One of the biggest barriers to investing that people run into is the large capital needed upfront. Most people don’t have $5,000 to put into the stock market, and even if they do, it is very hard to figure out where you should invest that money if you have no prior experience.

Thankfully, there is micro-investing. Micro-investing is just like normal investing, except it deals with investing smaller-than-average amounts. The benefit of micro-investing is that you can have a well-diversified portfolio starting with just a few bucks. Advances in technology have made micro-investing available to anyone with a smartphone and internet connection.

Stash Invest is a micro-investing app designed to make saving and investing as simple as possible. Stash specializes in fractional shares, thus offering average investors a low-cost way to invest in even large companies.

We are big fans of any app that encourages mindless saving, so we were very interested in taking a look at Stash. We will cover Stash’s features, fees, pros, and cons. Then we will give our verdict if Stash is worth trying or not.

Stash Invest: Overview

Stash is focused on making the investment selection and process as simple as possible. To that end, Stash offers investors a wide range of custom-made portfolios, tailored to each user’s preferences and risk tolerance. In that sense, Stash is ideal for beginner investors or those who need a guide on where to get started.

Stash distinguishes itself from other investment apps due to its focus on fractional shares. Fractional shares are just what they sound like—a portion of equity in a company that is less than a full single share. This emphasis on fractional shares allows people to invest in large companies, even if they do not have a lot of money. Like most robo-advisors, Stash mostly focuses on ETFs through its catalog includes some individual stocks. Best of all, there is no minimum investment amount. You can start investing with pennies if you want.

Stash really stands out by how well it guides you through the investment process. The portfolio builder tool provides guidance and recommended picks based on your account settings and preferences. You can choose to follow these recommendations or you can design and pick your own portfolio. Stash’s listings include over 1,800 commission-free ETFs that feature global brands like Apple and Costco.

Stash allows traditional brokerage accounts, checking accounts, IRAs, and Roth IRAs The recently started offering custodial accounts too. Lastly, Stash includes some nifty investment tools to hello you organize your expenses and goals.

Overall, Stash is designed to help beginners get their feet wet with investing and that is what it does best. The focus on fractional shares and the wide amount of resources, tools, and guides are all an excellent way to get started investing without having to make a huge financial commitment.

How Does Stash Invest Work?

Investing with Stash is a lot like investing with other online brokerages. First, visit the website or download the app on iOS or Android. You will have to create an account and verify some financial information. To create a Stash account, you must be a US citizen and you must be at least 18. If you sign up now, Stash will give you a $5 credit to your investment account, right off the bat.

Once you get your account verified, you will be asked to fill out a short questionnaire. Anyone who has ever used a robo-advisor should be familiar with this part. The questionnaire is designed to gauge your preferences and risk tolerance so the app can generate recommended investments.

The questionnaire will sort you into one of three investment groups: conservative, moderate, and aggressive. From there, it will pull up a list of recommended investments Many other micro-investing apps only allow you to pick between a number of predetermined profiles. But with Stash, you can basically pick and choose whatever investments you like. In our opinion, this is the correct way to do guided investing: give recommendations but don’t force someone into a particular portfolio structure.

As we said previously, Stash offers around 1,800 ETFs that include some big-name brands and organizations. Stash’s selections are fairly diverse as well and cover a broad range of industries, from retails to tech to medicine. Once you select your investments, just fund your account and you’re good to go. The entire sign-up process takes just a few minutes and you can start investing immediately.

Stash Features

Stash is primarily an investment app, but it is so much more than just that. Stash offers customers a sufficiently wide range of services, inducing but not limited to:

Educational tools. Stash has an immense library of free educational resources and articles on topics related to investing. StashLearn has articles on saving, budgeting, investing, debt, credit, insurance, and more. You can also subscribe to their weekly newsletter called the Wallet and each month you will get money management techniques delivered to your inbox. You don’t even need to make an account to use the education resources; anyone can use them for free.

Theme-drive investing. All of Stash’s ETFs are named to reflect their constituent holdings. For example, the Modern Meds ETF covers a wide range of biotech companies and the Rate Hike Refuge ETF contains interest-resistant investments. There are also 3 further theme categories: Belief, Balance, and Life. Each of these have a specific focus. For example, investments in the Belief category include mission-driven companies in industries like clean energy or affordable housing. The Life category focuses on companies that make products that can improve people’s quality of life, and the Balance category is built around meeting specific investment goals.

Round-up investing. Stash recently added a new round-up purchase option that rounds up purchases on connected payment methods and invests the extra change. So for example, when you pay for your $2.75 morning coffee, Stash will round up that purchase to $3 and invest the extra $0.25. Round-up purchases are becoming something of a standardized feature in brokerage apps and are a great way to save without thinking.

Auto-stash. The auto-stash feature allows you so set predetermined scheduled investments. For example, you can set things up so that $200 is automatically withdrawn from your checking account into your Stash account at the beginning of every month. This feature helps you stay on a consistent investment schedule.

Stash Retire. Stash offers both traditional IRA and Roth IRA retirement accounts. These kinds of accounts are privy to some excellent tax-advantages. With Stash, you can start a retirement investment account for as little as $0.01.

Smart Save. The Smart Save feature is a lot like the auto-stash features. It calculates when you have enough spare cash to save and automatically puts it into your Stash account. Saved funds will gain interest over time too. You can customize savings parameters and withdraw your saved money at any time.

Stash Coach. The Stash Coach program is designed to help you plan and improve your portfolio. Stash is directed at beginner investors so this feature is a way to get newbies portfolio’s in fighting shape.

