Why I’ll never use Stash investing

What's the guys? It's Graham here. So, after posting my review on Acorns Investing, many of you have asked that I review another investing app known as Stache. And no joke, this was such a popular request! At least a few hundred of you have asked for this just in the last week alone. So, as you all know, if enough of you ask for something, then you shall receive.

So, with that said, let's go over exactly what Stache is, how they make their money, if it's a good way for you to make money, and whether or not it's actually worth it. And all I ask in return for all of the hours of research that goes into making an unbiased review like this and staying up way late at night reading all of the fine print and not having a life and editing this video non-stop to try to get it posted today is just a simple like on the video. Something small—just doing that helps out the YouTube algorithm. It helps up my entire channel, and I found it also helps the performance of the video.

So that's all! If you just do that, I would greatly appreciate it. And with that said, let's get into the video.

So first, let's start here: what is Stache? Stache is really just an investing platform that helps automate your investing, but they do have a few very distinctive twists that make it a little bit more unique than some of the others. First, they do what's called micro-investing, which means that you can invest as little as five dollars into what's called a fractional share. This basically means you could buy a percentage of a stock without needing to buy the full thing.

Now, this is not unique to Stache; plenty of other companies do this too. But it's always less intimidating to buy in with a smaller amount if that's what you have available to you. For example, you can invest five dollars into Amazon without needing to come up with the full two thousand dollars to buy the entire stock. With five dollars, you could still say you're invested in Amazon stock, except you only own one-four-hundredth of one stock—hence the fractional share.

Now secondly, they have a wide range of investments that you could choose from depending on your goals, how aggressive you want to invest, and the timeframe you want to hold that investment. Now third, what's very unique to Stache is that they offer what's called stock back. This is a feature that allows you to earn stocks as a reward anytime you use your debit card for purchases within certain companies. For example, if you use your debit card to buy something on, let's say, Amazon, they'll give you back a small percentage of Amazon stock as a reward for using the debit card and shopping at Amazon.

The same could also apply through many other companies that you could be shopping with. The fourth, Stache also gives you the option to open up a Roth IRA, and with that, they give you the option to open up a Roth IRA for your children to get them started on their investing journey so that one day they could be lambo rich and be driving mega yachts everywhere because that's what you do with Roth IRA money.

But with all that fancy verbiage and investment terms and money talk, is Stache actually worth it? I spent no joke about two and a half hours reading through all the terms and conditions, all the fine print, all the boring yada yada yada, just to find out and just to make this video because I'm weird. But I'm really glad I did because this is what I found out, and it all begins with their pricing tier.

So to start, their basic plan begins at a mere one dollar per month, which is very similar to Acorns Investing that I mentioned the other week. This gives you access to their personal investment account where you can invest in $5 increments, like I mentioned earlier. You know, even though I think they do have decent investment options, it does seem a bit limited to me. While they do have a wide selection of available options, you're pretty much just buying Vanguard ETFs and broad index funds that they have pre-selected for you that you could pretty much buy anywhere. At that point, you're basically just using Stash as the broker or the intermediary if you're purchasing those funds.

But when it comes to that one-dollar-a-month fee, here's where things start getting a little bit iffy from my perspective. First, the dollar-a-month fee is up to the first $5,000 you have invested. I'm not gonna lie to you, that is just absurdly high. If you have four thousand dollars invested with Stash, you're paying twelve dollars a year just for a fee of investing, which works out to be 0.3 percent of your investment every single year. This is gone, this is gone, that's gone.

When it comes to investing, you could pretty much buy the exact same funds through Vanguard, which only charges you 0.04 percent as a fee, or almost the exact same thing through Fidelity, which charges, wait for it, nothing! They charge nothing because it's free, and I love free. So, from the way I see it, from that perspective, Stash is just very expensive to use.

But of course, now you might be asking yourself, "Well, Graham, what happens if you invest more than $5,000?" Well, that's a very good question because that means after $5,000, they charge you a ridiculous amount to invest your money—except it's just a slightly less ridiculous amount to invest your money. Because when that happens, your management fee lowers from one dollar a month to 0.25 percent of all the money you have invested.

