When I downloaded the Stash app for beginner investors at the beginning of January, I didn’t know the first thing about the stock market. In my last post, I shared how I began my journey of educating myself about investing by using the only tool I knew at the time: simply Googling search terms to learn about popular picks, and finding my way to experts who knew more than I did.
From there, I began trying the in-app learning tools Stash offers, and that’s where things started to get really exciting...
Step 2. Exploring the in-app Stash recommendations for diversification.
Now we’re getting a little more savvy. Built into the Stash app, based on a few simple questions I answered up front to describe my current situation and my investing “style” (moderate, aggressive, etc.), the “Get Recommendations” feature provides suggestions to help build a diversified portfolio, balanced across different types of investments that complement one another to avoid risk over the long haul.
In other words, the app’s automated wizardry runs the math for me, serving as a "robo-advisor" in regard to which types of funds to buy and how much of them, to build toward a stable long-term strategy designed to withstand the normal ups and downs of the market. While Stash opens the door to purchasing stock in individual companies—everything from Apple to Zoom and just about any other brand name I can think of between A-Z—it also provides access to a huge number of bonds, ETFs, REITs, and other words I had to Google to be sure I understood what I was getting myself into.
Don’t worry, we’ll get into some of the definitions in another post a different day. Right now, the point is that Stash (unlike some retail investing apps that have cheered rookies on into taking disastrously uninformed risks) has built-in safeguards to help protect newbies like me from making stupid choices.
After all, for me, this step was a deliberate act of faith… an informed faith, at least, after searching Stash recommendations on Google and reading a bunch of reviews with good things to say about the results other users have experienced. You might recall that I entered the world of investing with the Stash app basically sight unseen, curious to just check it out and see what it was like. As I began to realize how much investing could really change my life, I also realized I better look further into the company behind this technology, too, and make sure I was entrusting my money to a reliable service.
You can certainly go Google your own results and read all the same reviews I did; as for me, I came to the conclusion that although Stash seems to be the new kid on the block for individual, or “retail,” investors—perhaps lesser known than similar apps like Robinhood or Acorns (which I’d also never heard of before)—it has the best selection of features and pricing options based on my interests. Plus, The Stash Way, or the company’s investing philosophy, is all about educating the average joe in the world of investing while also safeguarding inexperienced investors (like me) from making huge day-trading mistakes that can cost people for a lifetime. (GameStop, anyone?)
Side note: It’s worth mentioning that I did notice Stash has a number of complaints on the Better Business Bureau site. I read through the feedback and took it under advisement, and all I can say is… so far, I haven’t experienced any of the issues described. My experience using the app has been trouble-free and actually exceeding my expectations; if I encounter any problems in the future, I’ll say so. As always, do your own research and draw your own conclusions.
Anyhoo, I won’t rehash everything I found online—because I’m of the opinion that if you're here reading this post, then we can all read for ourselves and consider the pros and cons of our own individual cases, thus developing the critical thinking skills which are in sore demand across Western culture these days. That said, if you ever have any specific questions about anything I share in my experiences, please do feel free to reach out. I’m not a professional, and I can’t give you any "official" advice, but I love sharing anything and everything I’ve learned, if it can be a benefit to you or anyone else working toward a better future. :)
Suffice to say, with a burst of recreational reading early in 2021, I found enough encouraging reports from places like NerdWallet, Business Insider, Money Under 30, and Investor Junkie that I felt comfortable clicking on “Get Recommendations” in the Stash app. Then I read through the suggestions, made note of those that appealed to me, and did half a dozen or so of the things the app thought I should do.
Boom. Taking advantage of the built-in diversification analysis, which tells me where I should increase my buy in order to develop a well-rounded portfolio, I worked my way, one by one, through suggested actions and in-app projections, all offered in plain and understandable English.
Using this information, I incorporated as much of the robo-advice as I felt comfortable taking, that early in the game, to branch out into the unknown. (We’re talking a few bucks here, a few bucks there… I’m not made of money, folks.) In addition to the fractional shares of company stocks I’d already purchased, I invested a few small amounts in a variety of themed funds with Stash names like Small But Mighty, Up & Coming, Foreign Heavyweights, and Long-Term Mix — in-app nicknames which provide a good idea of the types of holdings they include.
