Investing used to be fun. There was that greedy voice in our heads saying: "Trust your gut! Take a risk!"
Then it all got ruined by the one-two punch of a tech bust and the worst recession in a lifetime. Suddenly, we were supposed to be sober: Who are we to bet our retirement on our skills as day traders? Calm down. Diversify. Lock your savings up in index funds, wait a few decades, and hope you can retire.
That approach—so smart, so boring—is enough for millions of people wounded by the financial crisis. But what about the next generation of investors, for whom Pets.com and Lehman Brothers are childhood memories?
A fast-growing app called Stash is trying to make money by making investing enjoyable again. Its co-founders, Brandon Krieg and Ed Robinson, say they can do that without inspiring their customers, most of them millennials, to do anything too stupid.
Stash, which celebrates its first birthday on Friday, has signed up 215,000 users and is adding more than 10,000 a week, putting it on track to double its users in the next six months. Many of these investors are beginners without much money to spare. While other investing options require thousands of dollars to start, you can open a Stash account with five bucks.
That makes the app accessible to people like Alejandro Acuna, a 22-year-old college student at Georgia Southern University in Statesboro, Ga. He has a campus job that lets him put $5 a week in Stash—“what I pay for coffee,” he said.
“It’s coming along,” Acuna said of the $200 in his account. “If I start right now, maybe later on in life it will take me somewhere.”
While most traditional brokers assume you know the difference between a stock and a bond, a large cap and a small cap, Stash assumes its new clients know just about nothing. It offers only 36 investments, most of them exchange-traded funds, all renamed for beginning investors. Delicious Dividends is Stash’s more appetizing name for the Schwab U.S. Dividend Equity ETF. Roll With Buffett gives you a fractional share of Berkshire Hathaway Inc. That lets Stash's investors—average age 28, 80 percent under 34—invest alongside Warren Buffett, Berkshire's 86-year-old chief executive officer.
Stash encourages people to invest in things they understand or care about: Clean & Green is the iShares Global Clean Energy ETF. Defending America is the iShares U.S. Aerospace & Defense ETF. Social Media Mania gives you the Global X Social Media Index ETF, with its healthy chunks of Facebook, Twitter, and LinkedIn.
Betting a lot on hot social media or solar companies might sound like a classic investing mistake from the old days. Wouldn’t it be more responsible to put everyone into an index fund, as other robo-advisers do?