Ever heard of Stash? Neither had I, until I kept seeing their advertisements pop up on my Instagram feed. Curious about the prospects of investing through an app, I decided to check it out for myself. As background, I do have some money invested in my name in the Stock Market, and I am aware of how the traditional stock market works. With that said, let's take a look at exactly what the Stash app is all about.
Stash.
The idea behind Stash was to give people who couldn't afford to invest traditionally in the stock market a chance to do so. New users on the platform only need $5 to join, which is certainly the lowest barrier to entry I've ever heard of.
That ease of use is the selling point for Stash, which doesn't operate like a traditional broker.
Differences.
The only investment options available on Stash are exchange traded funds, or ETFs. These types of investment reduce risk by combining a number of different stocks, which reduces volatility. This means that anyone who chooses to place their money into Stash will only have access to these ETFs, and not individual stocks like Apple or Facebook. Of course, there is a fee that investors have to pay to place their money into these investments.
Financial Fee Overview.
The world of finance is all about investment fees. Before you can even invest in the stock market, you lose money on something called a bid/ask spread.
When you use a money manager, people can pay up to 2% of their assets to the manager for managing wealth and even more of a percentage if the money does well. With so many fees, it's not a surprise that so many turn away from the stock market and instead choose other options.
As great as Stash sounds, it still has fees. For investors with less than $5,000, the fee is a flat $1 per month, or $12 per year.
For investors who have over $5000 with the platform, the fee is .25% of the asset value. So if I invested $100,000 on the platform, the fee for the year would be $25. That doesn't sound like too much in relation to the total balance, and it's not, but what value is Stash providing to you for that money? There's no financial guru who is investing your money, because you make all the choices yourself.
Avoid Stash.
It's a great idea for young investors to get familiarized with the stock market, but I personally am not a fan. I would prefer to have full control over my finances and not pay a fee to simply invest in an ETF. In addition, I don't think the timing is right for the stock market just yet. If you want an app that teaches you how to invest conservatively, Stash is the app for you. If not, I would steer clear.
