With Brandon Krieg, Co-Founder and CEO of Stash
Steve recently spoke with Brandon Krieg, co-founder and CEO of Stash, to learn how the average person can start saving money and investing with just five dollars. Brandon gave listeners the rundown on how to use the Stash investing app to get started investing and building their financial future.
The Woeful State Of Saving And Investing
A shocking statistic: According to a new survey, 18% of Americans are basing their retirement plans on winning the lottery and nearly 60% of millennials think the lottery is a good plan for their retirement. 80% of Americans are living paycheck to paycheck—in other words, right on the edge of financial disaster. Most people can’t cover a $500 emergency expense.
So, why aren’t people saving and investing for their financial future? According to Brandon, the problem is two-fold. First, there’s just a huge lack of financial literacy. People just aren’t taught the basics of managing money, saving, and investing; they don’t learn it at home and it’s not taught in school. When Brandon and his Stash co-founder, Ed Robinson, asked people why they aren’t saving money and investing, the most common answer they got was a simple, “I just don’t know how to do it.” The second problem facing people who only have a little bit of money to start investing with is high required minimum investments with many investment companies. Even if people just want to start buying individual stocks on their own, most people can’t afford, say, one share of stock in Amazon with a share price around $1800.
The Solution In An Investing App
To solve the problem and help ordinary people easily get started saving and investing, Brandon and Ed launched the Stash investing app in 2015. Stash offers people the ability to start investing with just five dollars, automate future investments, track their spending and saving, get cash back on purchases in the form of stock shares, and get investing advice and a financial education. Stash users can set up investment accounts, retirement accounts, and even savings and investment accounts for their children. And all for just $1 a month, that’s $12 a year.
The Stash platform offers a wide array of investment choices in the form of individual stocks and ETFs. Brandon urges people to “invest with intent,” to invest in market sectors or companies that are doing things they’re personally interested in. For example, millennials interested in climate change can focus their investments on companies working on that problem.
A Debit Card That Earns You Stock
One of the services Stash offers is a debit card that earns you stock back on every purchase you make. Users earn 0.125% Stock-Back on all purchases made with the Stash debit card and up to 5% Stock-Back at certain merchants that offer Stock-Back bonuses. If you use the card at McDonald’s, then you earn a fractional share of McDonald’s stock. If you use the card shopping on Amazon, you get a fractional share of stock in Amazon. And if you use the card at a local merchant that’s not a publicly-traded company, Stash invests your Stock-Back money in a diversified investment based on your investment preferences.
To learn more about the Stash investing app and how you can join the ranks of Stash’s over three million customers, just visit the Stashinvesting.com website.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: According to a new survey, 18% of Americans are basing their retirement plans on winning the lottery and nearly 60% of millennials think the lottery is a good plan for their retirement. Wow.
My next guest has taken this to heart and come up with an ingenious solution to fix what he calls the savings epidemic in America. Brandon Krieg is Co-Founder and CEO of Stash, one of the fastest growing consumer investing applications in the US.
Steve Pomeranz: Brandon Krieg, welcome to the show.
Brandon Krieg: Thank you for having me. What a great intro. I really appreciate it and I’m excited to chat today.
Steve Pomeranz: So, is winning the lottery a responsible retirement plan, Brandon?
Brandon Krieg: No. No, it’s not. I have to tell you, when I saw the results of this come back, I was… it made me realize just how happy I am that my co-founder and I started Stash. I think that there is just this massive financial literacy problem that’s fueling these misconceptions, and it’s just, it’s very disturbing and we’re going to work really hard to try to fix it. So, yeah.
Steve Pomeranz: Well, you mentioned that there is this epidemic, the savings or deficit of savings epidemic in America. Why do you think it’s so hard for millennials and that generation to save any money?
Brandon Krieg: I mean, look, the reality is is that financial, just taking a step back and looking at the problem, is that financial education, back in the day when I was growing up, was taught at home. My parents explained money to me and how to balance a checkbook and how to think about money. They taught it in school.
We look at society now, these conversations don’t happen anymore, unfortunately. Right?
Steve Pomeranz: Yeah.
Brandon Krieg: They don’t teach it in school. A lot of parents or most parents aren’t teaching it at home. Now you step back and look at the, just the hard cold facts of America right now, is that 80% of people in America live paycheck to paycheck.
Steve Pomeranz: Yeah.
Brandon Krieg: Nearly half of Americans can’t come up with $500 in a medical emergency. This is really, really bad. So the question is, what do we do about it and how do we help fix it?
Steve Pomeranz: How much of it is lack of money and how much of it is lack of know-how or education?
Brandon Krieg: Well, to tell a story, being a New York City guy, when Eddie and I decided that we were going to start this business, we spent a lot of time walking around the streets of midtown Manhattan asking people those questions. I’m going on a little time machine and back about three, three-and-a-half years ago, the question we asked was, “Why don’t you invest and why don’t you save?”
