“We think it’s important for users to make a choice,” Krieg said. Letting investors choose gets them engaged and excited, prompting them to save more and learn more about how investing really works, he said. “They’re getting off the sidelines and into the markets.”
When Vivienne Peng, 26, decided she wanted to invest some money outside her retirement account, she wasn’t sure how to do it.
“I didn’t know anything, so it was very intimidating to me,” said Peng, who lives in Brooklyn and works at a nonprofit group. Stash is “almost like a game,” she said. “They kind of hold your hand through the process.”
Peng automatically withdraws $20 a week from her bank account and, after 10 months, has about $600 in Stash, which includes Roll With Buffett (“I’ve always heard my parents talk about Buffett”) and Modern Meds, a biotech ETF. Her second-biggest investment is now Aggressive Mix, a diversified blend of bonds and international and domestic stocks that Stash recommended to her.
After users sign up and fill out a short questionnaire, the app encourages them to buy Aggressive Mix or two other diversified ETFs, one moderate and one conservative, which are similar to the offerings at other robo-advisers and in 401(k) target-date funds. Pop-up notifications on the app, which is currently available only on mobile devices, tell them that the recommended investments are a good way to diversify.
“We can’t force them,” co-founder Robinson said. “We have to guide them.” He said it's working because, while Stash users are young, they’re “very cautious with their money.” The three ETFs are Stash’s most popular investments. There’s also an appetite on Stash for even more conservative investments such as Uncle Sam, an ETF of super-safe U.S. Treasuries, and Public Works, a municipal bond ETF.
With $12.25 million in venture capital funding and 25 employees, Stash is run out of a one-room office a short walk from the Flatiron Building in New York. It makes money by charging users $1 a month, or 0.25 percent per year on accounts over $5,000. The first three months are free.
Robinson, 33 and from Sydney, met Krieg, a 42-year-old from New York, when they were both working at Macquarie Group, the global investment bank based in Australia. At one point, Robinson said, “I used to not pick up the phone for a less-than-$10 million order.”
Things are a little different now. The money comes to Stash in batches of $20 or $30 at a time, not unlike donations to Bernie Sanders. The company says it has received 750,000 individual bank transfers over the past year. Stash declined to disclose the size of the assets it manages.
The average Stash user earns $45,000 a year. Common employers include Wal-Mart, Uber, the U.S. Postal Service, and, especially the U.S. military, with service members making up one in eight users. The app seems to spread by word of mouth on bases, ships, and even submarines, Robinson said.