Everything You Should Know About the Stash Investing App
Last Updated on August 30, 2021
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Short on time?
Here’s the big takeaways for investing with Stash:
- Account minimum: $0
- Invest with as little as 5 cents
- Fees: $1-$9 per month
- Current promotion: $5 bonus to start investing with upon signup (as of March 2021)
- Fractional shares
- User friendly app
Who is Stash best for? Stash is best for beginner investors looking for transparency, educational content, investment guidance, and the flexibility to use both automated investing and self-directed trading. However, the flat monthly fee structure won’t be the most economical choice for everyone.
What is Stash?
Stash is a micro investing platform that launched in 2015. They were built on the premise of making things simpler to understand for beginner investors. Stash utilizes a tiered subscription model approach for transparent pricing. They have also attempted to reduce as many barriers to entry for new investors by providing things like fractional share investing.
What are fractional shares?
Fractional shares are exactly what they sound like – they’re pieces of a share. The beauty of fractional shares, especially for beginner investors, is that you can buy pieces of shares of companies that you might not be able to afford otherwise. For example, Amazon, Inc was selling at over $3000 per share in February 2021. Most beginner investors would be entirely priced out without the opportunity to purchase fractional shares. The ability to buy pieces of shares at much lower prices also allows investors to diversify more easily, even with very little invested funds.
Stash has followed the footsteps of other recently launched subscription model investment apps, such as Acorns. However, they have differentiated themselves in a few ways, including:
- The number and variety of stocks available (3000+ options of stocks and funds)
- Self-directed trading
- A themed approach to investing
- Dividend reinvestment
Who is eligible to open an account with Stash?
In order to open an account with Stash, there are certain eligibility requirements you must meet:
- Have a bank account with a U.S Bank
- Have a social security number
- Be a U.S. citizen, a Green Card holder, or be a certain visa holder
- Be 18 years of age or older
How do you invest with Stash?
- Download the app
- Fill out your profile
- Answer a short series of questions that help Stash determine the best investment strategy for you based on your preferences, risk tolerance, and investment horizon
- Choose between the Stash investment suggestions
- Each comes with a simple explanation of the what you’d be investing so you can feel confident in your decision
- Link your bank account
- Verify your identity
Is Stash invest legit?
No matter who you choose to invest with, it’s important to make sure it’s with a legitimate company that takes your investments seriously. You can rest assured that Stash is an SEC registered investment advisor, as well as a registered broker-dealer and member of FINRA/SIPC.
Stash also uses 256-bit encryption, two-factor authentication, and gives you the option to use biometric recognition (i.e. fingerprint or face ID).
Plans, features & fees
Stash offers three different investment plans to choose from: Beginner, Grow, and Stash+. Each plan offers different features and benefits along with a flat monthly fee.
Stash Beginner $1/month
Stash Beginner is the bottom tier plan that Stash offers. This plan costs investors $1/month and provides you with a personal investment account as well as the ability to purchase fractional shares. If you’re interested in other banking benefits, this tier also offers a debit card and rewards program which qualifies you for “stock-back” (think cash back but in the form of fractional shares). On the beginner plan you can also choose a $1000 life insurance coverage plan through Avibra and early direct deposits through Green Dot Bank.
Finally, all these tiers, including those on the beginner plan, have access to the educational content on Stash via articles, blog posts, and comprehensive FAQs.
Stash Growth $3/month
Stash Growth is the middle tier plan offered by Stash. This plan costs $3/month and includes everything in the Stash Beginner plan plus access to Roth IRA and Traditional IRA accounts. There is additional retirement content available to Stash Growth members as well.
Stash+ is Stash’s highest tier. This tier includes everything from the Stash Beginner and Growth plans and also includes custodial accounts. Additionally, Stash+ users have additional reward levels if they opt to use the stock-back debit card and reward program. This top tier also includes an extended life insurance plan from Avibra (up from $1000 at the Beginner and Growth tier to $9000). Finally, Stash+ users also receive a stock market insights report each month.
What’s a custodial account?
What’s a custodial account, you might ask? A custodial account is an account managed by an adult (custodian) for a minor. The custodian has the power and approval to conduct transactions for the account until the child reaches the “age of maturity” which is typically 18 or 21 years old, depending on the state.
Stash+ users have the ability to manage up to two custodial accounts. The custodian does not need to be a parent, but can be a guardian, family member or friend.
Custodial accounts have a number of benefits:
- Lots of flexibility with no income limits, contribution limits, or withdrawal penalties
- No required distributions
- Withdrawn funds can be used for a variety of reasons as long as they are at the “benefit of the minor”
Custodial accounts do have some drawbacks, though. While they’re more flexible, they are less tax-sheltered than other alternatives such as 529 plans. Additionally, any gift or deposit made into a custodial account is irrevocable – meaning it can’t be changed or reversed.
|Fees||$1 – $9 per month|
|Investment Options||Individual Stocks & ETFs|
|Accounts Supported||Taxable Accounts, Traditional & Roth IRAS, |
and Custodial Accounts
|Automatic Dividend Reinvestment (DRIP)||Yes|
|Crypto||*Yes – CoinBase is live on Stash as of 4/14/2021|
|Environmentally & Socially Conscious Investing||Yes|
|Customer Service||Phone, Email & Chat|
Stash also offers a few other automated tools, like investment coaching and diversification assistance. And if you choose to bank with Stash, you’ll also have features like the “stock-back” rewards program.
