It translates into six financial objectives:

Spend less than you earn.

Pay bills on time.

Save cash for emergencies.

Invest regularly.

Diversify and think long-term.

Insure your assets and yourself.

The post The Stash Way: Stash’s Guide to Financial Wellness appeared first on Stash Learn.

Having the right insurance can help you stay on track financially, and it can be crucial to making sure you, your loved ones, and your property are protected if the unexpected happens, such as death, an accident, an injury, or theft. 

Stash has partnered with providers that offer access to life insurance, renters and homeowners insurance, disability insurance, and auto insurance.

Life insurance 

Life insurance can help protect your loved ones against loss of income and other financial uncertainties in the event of your death. In fact, purchasing life insurance can be an essential part of a smart financial plan, which should also include regular saving and investing.

Here are four reasons why getting life insurance may be a good idea for you.

1. It can help replace lost income. Your wages and salary can be essential to your family. Life insurance can help your spouse, partner, or children replace the income you contributed when you were alive. That can include day-to-day expenses, monthly bills, and other common financial obligations.

2. It can help with burial costs. It may be unpleasant to think about, but the average funeral costs up to $10,000 today.Life insurance can help offset some of those costs.

3. Paying for educational expenses. If you have children, you’ll want the best for them, especially after you’re gone. If your beneficiary puts your life insurance payout in a custodial account, or some other educational account, such as a 529, it can help fund their educational expenses. The money can also help your beneficiary cover the cost of your remaining student loans.

4. Paying outstanding debts. You and your spouse or partner may have a mortgage or other debts, such as credit card or other loans you co-signed together. Life insurance could help your beneficiary with paying off the balance of those debts.

Renters and homeowners insurance 

If you’re a renter or a homeowner, insurance can help cover your home and your personal property (both inside and outside of your home) in the event of theft or other qualifying loss. Renters and homeowners insurance provides financial protection for your home and your belongings in case of certain incidents such as fire, windstorms, or vandalism. These policies can also protect you from liability claims, including medical bills, when someone tries to sue you for damage or injury on your property.

Disability Insurance

Disability insurance can give you paycheck protection by replacing part of your income if you are injured or become too sick to work. You can get short-term disability insurance, which can typically replace approximately 50% to 60% of your income for a period of weeks or months. Or you can get long-term disability insurance, which typically can cover slightly less of your income (usually between 40% and 60%) for a period of years, or even decades. 

Auto Insurance 

If you own a car, you most likely need car insurance. It is required in almost every state in the U.S. and can help cover medical costs, repairs, property damage, even the replacement cost of your car if you get into an accident, or your vehicle is stolen. If you plan on buying or leasing a car, you need auto insurance. 

Stash and insurance

You don’t grow wealth in a day, and you want to make sure you protect yourself and your assets as you grow your wealth. You can find out more about insurance from some of Stash’s insurance partners here. 

We’ve built a home for all your money needs in one app, uniting investing, spending, saving, and guidance under a single roof.¹ Stash offers you access to the essential building blocks for achieving financial security. 

Remember, as you’re building the financial future you want, Stash wants to be with you every step of the way to help you achieve your goals. 

The post The Stash Way: Consider Insurance for Your Long-term Financial Plan appeared first on Stash Learn.

That’s why we’ve boiled down our investing philosophy into three basic steps that we call the Stash Way:

• Invest regularly
• Diversify
• Invest for the long-term

We’ll explain more about each one. But here’s a short explanation.

Invest regularly

After you’ve set aside savings for your rainy day and emergency funds, consider investing in the market, and making regular investments a part of your savings plan. Even if you take small amounts and invest them every week or every month, that can add up through the power of something called compounding.

Compounding is when the interest on the assets you own also earns interest, which can magnify your savings and your wealth.

Regular investing like this also has a name. It’s called dollar-cost averaging. But you don’t have to concern yourself with the name so much. We’ll give you an example of how it can help you have a better investing experience if you invest regularly. 

Let’s assume you put $20 each week into the market in a conservative fund that tracks a broad market index, such as the S&P 500. 

In some weeks, the market will be up, and the share price for the fund will also go up. During other weeks, the market will go down, and so the share price of the fund will also go down. On the up weeks, you’ll be paying more for the fund, and on the down weeks, you’ll be paying less.

Over time, the highs and lows should result in a better purchasing experience for investors.

