Stash puts the power of investing in the palm of your hand

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Stash puts the power of investing in the palm of your hand
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What’s standing between you and investing for your future—right now, this very minute? Is it time? Money? Knowledge?

A new app called Stash wants to remove those barriers from your life and put the power to invest right in your very hands—literally.

Read more: 9 secret habits of people who have no problem saving money

Is Stash the future of investing?

With Stash, you can buy exchange-traded funds (ETF)—some of Clark’s favorite kinds of investments—for as little as $5 right on your smartphone. That’s setting the bar for entry really low when you consider some ETFs can have a minimum investment of $1,000!

So, for example, there’s an ‘American Innovators’ ETF that includes Apple, Microsoft, Facebook, Alphabet, Intel, and IBM, among others. The ‘Clean and Green’ ETF includes Solar City, China Everbright International Limited, Vestas Wind Systems and Enel, among others. The ‘Roll With Buffett’ ETF includes the Oracle of Omaha’s wholly owned companies like Geico, Business Wire, Helzberg Diamonds, Benjamin Moore and Dairy Queen. Plus it also includes his largest equity investments like Kraft Heinz, American Express, Wells Fargo, IBM, and Coca-Cola.

Stash makes its money by charging $1 a month for balances under $5,000. So if you truly are a small investor, your money will get eaten up pretty quickly. For those with balances of $5,000 or more, Stash only charges 0.25%.

Want to be a better investor? Keep these tips in mind

Increase your savings rate gradually

Let’s say you’re starting with literally just doing $5 to your Stash account once a month. The key is to bump up your savings rate gradually. If you’re doing $5 once a month, what would it take for that to become $10 once a month? That might mean something as simple as skipping an extra trip to Starbucks once a month!

Keep costs low

Paying $1 each month on accounts of less than $5,000 isn’t exactly cost-efficient. But it is a good way to get you in the habit on investing. Once you build up a sizeable nest egg, you might consider moving it to any of Clark’s favorite low-cost brokerage houses like Vanguard, Fidelity, T. Rowe Price or Charles Schwab.

Don’t forget about dollar cost averaging

By making regular contributions monthly in equal amounts, you are doing what’s called ‘dollar cost averaging.’ That’s just a fancy way of saying you’re not trying to time the market. In months that the stock market is going down in value, your money buys more shares. In months that the market is climbing, your money buys a smaller number of shares, but the shares you already own are worth more.

Dollar cost averaging is a way to pace your investing so that you’re buying shares when prices are low, high or in between. Over time, putting money in this way reduces the possibility you will panic and either sell or stop investing; it keeps you steady as you go. And staying in the game makes you more money in the long run.

Diversification is key

You have to spread your money out to lower your risk. A lot of people make the mistake of taking all their money and putting it into a stable fund or a guaranteed fund. Those options may sound like a sure thing, but they basically tread water.

Clark prefers that you have money in a total stock market index as a ‘go to’ kind of investment. That’s where you own little pieces of thousands of companies. If one sector takes a hit — say, technology stocks, as they did during the ‘dot com’ bust — your whole portfolio isn’t blown to smithereens because you’ve spread your money out across multiple industries.

Sure, diversifying is not as ‘sexy’ as putting all your money into a single company and letting it ride. But investments should be about long-term security, not the dazzle factor.

Read more: Making $75,000 and living hand to mouth? Here’s how to stop

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Theo Thimou About the author:
Theo has co-written several books with Clark Howard, including the New York Times #1 bestseller Living Large in Lean Times. As a single widowed parent of two young children, he strives to bring unique savings tips to men and women like him who must face life without their spouses. He can be reached at [email protected]
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