As a follow up to previous articles, it was requested that other investing services be discovered and investigated. One of the first requests from a reader was regarding a company she’s recently heard of called Stash – an investing app. The founders were friendly upon contact and happy to sit down to answer a few questions about their company and its mission:
After meeting the gentlemen who started Stash, one gains a newfound respect for some of the people in the brokerage business – it turns out they’re not all just after your hard earned money. At Stash, the mantra is “what would we tell our nieces and nephews?” And that’s exactly how the company got its start – the founders asked their own young family members why they weren’t investing and what would get them interested and (after much more extensive research) tried to address those concerns in an investing app.
They hit the mark pretty well too. The end result is an investing tool that encourages saving and building a habit of adding to your portfolio through recurring deposits and purchases. Instead of encouraging short-term trading, this company is trying to build long-term investors out of a generation of people afraid to get into the markets.
And it’s working: after only two weeks, the company was already over 10,000 investors strong (with about 60% of them in their 20s). They’re growing fast at Stash and not slowing down. In fact, at the time the interview was taking place, their app was featured on the Apple App Store as one of the Top Apps – a high honor in the tech world (especially for a banking app).
The company has a long only philosophy and does not allow margin or short trading. The founders want members to “invest with intention,” meaning not blindly jumping into things, but getting some background on several options that are well-suited to your investing type before making any decisions. During the sign-up process, after collecting the necessary FINRA information (name, address, SSN, etc.), the company asks several questions to determine the risk tolerance of the individual investor (kind of like a short personality test) and then gives several recommendations out of a selection of investments that match that person’s risk tolerance.
None of the investments offered is too risky, as the goal is long-term growth, not short-term volatility; and you’re able to see all of the investments at or below your individual risk level. The interesting (and perhaps ingenious) thing is that you can’t retake the test and score a higher risk score like on many other online brokers – you are what you score the first time and they won’t let you trick the system into thinking any different. This is an attempt to keep investors from doing just that and taking on more risk than they can actually bear or afford – a noble aim.
Investments are limited for the purpose of keeping things as simple as possible for beginners. There are about 30 or so ETFs available divided into three categories: I Believe, I Want, and I Like.
I Believe consists of funds with causes so to speak. These are ETFs made up of companies that support causes dear to the hearts of many people; things such as providing clean water, defending America, practicing socially responsible business practices, and providing an equitable workplace for the LGBT community among others. In this category, investors can support causes in which they personally believe by investing in companies that support those causes too.
I Want is a category made up of funds that fulfill certain desires, such as regular income payments, strategies that imitate the greatest investors of all time, or extremely low volatility to insulate against market swings. Here investors choose from numerous options to add goals to their portfolio.
I Like is probably a popular category amongst Millennials as it’s here that you get to invest in trends you support. If you’re a robotics maniac, there’s a fund that invests in the coming of the rise of robots. If you’re a tech junkie, there’s an opportunity to invest in everything America has to offer in technology. If you’ve always got the travel bug, there’s a fund that invests in companies specializing in leisure, adventure, and travel. There’s something for everyone from retail therapy to social media addicts.
The company provides easy to understand guidance about every investment and encourages users to study, discover and learn more with each passing week. They set small milestones for investors – $1,000 might seem like an unreachable goal, but $10 a week might seem more reasonable. It’s amazing how quickly it can all add up into a serious portfolio. The founders urge you to take small steps towards a large goal.
If you’re going to take one step after reading this article, it should be to go check out Stash and see what you might be missing.