Regular investment with Auto-Stash

One way to Stash can help you invest regularly is through Auto-Stash. It’s an easy-to-use tool available on the app that can help you save or invest small amounts of money consistently over time, regardless of market conditions. You won’t have to worry about trying to pick the right time to invest or “timing the market” which we don’t recommend.

Auto-Stash boasts a few key features that can help you supercharge your saving and investing, including Set Schedule, which allows you to set up automatic transfers.

You select the amount you want to set aside, when and how often you want to set it aside, and whether you’d like Stash to automatically invest it in your ETFs and stocks, or simply place the money in your cash account. It’s an easy way to save and invest regularly, on a schedule that works for you.

Diversify

You’ve heard the term, don’t put all of your eggs in one basket. If you drop the basket, you’ll break all the eggs.

Diversification means you’re not putting all of your eggs in one basket, so you can better weather the stock market’s ups and downs. That means you won’t put all of your money in too few stocks, bonds, or funds.

When you’ve diversified your portfolio, it will hold a variety of investments that are not all subject to the same market risks, including stocks, bonds, and cash, as well as mutual funds and exchange-traded funds (ETFs).

By diversifying, you’ll be choosing investments in numerous economic sectors—not just the hot industry of the moment—as well as in different geographies around the globe.

More about diversification

Here’s an example of what that means. If you buy only technology stocks or stocks in the energy industry, you’d be putting all of your eggs in one basket. If tech stocks experience trouble, or the energy industry suddenly must deal with a natural disaster, it’s likely the stocks in those industries will decline together, and you’d lose more money than if you were diversified.

A diversified portfolio might have stocks in technology and defense, but they also might include consumer staples, energy stocks, and possibly commodities, such as metals, to name just a few possibilities. It’s also likely to include bonds and some cash.

One way to start diversifying is by purchasing an exchange-traded fund, or ETF. ETFs are investment funds that are traded on an exchange, such as the New York Stock Exchange (NYSE) or NASDAQ. They invest in numerous companies at once.

ETFs often correspond to a particular size company, industrial sector, market, or even social goal. So, you could own shares in an ETF that owns blue-chip stocks of large companies, or the stocks of less well-known, smaller companies.

You could also purchase shares of ETFs that specialize in emerging markets, commodities, or consumer products, to name a few different options. An ETF might also invest in companies that are helping the environment or working to increase the number of women in leadership positions at large companies.

Think long term

We know that markets are always changing, they can go up one day and down the next, and that volatility can be scary. But we also know that if you follow Stash Way’s investing philosophy, it can smooth out some of the bumps and help you to grow savings and wealth.

Investing in the stock market always carries risk. There is no guarantee that what you’ve invested in will make money. But we think if you follow the three basic principles of the Stash Way, you can minimize risk and set yourself on a path to realizing your financial goals.

Over the past two decades, there have been turbulent periods in the stock market. The chart below reflects how the S&P 500, a key index that measures the broader market, has fluctuated over that time. You’ll see gains and declines through the dot-com bust, 9/11, the Great Recession, wars in Iraq and Afghanistan, and four separate presidential administrations. You’ll see how staying the course can help you achieve your financial goals. Over time, markets have trended upward.

Disclosure: This is not a prediction or projection of performance of an investment or investment strategy. Past performance is no guarantee of future results. Any historical returns, expected returns or probability projections are hypothetical in nature and may not reflect actual future performance. The rate of return on investments can vary widely over time, especially for long term investments including the potential loss of principal. For example, the S&P 500® for the 10 years ending 1/1/2014, had an annual compounded rate of return of 8.06%, including reinvestment of dividends (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). The S&P 500® is an index of 500 stocks seen as a leading indicator of U.S. equities and a reflection of the performance of the large cap universe, made up of companies selected by economists. The S&P 500 is a market value weighted index and one of the common benchmarks for the U.S. stock market.

For example, if you had invested $10 per week in a diversified portfolio, using Stash’s Set Schedule from 2008 to now, you could have more than doubled your investment of $6,400 dollars. Through all the market dips, including the most recent one that started in February, 2020 related to the Covid-19 pandemic, you could have almost $14,000 in your portfolio.