We heard the same answer over and over and over again, which was, a, “I really, really want to, I just don’t know how to do it. So, I’ll do it later.” Then we heard, “I’ll do it when I’m rich.” This is really to answer your question, right? It’s like, so we’d say, “What does rich mean? What does that mean?” No one could answer the question. Everyone would just say to us, “Ah, I’ll do it later. I’ll do it later.”
What we found is that, basically, the vast majority of people in America have been effectively excluded from financial services or feel or felt excluded.
Steve Pomeranz: Yeah. That’s what I wanted to ask you. Let me interrupt for a second.
So, is there a barrier for the average person to—who’s never been in the investment world—to enter the investment world? Do they not know what to do?
Brandon Krieg: That’s part of it. Yeah. Part of it is they don’t know what to do because they don’t have a foundation of financial literacy to go on.
The other problem is that for a really, really long time, over the history of financial services, the minimums were really high.
Steve Pomeranz: Yeah.
Brandon Krieg: So, you’re sitting there watching a sports game on TV and there’s all these commercials coming on TV. Unfortunately, it’s an all-white family with a Volvo in the driveway and a white picket fence around the house. The minimum was like $25,000 to start.
Steve Pomeranz: Yeah.
Brandon Krieg: When you have $50 to invest and you don’t know what to do, where do you go? That’s why we started Stash, right? I think it’s really important that companies like Stash and other companies start looking after the core of America because we need to make sure that everyone’s investing in it. Everyone’s saving and everyone’s living a better financial life. It’s good for people and it’s good for society.
Steve Pomeranz: All right. So, let’s talk a little bit about Stash and what you guys are doing that are different.
So, let’s take a look at, you kind of alluded to the barriers of entry in terms of the 25,000. As you look for an investment advisor or someone of that ilk, the minimums rise from there. There’s a percentage charged on the assets and we’re talking some serious money to get some serious advice.
If you’ve got five bucks to invest or 100 or 200 to invest, you’re not going to get anybody like that. It’s going to have to be a technology solution.
So, tell me how Stash deals in this particular area.
Brandon Krieg: So, your question is great and I know that you’re an investment advisor. I can tell you that most investment advisors, unfortunately, can’t possibly manage to give advice out to… Stash, we have three, almost three-and-a-half million customers, right?
Steve Pomeranz: Yeah.
Brandon Krieg: You would need to have a mega army of people to do that. So, we use technology to deliver investment advice and financial advice through the Stash app. So, we built a platform that helps you not only get financial advice on how you’re spending money and where you’re investing and how you’re investing, but also gives you the ability to get financial education as you’re investing. So, you could open up an investing account, a retirement account and accounts for your kids on the investing side.
On the insurance side, you can get life insurance through Stash. We also built banking services so that you can also do your banking on the Stash platform and become an investor every time you spend.
So these really, really awesome products, that we’ve put on the Stash platform, all come together and they’re glued by a financial education, so that you can learn as you’re doing, you can understand what you’re doing.
We think a lot about the concepts of that kids are now taught in school called STEM, right?
Steve Pomeranz: Yeah.
Brandon Krieg: You learn as you do. I think it’s really important that you’re investing and getting advice, but you’re learning while you’re doing it. It’s not just like, “Hey, go do these things that you don’t understand and that’s it.” We’re going to teach you while you do it. I think it’s really important, again, for people to have the ability to start with $5 because what we find is that through a tool called Auto-Stash, the average Stash customer’s putting nearly $30 away every single week.
Steve Pomeranz: Wow.
Brandon Krieg: So, when we started this, our talk, you think about what America looks like right now. The majority of people that use Stash are far ahead of the vast majority of Americans after one year on the platform.
Steve Pomeranz: Yeah. All right. So, let’s stop there for a second. So, the minimum investment is $5? Did I hear that correct?
Brandon Krieg: Yep. You can start investing with $5.
Steve Pomeranz: Okay. What about incrementally after that? Is it still $5 an investment or can you reduce that?
Brandon Krieg: No.
So, there are two ways to, once you start to get additional investments. One is, you can invest in increments of $5. The second way is by getting the Stash debit card.
So, every single time you swipe this Stash debit card, you get stock wherever you are. So, for example, if you go to McDonald’s for lunch, you become a shareholder in McDonald’s and get stock in McDonald’s. Little, little-
Steve Pomeranz: Wow.
Brandon Krieg: … small amounts of stock.
If you shop on Amazon or pay your T-Mobile bill, you’ll get Amazon or T-Mobile stock and it goes into your investing account. If you go to the local car wash, then you’ll get stock in a diversified investment that we pick. That’s another way of getting stock.
So, again, they both kind of help the customer the same way because you’re an investor in brands that you understand and know. Most people in this country, unfortunately, can’t come up with… I don’t know what Amazon’s price is right now. I think it’s like 1,700 bucks or something.