Stash Pros & Cons
Number of stock & ETF options
Compared to many of Stash’s competitors in the micro-investing scene, Stash provides a greater diversity of stocks and ETFs to choose from. Their theme classification is also much easier for new investors to digest. They do a great job of removing much of the intimidating terminology and acronyms that can scare new investors away.
Stash has the following stock industries to choose from:
- Consumer staples
- Health care
- Real estate
Stash has the following ETF categories to choose from:
- Broad market
- Diversified mixes
- Global exposure
- Goods and services
- Missions and causes
- Technology and innovation
If you’re interested in investing in marijuana stocks, Stash is on a much shorter list of micro investing apps that give you the option to do so.
*As of April 14, 2021, Coinbase is now live on Stash. While their current crypto offerings are limited, it’s a positive sign as they continue to listen to their customers’ desires for greater investment options.
Stash’s educational content is informative, user friendly, and easy to digest. Their aim is to instill knowledge and confidence and their content supports that.
Low barriers to entry
Fractional shares along with a $0 minimum deposit makes them very friendly for new investors by providing low barriers to entry.
If you’re interested in banking with Stash, they also have a debit card and corresponding rewards program that lets you earn “stock-back” rather than cash back. The “stock-back” comes in the form of fractional shares and ETFs when you use your debit card with certain retailers.
Costly for small accounts
The biggest downside to Stash is that it can be quite costly for small accounts. Their flat fee structure is most advantageous for large accounts – which is a bit counterintuitive to their aim of supporting beginner investors.
While the monthly pricing scheme is transparent, a flat fee of $1/month ($12/year) on the Stash Beginner plan would equate to a 1.2% management fee on a portfolio totaling $1000. For comparison, there are many other robo advisor platforms who charge a percentage for advisory fees in the range of 0.25%.
However, on larger accounts, the flat fee can be advantageous. On a one million dollar portfolio, for example, the average robo advisor charges 0.32%, which totals $3,200 per year. If you had that one million dollars on the Stash platform with the Stash+ plan, you’d only pay $108 per year ($9/month).
It’s also important to remember that if Stash investors invest in ETFs, they’ll pay the ETF expense ratio in addition to the monthly fee. This is not unique to Stash investors, but it’s important to look at the costs holistically.
BBB rating is poor
Stash unfortunately has a very low BBB (Better Business Bureau rating). As of March 2021, their rating was an F, primarily because of customer service complaints.
While their app and website content is very user friendly and helpful, you may struggle to get someone on the phone or to respond to an email inquiry in a timely manner.
Limited trading windows
While Stash offers self-directed trading, they have delayed trading execution. For long term investors that follow the “set it and forget it” or those who only want to make occasional trades, this won’t be an issue. However, if you plan to be actively trading on a daily or weekly basis, the transaction delays may be detrimental. Stash offers just four trading windows throughout the day.
For a fair comparison, it is important to note that many of the low and no-fee micro advisor platforms also limit trading windows. It’s one of the reasons they can keep their costs so low.
There’s always a tradeoff
It’s only fair to note that there will always be a tradeoff between costs and features with robo advising platforms. Typically, the platforms which allow you to invest with very small amounts of money will charge you some time of advisory fee. The downside to that approach is that you’ll still be charged even if you only have $5 invested. The upside is that it’s a very transparent pricing structure with no guesswork. It’s also advantageous to larger accounts.
In comparison, other platforms may not charge an advisory fee until your portfolio reaches a certain value. But, those same platforms are also likely to have other barriers to entry such as higher balance requirements or minimum to open an account in the first place.
Alternative investment apps to consider
There are two good alternatives investors should consider while evaluating if Stash is the best choice for them.
Acorns offers nearly the same benefits, features, and fees that Stash does. Though, a big difference is that Stash offers self-directed trading and more stock and ETF options. So, if Stash seems appealing but you would prefer to keep your investments on auto-pilot, Acorns may be more your style. Additionally, Acorns offers a great benefit to college students wherein you get 4 free years of investing when you sign up with a .edu email address. You can read the full review of Acorns here.
Pros of Acorns
- No minimum investment
- Informative content
- Easy, hands-off way to invest
- User friendly app & website
- Free account management for college students
- Those with .edu email address will get 4 years of Acorns for free
Cons of Acorns
- Flat fee structure is detrimental to small portfolios
- Users need to actively invest beyond just savings round ups
- No self-directed trading
- The 5 portfolio’s available are limiting
M1 Finance is another fantastic alternative to Stash. While it is a great platform for beginners, it also serves the needs of more advanced investors who want self-directed trading. Investors will find slightly less informative content on M1 Finance, and it may take a bit of time to get used to the pie and slice methodology, but it’s a user-friendly platform worth exploring for beginners and non-beginners alike. You can read the full write up of why M1 Finance is a great platform for beginner investors here.
Pros of M1 Finance
- Free to set up an account
- Zero commissions and trading fees
- Low minimum balance
- Fractional shares
- Robo-advising that allows customization
- User-friendly interface
Cons of M1 Finance
- Need to be comfortable with self-directed trading
- Does not offer custodial or 529 accounts
- Does not currently support crypto
The bottom line
As we described earlier, every investment platform comes with certain tradeoffs. Stash offers beginner investors lots of stock and ETF investments to choose from, easy to digest educational content, transparent pricing, fractional shares, and the options of automated and self-directed trading. Stash’s primary pitfall is the cost of management for small accounts. However, for many beginner investors, they provide the support necessary to get you comfortable with investing – which is their raison d’être.
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