Stash Invest For Socially Responsible Investing (Review)
Stash Invest is a personal finance app that lets you start investing with $5. The app offers a convenient selection of environmental, social, and governance (ESG) funds, among other options. Read more to learn how to use Stash to invest sustainably.
SustainFi June 18, 2021
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Stash Invest Summary
- Minimum balance: $0
- Monthly fee: $1-9/month depending on the plan
- Fund expense ratios: socially responsible funds in the Missions and Causes line-up cost between 0.20% and 0.60% annually ($20 to $60 for a $10,000 investment)
- Account types: taxable investment accounts, traditional and Roth IRAs, custodial accounts
- Easy to use for beginners
- Several environmental, social, and governance options
- Invest in over 3,000 exchange-traded funds (ETFs) and stocks
- Fractional investing lets you buy portions of stocks
- Auto-Stash feature lets you invest automatically
- No trading fees or commissions
- No minimum balance and you need only $5 to open an account
- One-stop-shop including banking, a Stock Back card, a robo-advisor, life insurance, and retirement accounts
- No human advisor option
- No tax-loss harvesting (a way to reduce taxes)
- No sustainable robo-advisor option
- Several online brokerages like Public let you invest without monthly fees
- Stock Back rewards are low compared to many Cash Back cards offering over 1% cash back
What is Stash Invest?
Stash is a personal finance app that makes investing easy for beginners. Wall Street veterans Brandon Krieg and Ed Robinson started Stash 2015 with the mission of making investing inclusive and accessible to ordinary Americans. As of 2020, Stash grew to over five million customers and $2.5 billion in assets under management.
In addition to making investing easy, Stash offers a bank account with a Stock Back Card (which gives you cash back in stocks). Stash Invest also has a robo-advisor, Smart Portfolio, that doesn’t currently invest in sustainable funds. (If you are looking for a beginner-friendly robo-advisor with sustainable options, check out Acorns.)
How does Stash work?
Sign-up process. The sign-up process is simple:
- Download the Stash app on your phone or visit the Stash Invest website on your desktop
- Provide basic information about yourself
- Pick one of the three subscription plans. All plans offer investing with a brokerage account
- Add money to Stash automatically or manually. You can start investing with $5
- Invest. The platform offers more than 3,000 stocks and ETFs. Stash also serves a convenient list of suggested ETFs, including the “Missions and Causes” option we review below
Stash Membership Plans. Stash offers three membership plans, costing from $1 to $9 a month.
Stash Beginner ($1/month) includes a personal investment account, a Stock Back Card, and $1,000 worth of life insurance coverage through Avibra.
Stash Growth ($3/month) adds a Roth or Traditional IRA to the Beginner features.
Stash+ ($9/month) comes with all the Beginner and Growth features, plus a Stock Back Card that earns double stock, investment accounts for kids, a monthly market insights report, and $10,000 of life insurance coverage through Avibra.
Management fee. The membership plans cost $1, $3, or $9 a month.
$1-$9/month may be quite expensive as a percentage if you have very little invested. Robo-advisors like Betterment, Marcus Invest, and Ally Invest charge 0.25%-0.35% of assets for managing your money. If you only put $1,000 in your Stash account and sign up for Stash+, you are paying 0.90% of your assets annually. Further, if you are not using the Smart Portfolio, Stash doesn’t actually manage your investments as a robo-advisor would. It’s more like a brokerage.
However, if you invest $10,000, you are only paying 0.09%, and you get perks like the Stock Back card and life insurance.
Account types. Stash supports several account types, including:
- Taxable personal investment accounts
- Retirement accounts for traditional and Roth IRAs (Stash Growth and Stash+ members only)
- Custodial accounts (Stash+ members only) – these are accounts for those who want to help their children get started investing
- Checking accounts (through a partnership with Green Dot Bank)
Human advisors. Stash doesn’t offer human advisor access, though there is plenty of educational information on the site. If you are looking for a human advisor, we suggest a robo-advisor with human options like Personal Capital. Alternatively, you can find a financial planner.
Fractional shares. This feature lets you buy pieces of stocks or funds. Individual shares can be quite expensive. For example, at the time of this writing, a share of Tesla (TSLA) cost $626. Stash lets you buy a fraction of that share for a much smaller amount.
Diversification score. Stash Invest provides you with a diversification score to help you create an efficient and balanced portfolio. You also get recommendations from the app to help you invest.
Automatic investing tools (Auto-Stash). Stash has multiple features to help you automate your investments, including rounding up your purchases to the nearest dollar and investing that money.
Dividend Reinvestment Program (DRIP). The DRIP lets you automatically reinvest any dividends you receive.
Stock Back Rewards. Stash accounts come with a Stock Back rewards card. When you spend money at places like Amazon (AMZN) that have stocks listed on the platform, you get 0.125% back in stock in the companies where you make purchases. Stash+ members get 0.25% back. If the place where you spend money doesn’t have a publicly listed stock, you can choose what stock or ETF to get.
Compare robo-advisors with sustainable options
Socially Responsible Investing with Stash
Stash groups ETFs into themes, which makes ETF investing accessible for beginners.
We were particularly interested in the Missions and Causes selection, which offers six thematic funds.
The funds cover water, low-carbon, women leadership, cannabis, clean energy, and high environmental, social, and governance (ESG) score funds.
