Did you know that 1 in 6 millenials have over $100,000 saved
in their bank account? As it turns out this environment loving, cord cutting
generation may also be one of the most financially savvy generations over the
past several hundred years. Stash is one example of what this new generation
loves about technology and how it helps them to save and invest better.
Stash is an app designed to help you invest like a pro
without being one. Have you wanted to invest in the stock market but don’t know
where to start or how to begin? In that case, Stash may be the app for you.
Before we get started, here are few things we need to run
through. The New York Stock Exchange trades over 2,800 companies from blue
chips like Apple and Walmart to small cap companies some of us have never heard
about. Most of the companies that you interact with on a daily basis are
publicly traded companies, such as McDonalds, Starbucks, Tesla, Google and
Netflix. Furthermore many of these public companies are a vehicle to achieving
wealth.
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Why should you
invest?
There is a simple reason why investing is the pathway to
wealth for so many: because it works. The richest 10% own 84% of all wealth in this world, while the bottom 50% are left out in the cold with <1% of all wealth. The stock market is one major way that wealth is created and maintained;
by buying and holding on to valuable companies and riding their wave of success
wealth can be created. Take Amazon, one of the largest companies in the world;
if you had invested $1,000 10 years ago, it would be worth $16,239 today.
For many the stock market is the apex of wealth worldwide. Many
of the world’s richest billionaires’ net worth are all tied up in the stock of
the companies they founded or headed. It’s how the rich stay rich and get even
richer. That list includes Warren Buffet ($84B Net Worth, ~$80B Berkshire
Hathaway stock), Jeff Bezos ($112B, Net Worth, ~$103B Amazon stock), Bill Gates
($89B Net Worth, ~$88B Microsoft stock) and Mark Zuckerberg ($72B Net Worth,
~$70B Facebook stock).
What is an ETF?
Picking the right stock can feel like buying a lottery
ticket for many. Stash helps you to take the guessing game out of picking
stocks.
Firstly, lets get familiar with a term that is essential to
understanding how Stash works. The term is Exchange Traded Funds or ETFs for short.
ETFs are stocks that are invested in a basket of other stocks to help minimize
risk.
Ok, I know that may sound a bit like a Russian nesting doll
situation but it’s a lot simpler than it sounds. Here is an example; the
Vanguard S&P500 ETF is invested in all 500 companies that are apart of the
Standard’s & Poor’s Index S&P for short. Now if you buy one share of
this ETF, it only goes up or down based upon the aggregate of all 500
companies. This prevents you from being at risk from one company tanking and
you losing all of your money.
There are also sector specific ETFs like the TechnologySelect SPDR ETF. This ETF tracks the companies that are apart of the technology
sector like Apple, Amazon, Facebook and Google.
There are sector specific ETFs for everything from Real Estate
to Energy.
Why Stash?
Now that we’ve got our first lesson out of the way let’s
talk money and how Stash is gong to help you save/invest a bunch of it. While
the average savings account yields <1%, the stock market has returned on
average 7% a year from 1950-2009.
Stash allows you to invest in the stock market by choosing
the ETFs that are invested in a basket of stocks. Stash has also Millennial translated
the names of these ETFs so that you understand what they are invested in.
Invest like Warren
Buffet
Do you know who Warren Buffet is? Not only is he one of the
top 5 richest people in the world, he is this lovable old guy who may be the
greatest investor over the past 30-40 years. Many people seek his advice on
anything related to the stock market.
Stash has an ETF called Roll with Buffet. This ETF buys shares in Warren Buffet’s investment company,
Berkshire Hathaway, that owns shares in several other companies including
Wells Fargo Bank, United Airlines and Geico. This way you get WB to do the
hard work for you.
Some of the other Investment strategies available in Stash
are Delicious Dividends, Clean & Green, Young Money and All that Glitters. You can find the full list of investments here:-> Click!
My Stash
I have been using Stash for the past 5 months, and I’ll
admit: I absolutely love it. As someone who has been investing in the stock
market for the past 15 years with several different investing platforms, I
found Stash to be both fun and exciting. That may sound impossible, but the
most exciting part about the stock market is typically making money. But after
you have been doing it for a while, it can become quite stressful; determining
when to get into a stock at the right amount, while also choosing the one stock
to strike it rich. Stash takes the FOMO aspect of investing in the stock
market out of the equation.
Diversification is
key
When setting up your Stash account, you are prompted to choose
a weekly investing amount. I chose to deposit $20 a week to invest in my Stash
account. As someone who has been in the investing game for a while, I
understand that diversification is key. So, I chose to split my $20 dollar
investment between 4 separate Stash funds in order to provide diversification.
