Is Stash a Scam?
Have you ever thought about opening a brokerage account with Stash? Maybe you’re curious about Stash’s credibility and security? If so, read on, as we’ve done the research and have the answers to your questions! You’ll learn about who owns Stash, its background as a company, whether it’s a legitimate brokerage firm, how your money and investments with Stash are insured, and more.
Who Owns Stash?
Stash is currently privately held and was founded in 2015 by Brandon Krieg, Ed Robinson, and David Ronick.
The current CEO of Acorns is Brandon Krieg, and as of early 2022 Stash surpassed “unicorn” status by achieving a $1.3 billion valuation after Series G funding in February. It is rumored that they are exploring going public and consulting Goldman Sachs about strategies. It is said that they will pursue either a traditional IPO or the trendier SPAC merger.
Leading investors of Stash include Union Square Ventures, Goodwater Capital, Eldridge, and Lending Tree.
What is Stash App?
Stash’s founders, including CEO Brandon Krieg, created Stash with the goal of democratizing
investing. They’ve also put an emphasis on long-term investing and have targeted younger and more
inexperienced investors. In this way, Stash is similar to other young FinTech companies such as
M1 Finance.
Stash works to achieve these goals by simplifying the investing process, making it more accessible to beginning investors who may be overwhelmed by thought of investing and learning about the stock market. A big part of their effort to help beginning investors is through Stash Learn, which offers extensive educational tools written at a level that’s accessible for people who are new to investing.
How Stash Makes Money?
Stash requires only a $5 account minimum, making it extremely accessible. Account types vary in monthly fees from $0 to $9 per month. Some benefits of Stash, though shared by many of its competitors, include DIY and automated investing, fractional shares, and investment offerings based on values (such as ESG investing). Like Acorns, Stash also offers a feature that rounds up purchases to the nearest dollar and sends the remainder to your investment account (once it reaches $5).
Stash’s two subscriptions are Stash Growth ($3/month) and Stash+ ($9/month). These subscriptions all include DIY investing and a bank account with Stash’s “Stock-Back” card, which allows a small percentage of your purchases to contribute to your stock holdings.
Stash’s overall approach allows for both DIY investing and an automated portfolio, something that many robo-advisors don’t offer. Oftentimes, robo-advisors don’t let you pick any of your investments, making them totally hands off. This combination allows beginner investors to learn about investing and experiment with picking individual stocks. Thanks to the option of fractional shares, it’s easy to do this with a small amount of money (as low as $5 increments).
Is Stash Legitimate?
Stash Capital LLC is regulated by the U.S. Security and Exchange Commission (SEC) and incorporated in the state of Delaware since 2017. Their Reporting File Number is 021-242998.
Stash Capital LLC is also registered as a brokerage firm with FINRA (New York district office) and its CRD# is 287728.
Stash does not have any disclosures, which is usually a good sign.
In short, Stash is a legitimate brokerage firm and personal finance company, with a focus on making investing accessible for new investors in particular.
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Is Stash Secure/Insured?
In terms of security, Stash has undergone a process known as PCI DSS (Payment Card Industry Data Security Standard), which is an audit to ensure that cardholder data is properly stored and protected. Stash also uses standard SSL 256-bit encryption and Transport Layer Security (TLS) to protect your information when connected to Stash, whether via browser or mobile app. Plus, Stash permits biometric log-on and times sessions in order to automatically log you out after a period of inactivity. They also monitor log-ons to prevent access by unauthorized users.
As for protecting your money, each Stash debit account has FDIC (Federal Deposit Insurance Corporation) coverage, which helps protect consumer bank accounts against loss. This is federal, i.e. governmental, insurance, so it’s about as good as you can get.
When it comes to your investments with Stash, they are held by a third-party custodian, Apex Clearing Corporation. Apex is registered as a broker-dealer with the SEC and also a FINRA/SIPC member. As such, your investments also have SIPC (Securities Investor Protection Corporation) coverage, meaning that your investments are protected up to $500,000 total (including $250,000 for cash claims).
Is Stash Accredited by the Better Business Bureau?
No, Stash is not accredited by the Better Business Bureau (BBB). To gain this accreditation, businesses must apply, and it is likely that Stash has simply not applied. (Neither have most of its competitors.)
