Stash Review 2021: Pros, Cons and How it Compares

Investment app Stash aims to make the process of selecting investments — specifically stocks and exchange-traded funds — quick and easy for beginners. The monthly subscription fee starts at $1 per month for a brokerage account plus access to Stash's online bank account and debit card, which includes a rewards program. The minimum balance for a personal portfolio is $0, and because Stash offers fractional investing, you can buy portions of a company's stock or a fund share for pennies.

Stash offers other account options, too. For $3 a month, you get the brokerage and bank accounts, plus access to a retirement account — either a Roth or traditional IRA. For $9 a month, Stash offers all of the above, plus access to two custodial accounts for minors, additional bonuses through the rewards program, and a monthly investment research report. And, in 2021, Stash began offering its Smart Portfolios option — a fully managed, automatically rebalanced portfolio — as a part of its $3 and $9 tiers.

Stash is best for:

• Investors who want guidance selecting investments.

• New investors.

• Thematic or impact investors.

Stash at a glance

Where Stash shines

Investment guidance: Stash’s goal is to help beginners learn how to invest, and that’s what it does best. The app asks new account holders a few questions to determine risk tolerance and goals. It serves up a list of suggested ETFs, narrowing the options to those that make sense for the user’s financial situation. The app notes which investments should serve as the foundation of the portfolio — the largest slice of the user’s asset allocation. The user is responsible for creating a portfolio out of the suggestions, but the app includes educational content to help users learn how to build a portfolio.

Stash also offers access to individual stocks, and the platform has added considerably more investments in the last year: More than 3,000 stocks and ETFs are now available on the app, including Apple and Costco.

» Eager to pick your own investments? See our best online stock brokers

We like that, with both ETFs and individual stocks, Stash presents the investments in an easy-to-read snapshot. On one screen, users get:

• A quick, snappy synopsis of what the investment is all about.

• A bar visualization that represents the level of risk.

• The ticker symbol, last price and, for ETFs, the expense ratio.

The ETF descriptions also include:

• A list of the investment’s holdings.

• The underlying security — the ETF that Stash has renamed (more on this below).

Users can then dive deeper into performance. There are question mark symbols that launch quick definitions or explanations. A section of Stash is dedicated to educational content, tailored to users based on the information they plugged in when getting started.

Thematic and mission-driven direction: Stash renames the ETFs to better reflect their holdings. For example, the SPDR S&P BioTech ETF is called Modern Meds and the Vanguard Small-Cap ETF is called Small but Mighty. Rate Hike Refuge invests in the iShares Floating Rate Bond ETF, which aims to protect investors from interest-rate risk. The ETFs are divided into different categories to help make them easy to find.

There are mission-driven themes designed to guide users toward investing with their hearts. For example, Clean & Green is clean energy, via the iShares Global Clean Energy ETF. Do the Right Thing is socially responsible companies, via the iShares MSCI USA ESG Select Fund. Women Who Lead is focused on large companies with more women leaders, via the SPDR SSGA Gender Diversity Index ETF. There are also ETFs focused on other investing goals, like Park My Cash and Aggressive Mix.

Zero account minimum: It only takes pennies to start investing with Stash. That low minimum is made possible by fractional shares: Stash buys the ETFs and stocks, then splits them among its investors. That means you can build a diversified portfolio with very little money. Stash also has a tool to educate users about the power of investing. Users can quickly adjust a slider to indicate their monthly deposit and growth potential, or anticipated investment return, and the app will show how much the user could have after one year, five years and 10 years.

Automated features: If you like the idea of investing without too much effort on your part, Stash can round-up your purchases to the nearest dollar and, once those round-ups hit $5, will send that money to your investment account.

Another nice feature is Stash's dividend reinvestment program, or DRIP, which lets you automatically reinvest any dividends that your investments pay out. The DRIP is available for all of Stash's investment account types.

As a part of its new Smart Portfolios option, Stash also offers frequent automatic rebalancing. For example, when you add cash to the account, Stash will use that to purchase underweight investments. When you withdraw, it will automatically sell overweight investments to maintain an ideal balance. This is in addition to quarterly rebalancing, when Stash will automatically rebalance your portfolio if it’s more than 5% out of line.

Stock-Back rewards program: Stash offers a rewards program with a twist: Your rewards are fractional shares in the companies where you make purchases. Stash offers a 0.125% reward to people who subscribe to the $1/month or $3/month account options. (Those with the $9/month plan get twice that.) Stash also may offer bonus rewards; for example, the company recently offered a 2% reward, paid out in fractional shares, for every dollar investors spent at Netflix in a particular month. If the company where you make a purchase isn't publicly traded, you can choose another investment to invest your rewards in from a list of eligible investments.

Another novel aspect of Stash's debit feature is called "partitions," and it allows users to put money earmarked for different expenses and goals into separate buckets within the larger account. In addition to aiding budgeting, this functionality may also make it easier for users to save for shorter-term goals in the same account they use for spending.

Custodial accounts: Parents who want to help their children get started investing might be interested in a Stash custodial account. That said, they should consider the fees and expense ratios we detail below.

Where Stash falls short

Subscription fee: Stash offers three levels of its subscription service. The first tier, which includes an investment account and access to an online bank account, costs $1 a month. That sounds inexpensive, but as a percentage of assets, it’s actually quite high, especially for lower balances. An investor with a $500 balance will pay 2.4%; someone with a $2,500 balance will pay 0.48%. The $3 monthly fee, which adds access to a retirement account, makes the fee damage even worse for retirement savers. (Most brokers — including many of our picks for best IRA account providers — actually waive fees on retirement accounts.)

Here's how some other companies charge for services:

• Wealthfront, a robo-advisor, has a 0.25% management fee, but NerdWallet readers get their first $5,000 managed for free. This service will build your portfolio, rebalance it and apply tax-loss harvesting on taxable accounts.

• Acorns, likely Stash’s chief competitor, is a robo-advisor app that rounds up transactions in linked bank and credit card accounts, then invests them in a managed ETF portfolio. It charges $1 a month ($3 per month for the plan that includes retirement accounts) for rounding up transactions and ongoing investment management, including rebalancing.

The value that investors would get from Stash long-term is debatable. With a small amount of research, you could find the ETFs that Stash offers, or suitable alternatives, through many online brokers commission-free. (If that sounds daunting, we have your back: Check out our guide to investing in stocks.) Once you’ve built your portfolio, Stash isn’t involved in managing it the way a robo-advisor would be, though the company is a registered investment advisor and a fiduciary. The app will, however, provide an evolving library of educational resources and maintain a list of suggested additional investments based on your risk profile and existing portfolio. It also makes it easier to find investments that align with your values.

ETF expenses: The ETFs available through Stash have an average expense ratio — the annual fee charged to investors — of about 0.25%. That’s high compared with the ETFs curated by robo-advisors; most services are heavy on Vanguard’s very low-cost funds. To be fair, Stash brings more niche funds into the mix. Thematic investors are often willing to pay more to invest in causes or companies they believe in.

» Want to compare more providers? Check out our top picks for best robo-advisors.

Is Stash right for you?

If you’re looking for a little hand-holding while you build a portfolio of ETFs and individual stocks, Stash may be a good fit. That kind of educational assistance may save money in the long run — you’ll avoid costly mistakes and learn how to manage your own portfolio. Stash also provides access to fractional shares, allowing you to diversify with very little money.

But once you’ve learned the basics, you may find that you’re unlikely to get much more in exchange for Stash’s ongoing monthly fee. At that point, it’s a good idea to explore branching out on your own.