Now again, 0.25 percent might not seem like a lot of money, but when you consider that Vanguard is 0.04 percent as a management fee and Fidelity is entirely free with no management fee, and Acorns only charges you one dollar a month up to the first million dollars you have invested, in comparison, Stash just seems expensive. From my own perspective, just from this alone, I am just not a fan of Stash at all.

This part is very unclear because I couldn't find it anywhere in the terms and conditions, and I read through everything, but it looks as though you'll be paying Stash the 0.25 percent, and then you'll pay the management fee on the ETF on top of that, which could range anywhere from 0.04 percent all the way up to 0.95 percent. So, you could end up paying a lot more than you initially realize for really not much benefit just besides using their app.

Now next, besides that one, you're also gonna get access to their debit card, which honestly, like I just don't get the point of. Like sure, if you need access to go and spend your money, okay, maybe I get it. But if you guys know me and watch my videos, you know that I will never, ever, ever use a debit card for anything ever when you could just use a credit card instead. You can get the points, you can get the purchase protection, you get all the perks of using a credit card.

Also, be a financially responsible adult who puts money in the credit card and then pays it off in full—there really shouldn't be any reason for you to ever use a debit card. But Stash tries to give you a reason to use a debit card, which is this: because third, they offer what's called stock back. Now this is a feature where if you use their debit card within certain merchants, they will give you back a fraction of that merchant's stock as a reward for using the debit card.

So, like I mentioned earlier, if you go and spend a hundred on Amazon, they will give you back some Amazon stock as a reward or incentive for going and using the debit card. Well, the thing is the difficult part for me was actually finding the terms and conditions that specify exactly how much stock they give back as a reward for using the debit card.

Now, I'm not sure if this was intentional or not. I gotta say, like I'm good at doing research on this stuff, and for me, it was difficult to find. The only way I was able to find this is by going to Google, searching "stock back Stash terms and conditions," and then linking through it that way—so thank you Google for that! But I couldn't seem to find it on Stash; maybe this was just me or maybe not.

So, anyway, once I found their terms and conditions, here is what they say: upon a qualifying debit card purchase, you will earn a fractional share of the stock. Stock reward amounts will be a dollar amount equal to 0.125 percent of the aggregate amount of the qualifying purchase, or, if greater, a fixed dollar amount of one cent per qualifying purchase.

So, that's right! If you spend a hundred dollars on Amazon, they're going to give you a whopping twelve point five cents back on a hundred dollars you spent! Twelve and a half cents—like let me just share this quick money-making tip with all of you watching. If you want a reward by buying something, all you need to do is open up the Citi Double Cash Rewards credit card. They will give you back two percent on all purchases.

So, if you spent that same $100 on Amazon, you would get back two dollars instead of twelve and a half cents. You could pretty much just use any rewards credit card out there and get more benefits and more points and more cash back than you could get using the debit card through Stash.

So, for me, I see this all as like a gimmicky mess that just seems a lot better than it actually is. Like if they ever end up increasing the reward to like one and a half to three percent, then certainly I would feel a lot differently about this and would be a lot more incentivized to use the debit card. But any less than that, and I gotta say, it's a no for me dog.

And finally, the last reward that they offer you for a dollar a month is free financial education, which is something you can already get for free on YouTube, on Google, on Reddit, on the Internet. But you know what? It's free, and I like free. So, anything they give you for free—more free, the better!

Now let's go up to the next tier. If you're feeling a little bit spendy and you want to spend a whopping three dollars a month, this gives you the exact same benefits as the one-dollar tier, except now you're able to get access to their investment account and IRA. With this, you have the option to go for a traditional IRA or a Roth IRA.

But let's be real: spending an additional two dollars a month to open an IRA with any account balances under $5,000 is not fun. You're gonna have a bad time. To me, that's just ridiculous and way too expensive. And let's be real: who has the extra money to throw on an extra two dollars a month? I don't have that.

But hey, you know what? On the bright side, once you get about $5,000, then their fee lowers down from two dollars a month to the same point two point five percent that you get on their taxable accounts, which is still very, very, very high. Like I said, Vanguard is 0.04 percent, and Fidelity is free. So, spending almost ten times more for the same management fee just for using Stash doesn't make sense to me.