My first choice was an Aggressive ETF fund. Being a young
person you are always advised by those in the know to take risks when you are
young and can afford to. My other initial three investments were Internet
Titans, Modern Meds, and Delicious Dividends. Over the past month, I have also
added Colossal China and Corporate Cannabis to the mix. Here are the
descriptions for each of the investments:-
Aggressive Mix
Designed to get you broad exposure
to global stocks, bonds, and cash. This mix offers more stocks than bonds and
cash, which could be suitable for a younger, more aggressive investor with more
time to absorb risk.
Internet Titans
From shopping, to dating, to
entertainment, the Internet has changed almost every aspect of life – and it’s
only twenty-something years old. These companies capitalize on the Internet’s
irresistible allure. Top 3 Holdings:
Amazon.com, Facebook Inc (Class A), Netflix Inc.
Modern Meds
An apple a day just doesn’t cut it
anymore. These biotech and pharmaceutical companies work to cure diseases and
save lives. Some of them might just hit on the next big breakthroughs. Top 3 Holdings: Exact Sciences
Corporation, Vertex Pharmaceuticals Inc., Regeneron Pharmaceuticals Inc.
Delicious Dividends
When these companies generate
profits, they share more with investors than most – in the form of dividends.
This asset covers strong companies that consistently pay dividends. Top 3 Holdings: Home Depot Inc.,
Microsoft, Coca Cola
Colossal China
With innovative entrepreneurs and
an ascendant middle class, China has had one of the fastest-growing economies
in recent decades. This asset covers a wide range of Chinese stocks open to
foreign investors. Top 3 Holdings:
Tencent Holdings Ltd., Alibaba Group Holdings Ltd., China Construction Bank
Corporation Class H
Corporate Cannabis
Corporate Cannabis tracks the Prime
Alternative Harvest Index, which includes the stock of 30 public companies
internationally that are “engaged in the legal cultivation of cannabis, or the
legal production, marketing or distribution of cannabis products for medical or
non-medical purposes,” Top 3 Holdings: Aurora Cannabis, Canapy Growth
Corp. Cronos Group.
The return on these investments has ranged from 9.4% to
-2.83%. The fact that some investments have delivered a negative return
reaffirms that the stock market is a risk and that it is best to diversify your
investment over several options. Overall, the portfolio has returned 4.75%
($24.92) over five months, which is a great return compared to a savings
account. In total, Stash has allowed me to stash away $550.15 over this time
frame.
In truth, I had even forgotten to open the Stash app over the
past 3 months, then suddenly realized I had Stash-ed away over $500 dollars.
That goes to show that Stash makes investing automatic, something one of my
favorite authors David Bach preaches in his bestselling book 'The Automatic
Millionaire'.
Half way through my stash experiment, Stash introduced the
Smart Save feature to my account, which is pretty similar to the Acorns app. I
still am not entirely sure how it works but the website says Smart Save calculates
when you’ve got spare cash, then saves a small percent of it. You can adjust
your savings rate and withdraw at any time. Also, it will never start a transfer
when your balance is low. I am always interested in saving more so I signed up,
and I was able to save $95.59 over that time frame.
Know your investments
Stash will also keep you aware of what is going on with your
investments by providing updates about the stock market to understand why a
particular class of stock is underperforming. Stash wants you to become a
better investor because the better your investment portfolio does, the more
likely you are to keep using the app. Stash will also send you an investing
word a week to learn in order to further educate you about investing
Maintenance Fee
Stash does charge a $1 account maintain maintenance fee per
month. Although there is no guarantee, my Stash account is scheduled to save
approximately $1,300 over a 12 month time frame. At a $1 per month fee, the account
maintenance will be about 0.9%. The more you invest the less that fee works out
to be.
Summary
Stash is an investing app built for millennials, but works
for just about everyone. The ease of use makes Stash a must try for anyone
trying to dip their toe in the stock market investing game, but have just been
too intimidated by all the experts. Stash is designed to increase your appetite
for investing while reasonably minimizing risk. Stash is not the investment
vehicle to make you rich in a year. Stash is designed to take a steady approach
to investing your money ,with an effort to educate you about your investments along
the way.
Pros
· Stash interface makes investing fun and easy
· An abundance of investment options to suit individual investment styles
· Low fees & an effort to educate users about investing
Cons
· Investing is not real-time with less control over market timing
· Fees start to add up on small accounts
Use my referral link to sign up for Stash and you will get
$5 to start your portfolio.
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