As of time of this writing, Stash has an F rating with BBB, which is the worst rating offered. To make their ratings, the BBB considers company size, company history, transparency, and governmental actions taken against the company.
While the rating does not include the customer reviews posted to the BBB website, it appears that
there have been 600 total complains in the past three years, with about half (296) of them closed in the last twelve months.
This looks like a high number of complaints but is really not when considering over 5 million customers. BBB consumer complaints are a lot like selecting only 1-star reviews on Amazon—you’re bound to see only the worst experiences that people have had and no positive ones, which can give a bit of a skewed perspective. As such, you might want to take the BBB complaints with a grain of salt. To give a more holistic perspective, you might look up other reviews online.
Top Competitors
Wrapping up: Is Stash a Scam?
All in all, Stash is not a scam. Although relatively new as a broker compared to many more established players (such as Charles Schwab, TD Ameritrade, Fidelity, etc.), your money is protected and insured through both financial insurance and cybersecurity.
Stash may be a good option, particularly for younger, less experienced investors who may not have a lot of money to invest. It can also help establish the good habits of incremental and passive investing, which form part of a smart long-term investment approach for most people.
Ultimately, if you begin investing with Stash, you can rest assured that your money is as safe with them as with any other broker-dealer out there, thanks to SIPC coverage for your investments and cash holdings in your investment accounts, as well as FIDC coverage for money you hold in Stash bank accounts.
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Stash Invest Review
Do you want to start investing but don’t think you have a large enough pile of cash stashed away to afford enough stocks to create a diversified portfolio? Or maybe you do but the commissions from buying dozens of different securities eat up too much of your cash. Either way, Stash Invest has a solution for you. Their mission is to make diversified investing easier and cost effective for people with smaller savings by allowing you to invest in fractional shares. This article will offer an overview of Stash’s unique platform.
Stash App Niche
Stash has carved out a niche for itself in the
large brokerage industry by making diversified investing achievable and cost-effective regardless
of the size of your nest egg through fractional share investing. For example, let’s say you’ve worked hard to stash away $1,000 to start a portfolio. You know that you need at least a dozen different stocks in your portfolio to mitigate a lot of the company-specific risks, which means you have roughly $83 to invest in each stock.
If you wanted to invest in companies like Apple or Tesla, whose stock prices are approaching $200 a share, you’d be out of luck… and forget about buying a share of Amazon stock, which is currently approaching $2,000. Stash solves this dilemma by allowing you to invest in a fractional amount of these companies’ shares, so you can invest $83 in each of these three stocks. In fact, Stash will let you buy in as little as $5 increments if you want.
Investment Choices
On the downside, because Stash is so accommodating to smaller investments it wouldn’t be practical
for them to offer every public stock on their platform. For example, if you decided to buy 0.2%
of a share of a stock most people have never heard of, Stash might have a hard time finding others
to buy the rest of the share. As such, Stash currently only allows you to invest in roughly
3319 different U.S. stocks and ETFs.
Personalized Stash Portfolios
Stash recognizes that everyone has a different approach to investing, which is why they give you the option of investing on your own, where you do your own research and choose investments, or you can use their free personalized portfolio tool to help you build your ideal portfolio. This tool will ask you a series of questions about your financial situation, goals, and risk appetite, and then recommend a portfolio of stocks and ETFs that fit your needs. The tool is also fun to play around with to see how changing your answers impacts Stash’s recommended portfolio.
Educational Tools
Stash is also good for beginners because they have their own learning center, called “Stash Learn”, which has self-help style articles that are easy for even the newest beginners to follow. They also offer more in depth articles and discussions on financial topics to provide continued engagement and learning after you’ve mastered the basics of investing.
Stash Account Types
Stash doesn’t offer the full suite of different account types that you’ll find with the larger brokers, like TD Ameritrade, but they do offer the most popular accounts. These include your standard taxable account, Traditional and Roth IRAs, and custodial accounts.
Stash Review Summary
Stash’s investment options are somewhat limited in scope, and as such we wouldn’t recommend their account to professional investors that are looking for a wide range of investment choices and security types to include in their portfolios. On the flip side, if you are part of Stash’s target market - you want to build a diversified portfolio with a small amount of cash without breaking the bank - then we would recommend you give Stash a try.
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Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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