Over 90% of millennials are scared to invest, whether it’s because they distrust the market or they feel they lack the knowledge necessary to invest. There are a ton of companies trying to get millennials to invest – you may have seen TV ads for Betterment or downloaded Acorns from your local app store – but they’re facing an uphill battle.
Enter Stash. It’s a new app that wants to help millennials understand what, exactly, they’re investing in. Beyond that, it wants millennials to choose to invest in companies that they like, love, believe in, or all three – a form of "socially responsible investing."
Let’s take a step back and look at how companies like Stash work. (If you’re already a user of another investment platform or went to business school, feel free to skip this paragraph.) Stash is an automatic investment service, or "robo-advisor," if you want to be fun. Withdraw money from your bank account and send it over to your robo-advisor. Depending on the service, they may automatically buy shares in Exchange Traded Funds, or ETFs, that track a portfolio of companies. ETFs can track just about anything – the S&P 500, health companies, defense contractors, you name it.
Most robo-investors don’t really bother to explain the actual ETFs they’re using to build your portfolio. Sure, they list the names, and you go Google them, but that doesn't’ really help you understand why you’re investing in them.
This is where Stash hopes to make their biggest impact. When you fire up the app, Stash gives you just a few examples of investments you can make – funds with names like "Aggressive Mix," "Park My Cash," and "Roll with Buffet." (After you pick your first investment, you can use the app’s Discover section to find more investments.) When you tap an investment, you’re taken to another screen with a lot more details on the fund:
a plain English explanation of what the investment is and why you’d want to invest
an estimated risk level
the ETFs or stocks that make up the investment
Let’s look at an example – the "Live Long & Prosper" investment, profiled last week on the Stash blog. No, it’s not a fund made up of the various companies which produce Star Trek films and toys, though that would be cool. Instead, it’s an investment in healthcare companies, such as Johnson & Johnson, which make Tylenol and Band-Aids, and Pfizer, which makes Lipitor and Viagra.
Besides being a really profitable investment – Stash notes that this ETF outperformed the market every year for the last five years – it’s also good for people who want to back healthcare companies. While I personally don’t get jazzed about healthcare companies, I’m sure there’s someone out there who would.
Stash actually has a pretty good spectrum of investments for people with a variety of financial and political interests. There’s an investment for companies using and creating clean energy, an investment for aerospace and defense companies, and an investment to support companies with equal rights policies in place.
But here’s the million dollar question: will any of this actually get millennials to invest?
There’s plenty of reason to suggest that the political nature of Stash will pique the interest of many millennials. While millennials are less likely to vote than the older population, they engage in politics in other ways: social media protests are a brand new way of dealing with a broken political system. And while millennials may not believe that voting on a ballot will change anything, they do believe that voting with their dollar will – just look at the Chick-fil-A boycott.
If you want to invest your money in companies that matter to you (or at least keep it away from corporations you know are doing harm to the Earth and society), Stash is currently the easiest way to do so.
The fee structure is also simple: for accounts under $5000, Stash charges $1 per month. After you hit $5000, Stash charges you 0.25% of your account per year. These fees are in line with competitors. One thing that makes Stash different, however, is that they take the fee out of your bank account, not your Stash portfolio. They describe it as a "subscription for your financial future." Each fund may also have its own fees, which will be listed on the investment overview page.
Even if you’re not interested in politics, Stash has plenty to offer you. Sure, a big part of their product is matching you up with investments that you believe in, but it’s also about making you money. If you know nothing about investing, Stash’s easy-to-understand, plain English explanations will help you navigate the market.
Image: Alessandro Valli