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If you’re a recent graduate, odds are you know investing is an important part of building wealth. And you’ve got all sorts of money goals. Apartment goals, new ride goals, wardrobe goals, music festival goals, vacation goals, buy your own place goals, start a family someday goals, be your own boss goals, retire before your 70 goals. The list goes on. You receive your first student loan bill and get sticker shock while apartment hunting. Can you believe that price didn’t even include utilities and cable? Also, what’s this renter’s insurance the landlord is talking about? Maybe Mom and Dad aren’t that bad of roommates after all. Invest for the future? What’s left to invest? I’ll just wait…
No! That is the worst thing you should do. One, it doesn’t get any easier in your 30s. Remember all those goals? Two, remember this financial concept – time value of money. Time is on your side when investing in your 20s and you don’t want to lose an entire decade of compounding dividends and interest. Take one look at these info graphics from safetynet.com and you’ll see why. Notice Olivia and Jason. Both invested $80,000 total. Olivia made annual contributions of $2,000 starting at age 25. By the time she reached 65 her investments grew to over $1 million. Jason started at 45 and had to double his contributions to invest the same amount. By age 65 his contributions only grew to $278,920. Investing early allows you to make smaller contributions yet still earn more than someone who started later.
Yea that’s great, but I don’t have an extra $2,000 to invest so what’s the point? Enter STASH Investment Accounts. Here are five reasons STASH works for new investors (and broke millennials).
1. You can start investing with as little as $5.
Start the habit of “paying yourself first”. STASH makes it easy to follow a dollar-cost averaging investment strategy. Set regular automatic investments of dollar amounts you can afford. It can be as little as $5 a week. The key is to create good savings habits. By saving first and spending what’s left you’ll be less likely to spend money on things you don’t need – like that one last drink at the bar or the gym membership you’re not using.
Apply for the STASH debit card to earn stock back on purchases you regularly make and/or link your current debit and credit cards to STASH to earn stock back for purchases made with over 1,000 participants. Your investments will grow even faster with these stock back features. There’s also a Round-Up feature that rounds up purchases on your linked cards. Once it reaches $5, the spare change will be deposited into your STASH account. Think of it as your online piggy bank.
Lastly, STASH now offers $5 for referrals (terms and conditions apply). When a friend signs up using your referral code, you’ll each get $5. Email or direct message me for a referral code, then start referring friends on your own.
2. You can inexpensively build a diversified portfolio.
There’s risk with investing and you could lose money. To reduce the risk, financial advisers recommend diversifying your investments among different types of assets, companies, and sectors of the economy. Stash allows you to buy fractional shares of individual stocks and ETFs for as little as $5 so you’re diversified from Day 1.
3. Save on fees.
Pay $1 per month for STASH’s education, savings, and guidance tools. Pay ZERO add-on trading commissions.
4. Learn as you go.
Besides being broke, another reason we tend to hold off on investing is fear. We’re afraid we don’t know enough, will make poor choices, and lose money. Working with a financial adviser is helpful, but can be expensive. When you have little funds to invest you’ll want to keep everything you have and not pay costly fees or commissions. STASH offers tools and educational resources that help you invest with confidence and learn as you go. A quick questionnaire helps determine your investor profile. You’ll receive recommendations based on your risk tolerance and investment goals right away. STASH also allows you to invest by themes and explains investment strategies using simplified, easy to understand terms.
5. No restrictions to withdrawing funds.
Investments in a retirement fund like an IRA (also offered by STASH Retire) or 401k has tax advantages, but you cannot withdraw money from these accounts without penalty until the age of 59 1/2. Saving simultaneously in a retirement account and STASH investment account can help you reach different savings goals faster. Money in a STASH investment account can help you save for intermediate goals (5+ years), like a down payment on a home or starting a family. It’s there to cash out without penalty if needed. But, don’t treat your STASH investments as an emergency fund. In the short term markets can be volatile, and you wouldn’t want to sell your investments for a loss to pay for a flat tire or health insurance deductibles.
Ready to start investing with STASH? Don’t forget to use a referral code to sign up (from me or a friend).