Then, because the Stash app said I should, I went back and threw in a little bit of everything from the list of foreign and domestic bonds, too, just to say I did.
Remember that old "I'm a Big Kid Now" jingle? With this step, I got to experience a whole new sense of satisfaction from successfully doing something I’ve never done before. This represented the very first time in my life that I have ever taken investment advice and made long-term wealth-building decisions.
Granted, ETFs and bonds might not sound as exciting as the big-name U.S. brands set for explosive growth in 2021. But… okay, maybe it’s because I’m getting started at age 36, not 26, but when it comes to building toward financial freedom and eyeballing a relatively predictable outcome on an upward-trending trajectory over time… I like boring. Boring is exciting. (I’m such a grownup.) Boring means I can set it and forget it, leaving it alone and letting it grow over the next 5, 10,15, or even 20 years, and it will more than likely make money for me—where some of those “fun” stocks today might be “bankrupt” stocks tomorrow.
Which is not to say I’ve avoided any risk in my portfolio. Actually, as I’ll share along the way, it turns out I’m a pretty aggressive investor, considering I don’t have much to work with. I’m just taking the long view, which eventually trends upward, so it doesn’t really matter if the pendulum swings wildly from day to day in the meantime.
And incorporating “safer” investments doesn’t mean I can’t also buy into some high-risk, high-reward companies. In fact, because I’m buying into some high-risk, high-reward companies, it’s an even better idea to also buy into some “safer” investments to balance things out over time. Make sense?
So the purpose of the Stash diversification analysis and “Get Recommendations” feature is to help build in some long-term stability by picking a mix of different funds and bonds, both foreign and domestic, which are expected to yield relatively steady increasing returns over the long haul. On the road ahead, I'll be writing a bit more about what all of the terminology means, but for now, just know the basic idea of diversification: Don’t put all your eggs in one basket.
That way, if you do want to play around with some higher-stakes company stocks (like I do), you stand less chance of losing everything if one of those companies suddenly tanks. Since I’m in my later 30s, not my early 20s (which means I have less time to live to see my fortunes pay off), and I’m a small-town South Dakota gal without a lot of disposable income to gamble on roller-coaster volatility, an informed approach to my investing will reflect my reality.
Therefore, even though I’ve added some aggressive picks to the mix, I also opted to go with some of Stash’s recommendations for a moderate-risk, long-term investment strategy. This meant including a combination of funds and bonds that are carefully curated by people who know a heckuva lot more than I do.
On that note, I’ve been getting a lot of use out of Stash’s learning library and the handy in-app glossary along the way. Plus, I’m still Googling everything before I buy anything, checking at least two or three sources to confirm any “gut feels” I’ve got about one approach over another.
Having incorporated some Stash app recommendations within my first couple of weeks as an investor, then, I'm happy to note I even briefly achieved a green progress bar on my diversification analysis, signaling I’d met all the measures for a well-balanced mix. Hooray!
That was right before I moved on to the next phase of building my very first investment portfolio — at which point I threw my diversification analysis right out the window, binging a bunch of those big-name U.S. brands set for explosive growth in 2021. :)
But that brings us to the third step I took to develop my strategy, which takes a long-term wealth-building view and taps into some aggressive opportunities to take advantage of our current economic conditions. Next time, I’ll tell you about the most valuable industry resource I found in my first weeks as an investor, which gave me the confidence and the courage to step out in an informed faith that the future can be different than I ever imagined.
>>> Go on to Step 3 >>>
In the year ahead, I plan to continue writing about my experiences as a beginner investor, using the Stash app to build a portfolio in the stock market. I’m not saying you should do it, too — I’m just gonna try it myself and let you know what happens. I’m learning as I go, so if you’d like to come along for the ride, we’ll be learning together, hopefully doing our small part to turn the tables and win the wealth-building game, for the good of greater society.
Does that sound overly ambitious to you? Maybe we just haven’t allowed ourselves to think big enough before.
If you like anything you read here, please share this post with your social media networks to get more people thinking about how we can all start winning the wealth-building game together. Like to connect? Drop me a line or visit on Twitter.