The coaching program incorporates gamification aspects. For example, you can set certain investment goals and then get ranked and receive points when you meet those goals. The gamification aspect is completely irrelevant for investing but it keeps people using the app. 

Stash Debit. Stash recently launched standard bank accounts and accompanying debit cards. The account has absolutely no fees, including overdraft fees, and you will also earn fractional shares when you buy from that company. We think this is an excellent feature and a great addition to the investment products.

Dividend reinvestment. If you have any dividend stock, the Stash will automatically take those dividends and reinvest them. Reinvesting dividends is the best way to maximize your dividend yields and Stash will handle it automatically. Dividend reinvesting also lowers the amount of commissions and fees you have to pay.

Partitions. Stash also allows you to make “partitions” in your accounts so you can organize your savings goals and expenses. For example, you can set up a partition specifically for your car fund and keep that money separate from everything else.

Stash Pricing

Stash does not charge commissions for regular trades so they make their money mostly through account fees. Unlike most brokerage services, Stash does not take a percentage of assets under management as an annual fee. Instead, Stash offers 3 accounts with a different flat monthly fee.

The Beginner account starts at $1/month and includes a personal investment account, debit account, stock-back rewards, and Stash’s library of training and educational resources. The beginner account does not allow for retirement or custodial accounts though.

The Growth account is the second tier and costs $3/month. It comes with everything in the Beginner account along with tax-advantaged retirement accounts. The Growth account still does not allow for custodial accounts.

The Stash+ account is the highest pricing tier and costs $9/month. The Stash+ account includes everything in the Beginner and Growth accounts and includes the option for custodial accounts. The Stash+ account also comes with a special metal debit card with 2x stock-back purchases and a monthly market insight report.

These prices sound very low, but consider the fact that you are mostly investing in extremely small amounts. Stash has an average account size of $127 so a $1 flat monthly fee represents about 0.78% of AUM for the average Stash user. For comparison, Wealthfront and Betterment, two very popular online brokerages, both only charge a 0.25% annual management fee. M1 Finance also offers fractional share investing, but doesn’t charge any management fee at all.

So at low values, those monthly fees will be a pretty large chunk of your total account value. To its credit though, Stash offers a lot of other excellent features than many other services do not offer, such as checking accounts, planning tools, and auto-investment tools. 

Is My Money Safe With Stash?

Yes, your money is safe with Stash, or at least, it is as safe as it would be at any other traditional banking or investment institution. Stash accounts are NOT FDIC-insured but your money is protected in other ways.

All of Stash’s accounts are actually held by custodian company Apex Clearing, which is a registered broker-dealer regulated by the Financial Industry Regulatory Authority (FINRA). Investments held by Apex are protected up to a $500,000 maximum, including $250,000 cash balances through the Securities Investor Protection Corporation (SIPC). Since your money is not actually held by Stash itself, creditors will not be able to take your funds if Stash fails.

Uninsured funds are enrolled through what is called the Apex FDIC-insured Sweep Program for up to $250,000 per customer.

Keep in mind that these protections will not insure you from loss of value from failing investments.

Stash Pros

User-friendly approach. One of Stash’s strongest features is how it streamlines the investment approach. The focus on fractional shares means that you can start investing without large sums of money and the guided investment tools help new members learn the basics of investing. The beginning questionnaire helps you narrow down your options but it never forces you into a particular allocation. The Stash Coach program also continually gives updates and notifies you if your portfolio is not sufficiently diversified.

Theme-driven investing. Theme driven investing is not exactly new, but it is a simple way to help new investors figure out where they should put their assets. It is pretty easy to tell which ETFs focus on which industries, and further Belief, Balance, and Life themes let you personalize your investments more. It’s worth noting though that most of Stash’s ETFs are just remanded ETFs that exist elsewhere. Either way, the labeling system is clear and obvious to newcomers.

Automated saving features. Stash includes a ton of excellent automated features, like auto-stash, dividend reinvestment, and automatic saving. These kinds of features are great for building good financial habits and can be customized based on your preferences and goals. We especially like the round-up purchases and auto-stash deposits as both methods help you mindlessly save.

Stock-back rewards. Stash’s stock-back rewards debit program is just the icing on the cake. Stash will literally give you fractional shares when you buy things at certain companies. They change these rewards fairly frequently also. For example, a recent reward program offered out a 2% reward for every dollar account holders spent on Netflix that month. This is one of the more unique features of Stash and is an excellent addition to an already great investment app.

Stash Cons

Fees. Stash’s fees are fairly high for accounts with low balances. This means that it can be hard to build up investing momentum in the beginning unless you put in a one-time lump sum. These fees can be especially problematic for retirement savers.

Expense ratios. Stash also has relatively high ETF expense ratios at about 0.24%. That is fairly high when compared to other robo-advisors. To its credit, Stash offers a pretty diverse range of ETFs and gives account holders a lot more flexibility in picking investments than other services.

No retirement accounts on the Beginner plan. You have to have the Growth plan or higher to create a retirement account and the $3 monthly fee can be a huge chunk of your savings at low amounts.

Conclusions

So, is Stash Invest worth it? If you are a beginner, we say yes. Stash’s focus on fractional share and guided investing make it a great app for beginners to start investing. Members get a lot of educational and training resources, along with useful features like Stash Coaching to help improve their finances. The Stock-back rewards program is also a unique feature with great incentives.

However, if you already know the basics of investing, then there won’t be much you can get out of Stash due to its monthly fees. So if you have a bit more experience, we recommend looking for another service.