Plus, I also believe you're still paying the normal ETF fee on top of the Stash fee, which makes this just insanely more expensive. So, from my perspective, why anyone would ever do this is beyond me. But hey, you know what? That's what you get for three dollars a month or that's what you get for a 0.25 percent management fee.

And finally, for all of you rich ballers out there who have nine dollars a month to spend—basically the price of avocado toast every month—this is what you get. First, you get the option to open up an investing account for two children, which for me, I don't have two children, so that's no use for me. If you do have two kids, then I believe you're still overpaying for something you can get for pretty much free by going elsewhere.

The second, for nine dollars a month, you'll also get a metal debit card. That's right! We got a metal debit card—millennial money alert! Millennials love metal cards like that, and Stash appeals to Millennials with a metal debit card. Of course, with that, you also get 2x stock back, which means they'll double your stock back rewards from twelve and a half cents to twenty-five cents on every hundred-dollar purchase.

Now again, maybe just maybe, if they're offering a special promotion where they're giving five percent back as a stock reward and you could double that to ten percent and you spend a lot of money with that, then just maybe you can break even or get your money's worth when it comes to that maybe. But I just can't imagine and wrap my head around how spending nine dollars a month on a metal debit card and 2x stock back rewards would ever be worth it for a reward that's just absurdly low to begin with.

Even if you double it, it's still absurdly low compared with just about any cash back credit card you could possibly get right now and use just about anywhere. It just doesn’t make any sense to me! I've been trying to get it. It just doesn’t make sense!

But hey, you know what? At least on the bright side, they give you a monthly market financial report, which again, you could pretty much get for free anyway on CNBC, on CNN Money, on Reddit, on YouTube. But hey, you know what? That's none of my business.

So really, when it comes to all of this and using Stash, here are my completely honest thoughts. So, as usual, I should just say this: doing something is better than doing nothing. So, if Stash gets you investing, it gets you budgeting, gets you thinking about your money and your future, even if it costs you an absurd amount of money to do so, that is better than not investing at all in the first place.

So from that perspective, I'm just happy people are investing. I'm happy people are looking at their finances. I'm happy people are thinking about their budget, and again, if Stash is the way that they do it, that is good with me as long as people are getting into it.

But I gotta say, for everyone else who has a moderate amount of self-control and doesn't mind spending five minutes of their time doing some research, there are plenty of other cheaper alternatives that give you the exact same thing for the most part for a fraction of the price.

Literally, one fund could be all you need with Vanguard and that is just VTI, and you're done! Or you can go with the free option with Fidelity, and that's FSRVX. This has zero fees. Both companies allow you to open up a Roth IRA without charging you anything.

Now in terms of the stock back program, to me, come on, that's just stupid! Just open up a Citi Double Cash Rewards credit card with two percent cash back if you want to get some cash back on something. That's the way to do it! And if you do a lot of shopping on Amazon, then just open up the Amazon Prime Rewards card and get five percent cash back on all Amazon purchases.

That is way, way better than the 0.125 percent that you get back as a stock back program reward on Stash. To me, that amount is just like a slap in the face. That's insulting! They just insulted me by offering 0.125 percent rewards. Come on!

So overall, in my opinion, from my perspective, because this is not financial advice, all of this is for entertainment purposes only, and you should do your own research, Stash to me is just not worth it. I don't see the point. Now yes, it's still better than doing nothing, but that isn't an excuse not to do something better.

Because it takes a few seconds just to download any other app instead that is slightly less expensive. Like Acorns is a less expensive option even though it doesn't offer the stock back program. You can get that with a credit card way better anyway, and Acorns only charges one dollar a month for up to the first million dollars you have invested.

I'm very happy that financial education is slowly starting to get more mainstream and it gets people excited about investing. But there are so many other cheaper alternatives out there that take the same amount of time just to set up, and with Stash, it just isn't worth it from that perspective, in my perspective.

So with that said, you guys, thank you so much for watching! I really appreciate it. Make sure to add me on my second channel; it's called The Graham Stephan Show. I'm posting there every day I'm not posting here, which is great.

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