Steve Pomeranz: Yeah. About that. 1,800.
Brandon Krieg: I don’t know many people that can come up with $1,700 right now.
Steve Pomeranz: To buy one share.
Brandon Krieg: To buy one share.
Steve Pomeranz: Right.
Brandon Krieg: And put their entire net worth into one share, which is totally not okay.
Steve Pomeranz: Right. Right.
Brandon Krieg: So, we want people to be diversified and that’s the advice we give.
Steve Pomeranz: All right.
Brandon Krieg: So, yeah, that’s kind of how you get in.
Steve Pomeranz: That’s interesting.
Steve Pomeranz: So, you have an individual person can invest in individual stocks. I looked at the website and I saw a whole list of individual stocks, kind of family, not family, household names and also different kinds of index funds, ETFs.
But, you’ve been very clever as how you’ve put this together. I’m kind of looking at it right now. Combat Carbon. So, there’s kind of the typical, kind of millennial, climate change kinds of stocks.
But, there’s also other stuff here. All That Glitters, gold, and blockchain, I guess.
Brandon Krieg: Mm-hmm (affirmative).
Steve Pomeranz: Bonding with America. Colossal China. So, you’ve picked these areas. So, I read in your material that you want the investor to become engaged or invest with intent.
Brandon Krieg: Yep.
Steve Pomeranz: Why is that?
Brandon Krieg: Well, that’s… I love that you talked about the names of the investments, especially on the ETF side.
So, to role play and have some fun. If me and you were out, Steven, neither one of us work in financial services. We have nothing to do with it and I say to you, “Steve, I’m so excited. I became an investor today. I bought the, insert the fun company, Core Tactical Class C.”
Steve Pomeranz: Yeah. Right.
Brandon Krieg: “Blah, blah, blah.” You’re going to-
Steve Pomeranz: It’s like, “What? What are you talking about?” Right.
Brandon Krieg: Right. You’re going to look at me like, “Dude, what are you talking about?”
Steve Pomeranz: Really.
Brandon Krieg: We talk about The Rangers.
Steve Pomeranz: Yeah.
Brandon Krieg: That’s kind of the, one of the reasons we said, we want people to, and you said it, right? We want people to invest with intent.
So, when you come to Stash, if you have, whatever you believe in or whatever you think about the world or your prerogative on things, we want to put you in a position where you can invest in that. But, we want to be careful not to introduce the paradox of choice. Not to have too much so that you’re like-
Steve Pomeranz: That’s the world today. Too much choice.
Brandon Krieg: Too much choice. Right. I mean, we want to give you choice, but the thing that’s really important here is that, now you’re investing in whatever you want. I think it’s really important for Stash to keep a very neutral, unbiased view of the world.
If you care about investing in legalized cannabis, you should be able to do that. Conversely, if you care about investing-
Steve Pomeranz: Investing-
Brandon Krieg: … in US government, you should be able to do that.
Steve Pomeranz: … in defense. What about defense? I mean, I noticed that there’s stuff here that’s not so politically correct. That’s not where you’re at. That’s not what you’re after here.
Brandon Krieg: That’s not my, that’s not honestly for me. It’s about giving people the ability to invest and then using the Stash Coach to help you get diversified.
Steve Pomeranz: Gotcha.
Brandon Krieg: It’s really about things that you care about and having the ability to get that and also get diversified is very powerful for people. That’s why we’re growing so fast.
Steve Pomeranz: We got about a minute left. Tell me how Stash makes money.
Brandon Krieg: So, we view the world of investment management more like Netflix than the old-school way of charging. So, we made Stash a subscription business. We have different packages or bundles that you can come in with when you open your subscription.
Currently, you can sign up for a dollar or $3 a month plan. That allows you to have up to $5,000 in a platform and get all trading for free, get financial advice and education, get all of our digital advice, and it pays for all your fees.
So, it’s really just simplifying the way that we charge and making it super-transparent.
Steve Pomeranz: So, for a buck a month, $12 a year, you can get on this plan and buy whatever you want. There’s no commissions or anything of that nature. You’re paying this subscription fee, which is covering all your costs.
Then, when you get to $5,000, then you’re charging a 0.25% which adds up to $12.50 a year.
Brandon Krieg: That’s right.
Steve Pomeranz: So, it kind of stays the same.
Brandon Krieg: That’s right.
Steve Pomeranz: My guest, Brandon Krieg. The company is Stash. The website address is stashinvest.com. I want to congratulate you for a great business. You’ve only been around four years. You’ve got three-and-a-half million customers. I think you’re doing a great job and wish you the best of luck, Brandon.
Brandon Krieg: Thank you so much. I enjoyed this.
Steve Pomeranz: So, to hear this interview, and anything that we’ve discussed on this show, remember to come to our website, which is stevepomeranz.com. We love your questions and we want to help educate you as well. That is our mission, too.
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