For each fund, Stash shows a convenient Dashboard that looks like this:
We are going to look into each option in more depth to help you find the right one. We’ve omitted Corporate Cannabis which is not really a sustainable fund.
|Theme||Ticker||Fund||Expense Ratio||Assets ($m)||MSCI Rating||Sustainalytics Rating|
|Water the World||PHO||Invesco Water Resources ETF||0.60%||$1,680||AA||3 / 5|
|Combat Carbon||CRBN||iShares MSCI ACWI Low Carbon Target ETF||0.20%||$829||A||3 / 5|
|Women Who Lead||SHE||SPDR SSGA Gender Diversity Index ETF||0.20%||$238||AA||4 / 5|
|Clean & Green||ICLN||iShares Global Clean Energy ETF||0.46%||$5,860||A||4 / 5|
|Do the Right Thing||SUSA||iShares MSCI USA ESG Select ETF||0.25%||$3,210||A||5 / 5|
Note: as of May 31, 2021
Water the world: Invesco Water Resources ETF (PHO)
- Expense Ratio: 0.60%
This ETF lets you invest in water treatment and technology companies.
With climate change, droughts are becoming more frequent, limiting the supply of drinking water. But demand is growing as the global population expands. Likely future water shortages create an opportunity for water infrastructure and technology companies. Water utilities also provide a critical social service, making them attractive for socially responsible investors.
Launched in 2005, Invesco Water Resources ETF (PHO) is the largest water ETF. PHO invests in U.S. companies that conserve and purify water for homes, businesses, and industries.
PHO has 36 holdings, largely in machinery and water utilities; the top three are Xylem Inc (XYL), Roper Technologies (ROP), and American Water Works (AWK). Xylem and Roper Technologies create water technologies like water meters and pumps. American Water Works is a water utility operating across the U.S. In 2020, PHO returned over 20%, and year-to-date it’s up another 14%.
👍 We think PHO is a good choice for investing in water. But you definitely need other funds to create a balanced portfolio.
🔔 Learn about other funds that help you invest in water.
Combat Carbon: iShares MSCI ACWI Low Carbon Target ETF (CRBN)
- Expense ratio: 0.20%
This ETF is supposed to help you invest in companies with a lower carbon footprint relative to the broader market. CRBN was created in 2014 by asset manager BlackRock.
The fund invests in both U.S. and international stocks. This is not a clean energy or fossil free fund; it’s a fund that aims to achieve market-like returns while reducing greenhouse gas emissions. For comparison, the carbon intensity of CRBN is less than 50% of S&P500.
However, the fund doesn’t divest from oil and gas stocks. Fossil fuels are nearly 5% of the fund’s assets, and it owns stocks of oil field services company Schlumberger (SLB) and oil major Chevron (CVX).
👎 We find that most investors who want to lower their carbon exposure prefer not to own any oil and gas companies. For this reason, we don’t think CRBN is the best fund in the Missions and Causes line-up.
🔔 Do you want to avoid fossil fuels completely? Check out our guide to fossil free investing.
Women who lead: SPDR SSGA Gender Diversity Index ETF (SHE)
- Expense Ratio: 0.20%
This ETF lets you invest in companies that support female leaders.
Launched in 2016, SHE invests in large-cap U.S. companies with a high percentage of women who are executives or directors. State Street advertised this fund by commissioning the Fearless Girl statue in the Financial District of Manhattan.
The fund picks stocks from the top 1,000 US companies and weighs them based on market cap. Companies in the top 10% on gender equality metrics in each sector are included. Each stock is capped at 5% of the fund.
SHE has 165 holdings, with around 27% of the fund invested in tech. At the time of this writing, the top three holdings are PayPal (PYPL), semiconductor company Texas Instruments (TXN), and Visa (V). SHE is relatively inexpensive, with only a 0.20% expense ratio.
👍 We think that SHE is a good option.
🔔 You can also learn about other funds that help you invest in racial or gender equality.
Clean & Green: iShares Global Clean Energy ETF (ICLN)
- Expense ratio: 0.46%
Established in 2008, ICLN invests in clean energy companies. These companies are in biofuels, ethanol, geothermal, hydroelectric, solar, and wind industries.
As of June 2021, the fund owns about 80 stocks from around the world. Its top regions are the U.S. (around 39% of assets), Denmark (14%), and Spain (7%). Top investments include wind turbine manufacturer Vestas (VWS), Danish wind developer Orsted (ORSTED), and solar energy company Enphase Energy (ENPH).
The fund is relatively inexpensive for a clean energy fund, and it even has good ratings from ESG rating agencies.
However, clean energy stocks have been very volatile. ICLN was up 141% in 2020 but down 14% in 2021 through mid-June.
👍 We think ICLN is a good way to get exposure to clean energy, but we would not put a big chunk of your assets in it due to high volatility.
Do the right thing: iShares MSCI USA ESG Select ETF (SUSA)
- Expense ratio: 0.25%
Launched way back in 2005, SUSA invests in U.S. companies with strong environmental, social, and governance (ESG) scores from rating provider MSCI. The fund aims to track the broader market. With over 200 holdings, this ETF is diversified and could be the foundation of a socially responsible portfolio. The top three holdings are Microsoft (MSFT), Apple (AAPL), and Google (GOOG).
SUSA doesn’t invest in tobacco and firearms, though it still buys fossil fuel companies to approximate the return of the broader market. The fund just aims to pick the oil and gas companies that are less polluting and have higher ESG scores than others. However, if you don’t want to own oil and gas stocks, you can buy other fossil free options through the app.
👌 SUSA is an OK ESG fund (but not the right choice if you want to divest from fossil fuels completely.)
- Stash is a good option for beginners who want to get into investing
- Several environmental, social, and governance funds are selected for you to start
- However, if you want help saving and more holistic portfolio management, check out Acorns
- If you know what you are doing and just need a broker, you can get a no-fee brokerage account from Public