So it's a new year. Maybe you heard?
And if you're like a lot of people, you probably didn't save as much money last year as you could have. Or should have.
Is investing more one of your new years resolutions?
Weddings. Traveling. Hobbies. Getting engaged. Life comes at you quickly and no matter how much money you make, expenses can add up if you're not thoroughly committed to a savings and investment plan.
I'll be honest; I try to pay attention to the markets and I've been a diligent saver at times, but I wish I could do more. I wish I have done more! I've always wanted a way to replace my penchant for small impulse purchases on Amazon, and instead invest money into a diversified portfolio of equities all while not having to worry about whether I've timed the market correctly.
Becoming an active investor requires a real commitment to understanding a pretty complex topic. You have to understand your own risk tolerance and come up with your own own philosophy, as my partner in this blog explains. But it's particularly daunting if your overriding life perspective towards investing has been this:
"I don't do this for a living. It's going to be tough to outsmart the experts, many of whom can't consistently beat the average market return. Rather than pick individual stocks, I'll just park my savings in this index fund made available to me by my employer's 401(k) program."
Was this ever you? Because this was me.
I won't beat myself up too bad, because I'm pretty sure there are millions of who did the same thing I did. And I probably should be proud of the humility that's evident in my acceptance of knowing what I don't know. I learned that not too long after beginning to invest in the stock market. In May of 2008. Remember? Back when America was great?
My resolution this year is to take a more active role in managing my money and to be more proactive in making investments. But I also have to be realistic. I'm probably not going to begin spending hours of time on the weekend pouring over quarterly earnings reports. I still have to master my own chosen profession. I still have to spend every free second thinking about playing or actually playing golf.
But I oh-so-recently discovered Stash Invest. The app has made world of difference in how I'm approaching my investments. It so completely lowers the barriers to entry for novice investors that...it could do for investing what Facebook did for the internet.
I don't make that statement lightly. But I remember when Facebook was taking off, and I've got that same feeling now. That same feeling I had in the fall of 2005 when Facebook made it possible for us college kids to post pictures of our wild nights out at the bars. Facebook in 2005 was completely f***ing amazing. It gave you that "Wow!-I've-wanted-this-for-so-long-but-I-never-really-quite-realized-that-I-did-cause-I-didnt-know-it-was-possible-but-it's-so-awesome-and-it's-so-easy-and-I-can't-believe-someone-built-it-and-it-works-so-well-and-wow-this-really-changes-everything" type feeling.
Do you know what I mean?
This feels like that.
Here's why Stash Invest is winning fintech, bringing sound investing practices to main street and rekindling hope that The American Dream isn't dead just yet.
In fact, it may even be bringing it back to life.
The ad copy rings true, and the first-time user experience is so smooth that you really can go from Facebook ad, to app download, to investment (save for the initial funds transfer) in your first session. The fact that you can start investing with $5 is in itself revolutionary. A modern marvel in some respects. A pretty big game changer if the Stash experience stopped here.
But the real beauty in the $5 minimum investment is the dollar-cost-averaging that's essentially automatic to the process. If you started a 5 year old out on Stash Invest, you could see how they would grow up not really knowing any other way to put money into the market. $5 is a low barrier to entry and the investment options are so fun that when you move another $20 over, you end up want to buy $5 of 4 different choices. Thinking about "timing the market" never even enters into your mind. You just end up doing it. You even feel a little bit like a squirrel, stashing away small assets. But that's a good thing.
This was pretty amazing to me, because when I used to make trades on Schwab, I'd select an investment, then agonize over the (nominal) fee, then wonder if I should split the trade into two, but then agonize over getting hit with two fees...and before long I had abandoned my shopping cart. Or I'd just plow my money in without having made a reasoned decision. Bad.
Trying to figure out if I was doing dollar cost averaging correctly used to be my single biggest hurdle in making an investment. Fear of doing it wrong caused me a lot of anxiety.
But on Stash I don't have that problem.
I used to go into my Schwab account and look up mutual funds, and the list just went on, and on and on. It felt impossible. What is the difference between any of them? Not to mention the conspiracy theories. I was weary of Schwab-branded products. Were they pushing their own product ahead of what was really best for my risk tolerance? I'm a pretty avid conspiracy theorist already. The Schwab-heavy options weren't helping.
What today's retail investor is long overdue for is a dramatically simplified approach to building a diversified portfolio.
So much of being a successful investor in the past was about taking emotion out of the equation, and I get that. No explanation needed. But after food, water, clothing and shelter, emotions drive the human experience. Emotions run wild in some form or another, all day every day.
What Stash did such a great job of is providing the right amount of investment options but packaged in emotion-centric categories. The "I want" category is the most laymaniest option of what you'd generally be looking for if you tried to start investing in a traditional online brokerage. You've got the Blue Chips, a conservative play, a way to park cash, and a way to copy the experts. Boom. Great. Something for everyone.
But they kick it up a notch with the "I Like" and "I Believe" categories, where you're presented with fun, cool names for investment options you probably wouldn't have picked otherwise. Do you like robots? Great! Invest in robotics companies. Enjoy shopping? Maybe "Retail Therapy" is the fund for you.
And don't forget my personal favorite, "Roll with Buffett". Now you too can be about that Oracle life. Even "Delicious Dividends" sound way way cooler than any of the singular companies found within the ETF.
I don't like paying fees. You probably don't either. But when I found out the fee structure on Stash, I wasn't dissuaded from continuing. Because of the cash-flow mechanics involved in the on-boarding experience, it was actually the complete opposite. I literally cannot make my very small investments fast enough. I'm racing to get $100 in my account. Why? Because I don't want to pay more than 1% a month. I understand that every dollar I put in up to $5,000 lowers relative fee.
Now when I get to $5,000 that'll be another story. At that point you pay 0.25% on your balance. But my guess is that the mechanics of Stash product usage will require several hundreds of transactions to get to that point, and I'll have built new positive life habits, that there's no way I'll switch. I don't even know how I would recreate the diversification that I've done to this point, on less than $50 invested.
But Stash is fun and Stash is sticky. It makes me feel good about my own financial situation. I feel like I'm stuffing cash into hiding places in my home, like I'm Henry Hill or something. Maybe Lufthansa is in one of these ETFs.
This isn't a political blog. And I don't want this to become a political post. But there are a wide range of opinions on what would actually "Make America Great Again". Trump may not have the answer. Hillary may not have the answer. What "great period" are we even talking about?
But to me, the American Dream is at the very least about having some sense of stability, control, and security in your personal finances. Home ownership is a big part of that. Investing in the stock market can be too.
And a big first step towards improving things for a huge demographic of people is to enable the ever-growing lower class the ability to invest and build wealth for themselves. If I'm in the "has a traditional brokerage account but isn't an active trader" user persona, and I love this app, then I'm guessing there are tens of millions of Americans who, the thought of being an active investor never even enters their mind. It's great that it doesn't have to be that way anymore.
And sure, naysayers can argue that $5 isn't going to go very far. But little by little, it does add up. And little by little, people can develop good habits, like investing in a diversified portfolio of assets where dollar-cost-averaging is baked into the process. Maybe investing in "Retail Therapy" on Stash becomes the new retail therapy. Ironically to the chagrin of big retail.
I'd much prefer to teach people how to fish, and becoming a great fisherman takes repetition. Thankfully you can now get your repetitions on Stash. Starting $5 at a time.