Disclosure: Past Performance does not guarantee future results. The rate of return on investments can vary widely over time, especially for long term investments including the potential loss of principal. The S&P 500® is an index of 500 stocks seen as a leading indicator of U.S. equities and a reflection of the performance of the large cap universe, made up of companies selected by economists. The S&P 500 is a market value weighted index and one of the common benchmarks for the U.S. stock market. Calculations do not reflect the deduction of advisory fees and does not take taxes or withdrawals into consideration. The hypothetical assumes individual was invested in the S&P 500 index (assuming a 100.68% cumulative growth rate for this time period) from the time period of 11/30/2007 – 3/6/2020 with a $10.00 weekly investment contribution. This example assumes No other account account deposits, investments, fees, or dividend reinvestment. Through the power of compounded growth, assuming a cumulative growth rate of 100.68% the hypothetical value would be $13,824 on a $6,400 total contribution for the time period. Data source: FactSet.

Stash on

With Stash, you can easily invest in dozens of funds and individual stocks.

You can also start investing with small amounts, even $5 a month can add up. For those who are looking to invest in the market but worry they don’t have enough to begin, Stash lets you purchase fractional shares, which is a great way to get started.

Fractional shares allow you to invest in exciting, innovative, and interesting companies without having to pay full share price. Think of them in terms of a pizza. If the whole pie is a share, then a fractional share is a slice. Except this pizza may earn interest, dividends, and grow over time. And you get a taste of the company’s success.

Stash can help you meet your long-term financial goals with a variety of products, including Stock-Back, which rewards you with fractional shares of stock every time you spend with your debit card¹, and portfolio diversification analysis, designed to help you create a diversified portfolio, so your investments don’t grow out of sync with your goals.

Stash is on a financial journey with you, and that includes helping you make smart decisions about investing.

The post The Stash Way: Our Investing Philosophy appeared first on Stash Learn.

That’s why it’s important to have money set aside, in the event we need to pay for unplanned costs and expenses, whether that’s a broken muffler on the highway, a job layoff, or a sudden illness.

But saving to repair your car and saving for a life-changing event can require different savings strategies, with either a rainy-day fund or an emergency fund.

At Stash we encourage users to create two different kinds of funds. One is called your rainy day fund, and it can be used for short-term unexpected things as they arise. The other is your emergency fund, and it’s for bigger unexpected expenses, such as loss of a job, large medical expenses, or something else of that nature. 

Rainy day fund

Your rainy day fund should have between $500 and $1,000 in it, and it should be a liquid account, meaning it should be easily accessible, for example in a bank account. That way, when your dishwasher starts spewing suds on the kitchen floor unexpectedly and you need a few hundred dollars to fix it,  it’s there.

Your rainy day fund is liquid (meaning it’s cash). The best place for it is likely in a bank account, such as a savings account, where you can access the money quickly.

Once it’s spent, you can start saving again for the next time because well, life happens.

Emergency fund

An emergency fund, on the other hand,  is for when life throws you a major curveball, so you have money to fall back on. Your emergency fund should have enough money to cover your expenses for three to six months. You’ll use this money in the event of a more serious setback, such as a layoff or an illness that prevents you from working.

How much should be in this fund? That all depends on you, your fixed expenses, and what you’ll need to keep yourself going in a really tough time. Is your monthly spending $2,000 or maybe $4,000? Whatever the amount for your monthly expenses is, multiply it by three or by six. That’s how much you should try to put away.

Since this fund is for longer-term planning, you may want to keep it in a place where it can earn some interest. That’s because your money could sit in this account for years, and the typical bank account pays very low interest, which may wear away at your savings due to inflation.

You can keep it in a money market fund or maybe in a certificate of deposit (CD). You may also consider putting the money in an exchange-traded fund (ETF ) based on short-term U.S. Treasuries.

Important note: Any time you invest in a security such as a stock, bond, or ETF, it involves risk. You can lose money on your investments. The same may not be true for a standard bank account or CD.

Here’s one very important thing to keep in mind: Since you may be keeping your backup fund money in an investment vs. a savings account, it may take you a few days to access it.

Life is just generally much more stressful when you know you’re one emergency away from financial ruin. By saving up an emergency fund, you’ll sleep more easily knowing that you can handle the unexpected costs life will inevitably throw at you.

Start saving small amounts, and then try increasing those amounts over time. It may take a while, but pretty soon you can have both your rainy day and emergency funds flush with cash. 

Once both accounts are fully funded, you may have the financial freedom to pursue other goals, like investing, saving for retirement, your child’s education, a house, and more. And more importantly, you’ll know that if things go wrong, you’re covered.

