negative reinforcement has a bigger effect on our perception than positive. Extrapolating from marriage and the ideal praise-to-criticism ratio we can expect that investors need a positive ‘up to down ratio’. That’s a lot to expect.
In order to really reinforce positive investing behavior, Stash (and everyone) has to think outside the box for metrics to make investors feel good about their investing habit. I feel very strongly about this “human element” of an investing strategy and changing people’s perception about investing.
I have created a free course that you might enjoy to help you have fun as you get started investing, and with metrics designed to keep you motivated to stick to you plan. Please check it out, I hope you’ll enjoy it:
A final word
While it looks like the list of cons is more thorough than the list of pros, don’t read into that too much. Stash is another way to accomplish the same goals as the Elephant’s Paycheck. Stash is a similar traditional investing approach without most of the human aspects of the Elephant’s Paycheck Blueprint. Stash uses modern technology to enable people to start modestly, build long term wealth, and most importantly, invest in alignment to their values.
Since I felt that the fees weren’t disclosed well enough in the sign up process, here you go:
$1/month, or 0.25% of balance annually (charged monthly, calculated daily) for balances over $5,000 (at $5,000 that’s just over $1/month).
Who it’s for
As I said earlier, it’s not a good complementary app for Elephant’s Paycheck investing. Though is a good way to diversify some of your holding from individual stocks (that I recommend for the Elephant’s Paycheck portfolio) into funds.
The app itself doesn’t do anything to help you learn more about investing to build mastery around your decision making and habit. It would be great if each fund option linked to information / news about the fund. Because they’re funds, they’re too abstracted from the individual holdings to link to 10Q’s or quarterly conference calls, so that you can learn about your investments. I don’t believe funds have quarterly calls or the equivalent of 10Q filings. (Two other reasons I prefer individual stocks.)
The app is also amazing for people who want specific investments that align to their values. I love their focus to this goal. I know it’s important.
What I bought
Maybe I should have a disclosure page on this site, but I don’t. Mostly because I don’t make investing recommendations (I’m not advising, just educating). But for the review, I thought it would be fun to tell you what I did.
I have put $20 in a Berkshire Hathaway tracking fund. Of course, as I was writing this post I noticed that I lost $0.31 this week. You can see how by giving me no other way to describe my results, I’m forced to share something negative. To evaluate my performance in a way that might discourage you to give it a try. A shame, because you should.
If you’re curious how I track my performance, you’re going to want to have a look at this free email course on tracking investments for people who are just getting started investing (and may not be investing very much to get started):
I hope you like this review. I welcome comments below and private messages to discuss.
If you enjoyed this review… read my Robinhood review too. You’ll like it, as you would my book. And don’t forget to download Stash to give it a look. If you, like me, would rather buy individual companies (like Apple, Tesla, Google, or Snap, and more), try Stockpile. They’ll even give you $5 if you start with $10 or more. Read my Stockpile review here.
Disclosure: The links in this post are affiliate links. That means if you decide to invest with Stash I get paid. My integrity is worth more than any affiliate payment — I recommend Stash because it’s commendable not because it’s commissionable.