Remember, your paycheck has a lot of demands placed on it. There are always bills to pay, temptations to buy. So think about assigning every dollar you earn a purpose, which can help you stay in the lanes you’ve set for yourself on your financial journey.

Consider Auto-Stash

Stash’s financial tool Auto-Stash is a powerful suite of tools that can help you put your saving strategy on automatic. That way you won’t even have to think about it. In fact, during 2019 Stash customers who used Auto-Stash saved twice as much as customers who did not turn auto-Stash on¹, and you can use Stash’s partitions² to set up both an emergency and a rainy day fund.

Using automated saving strategies removes the decision making needed every time you see your paycheck. You’ll be able to plan for anticipated expenses and save for the unexpected expenses.

The post Save For the Unexpected. It’s a Key Part of the Stash Way. appeared first on Stash Learn.

The goal is to spend less than you earn, so you can save and plan with the money you have left over.

Once you have these numbers firmly in your mind, they can become the cornerstones for your entire financial life and plan. Knowing how much you have and how much you spend are essential to coming up with short-term plans like building an emergency fund, but also for long-term objectives such as buying a house or setting money aside for retirement. 

These numbers can also help you plan for the near term, simply by letting you know how much you have to spend on everything from food and clothes to shelter and entertainment during the month. 

Knowing what your life really costs probably requires going through your bank statements, receipts, and credit card bills and tallying up everything you spend money on during the month, and throughout the year.  

But we don’t want you to get overwhelmed by this task. We’re going to start with a simple worksheet to help you figure this out.  If you don’t know, just take an educated guess, because you are better off guessing than quitting, and never taking full stock of what you have.

Fixed or variable expenses? 

To start we are going to help you organize your money into three categories; income, fixed expenses, and variable expenses.

You can jot down your income on a piece of paper, in a spreadsheet, or wherever makes you comfortable. For most people who get a paycheck, there are two numbers to keep in mind. You need to learn the difference between your gross income—which is the total amount of money you make, and your net income, which is how much money you actually receive, once your taxes and other deductions, such as Social Security and Medicare, have been taken out.

For the purpose of your budget, your net income is what you need to concern yourself with, as it is the amount of money you actually have to live on each month.

Next, list all of your expenses. Generally speaking, there are two types of expenses you should be aware of. The first one is called a fixed expense. That’s an expense you have to pay every month no matter what, and it won’t change very much over time. Examples are your mortgage or rent, student loans or any other type of debt that you must pay back, and health insurance premiums.

The next kind of expense is called a variable expense, and that’s something you do have control over. These are the things that you spend money on, that change over time, such as movies and entertainment, clothing, groceries, and vacations. 

Now, take your total income and subtract your total expenses and cross your fingers that you end up with a positive number.  If you have a negative number, meaning you spend more than you earn, don’t freak out! We’ll help you figure out how to make it positive by setting up a budget.

If you have a positive number, meaning you spend less than you earn, it’s time to celebrate because you are already ahead of the game! You are making more than you are spending and this is essential to growing wealth. You are ready to start saving and investing.  

But first, let’s review how you can save more money by using a simple budget. 

Why you may need a budget

Every journey starts with a first step. And many journeys also require a map, so you know where you’re going. In the world of personal finance, both your first step and your map are called a budget. 

A budget lays out your path for spending less than you earn, and achieving your long-term goals, whether that’s buying a new car, paying for your child’s education, saving for retirement, or doing something fun, like going on vacation.

But people seem to dread the word budget, because they think it implies limits and an end to freedom and fun. In fact, a budget is just the opposite. You can think of your budget as your financial declaration of independence.  It’s a living, breathing thing that changes with you, your needs, and your life, and it can help you apply order and purpose to your finances.

With a budget, you gain understanding of how much money you have coming in each month, and how much you’re spending, and on what. Not only that, you can use your budget to put money aside, for the things you have to spend money on each month, as well as what you want to spend money on. Yes, you have to pay your rent and your mortgage and your student loans, but every budget should have room for fun things, and for your dreams, whether that’s saving for a new car, a vacation, or your first home.

The point of any budget, is to make sure you’re not spending more than you earn. And you need to get a handle on what you spend, because probably the most important financial goal for everyone when they start planning their financial lives is saving. 

Savings allow you to weather the various uncertainties that life can hand us. Savings can also help you achieve both short-term and long-term goals. It also factors into how much you have to invest, which can help you build wealth in the long run.  

What type of budget is best for you?

There are numerous types of budget you can try, or you can feel free to create your own.. One of the most popular budgeting techniques is something called the 50-30-20 budget. 

Here’s how it works. 

• Determine what your take-home pay is each month; this is the amount that you have after taxes. (It’s also called “net pay.”)
• List your fixed expenses and variable expenses.
• Allocate 50% of your take-home pay to fixed expenses.
• Aim to spend no more than 30% of your pay on variable expenses.
• Save at least 20% of your take-home pay.

But that’s just one budget, and you can feel free to adjust the percentages to whatever’s comfortable for you, as long as you make sure you’re saving money each month. There’s also something called the envelope method, and something called the zero-sum budget. The important thing is that you choose some form of budget, so you can carefully examine your monthly spending, and put money into savings each month.

Stash actually has a number of financial planning tools that can help you start to build a budget. One of these is called partitions, which can help you segment your savings into different categories, including your fixed and variable expenses, as well as your savings. 

Pay your bills on time

The average U.S. household pays 13 bills each month, and yet 43% of consumers report that paying bills is either somewhat or very difficult, according to the Consumer Financial Protection Bureau (CFPB). 

Paying your bills on time can go hand-in-hand with building a budget. Make sure you include all your bills as part of your monthly fixed and variable expenses so that you’ll pay them on time each month and not get behind on payments.

Staying on top of your bills can insure that you’re not eating up your monthly income paying late fees.

Prompt payment of bills can also help you maintain a good credit score, which measures how well you manage your debt. Having a strong credit score is necessary for certain financial milestones such as buying a car, taking out a mortgage for a home, even renting an apartment. So, it’s important to pay all of your bills—including credit card, utility bills, and student loan payments—on time and in full.

The post The Stash Way: Try to Spend Less Than You Earn appeared first on Stash Learn.

In this article, we’ll be talking about how investing regularly is a key part of The Stash Way.

Investing regularly is a better idea than trying to time the market

By investing regularly over time, adding more money when you can, you can avoid the perils of trying to time the market.

Timing the market is when you make guesses about which way the market will head, and buying or selling stocks based on those guesses, and it’s almost never a good idea.

No one has a crystal ball. By investing regularly, you can take your eye off the day-to-day noise of the market while feeling confident that you’ll be capturing the highs of the market, as well as the lows.

Why are the lows important? You can buy more of the investments you want at a cheaper price. That’s called “buying the dip.”

It’s important to note that investing regularly and dollar-cost averaging is not a protection against market volatility. It’s possible that during a serious market correction, dollar-cost averaging may not protect you.

Nervous? You can invest regularly in bonds and stocks

Not everyone has the same appetite for risk. And you may not want to keep adding to your stock holdings when the market goes down. (In fact, there’s a definite danger to having too much of your portfolio invested in stocks.)

If that’s the case for you, you might consider investing regularly in bonds.

Here’s the thing about the bond market: it doesn’t necessarily correlate with stocks. So, when the stock market falls, or even enters a correction or bear territory, bond prices may rise, or increase in value. There are also many different types of bonds, which can help you diversify.

Treasury bonds, issued by the U.S. federal government, are some of the safest bonds around since they are backed by the federal government. Investment grade corporate bonds, often issued by companies with a long history of profits and sales, can also be a good addition to your bond portfolio.

Defense, defense!

Something else to keep in mind: You can also invest regularly in something called defensive sector stocks. These are stocks in sectors such as consumer staples, health care, and utilities, that tend to be less volatile than other sectors.

That means, regardless of what’s going on in the economy, that consumer demand for the products and services produced by companies in defensive sectors is likely to remain stable.

Think about it: you will always need toothpaste and toilet paper from consumer products companies; similarly, consumers will always need to go to the doctor, or purchase prescriptions from health-care providers, and they’ll always need electricity and water from utility companies.

Stash has a tool called portfolio diversification analysis. This tool is available to any Stash customer with an invest account, and it can help you take small steps to craft a more diversified portfolio.

Turn on Recurring Transactions

One way to Stash can help you invest regularly is through Recurring Transactions. It’s an easy-to-use tool available on the app that can help you save or invest small amounts of money consistently over time, regardless of market conditions. You won’t have to worry about trying to pick the right time to invest or “timing the market” which we don’t recommend.

Recurring Transactions boasts a few key features that can help you supercharge your saving and investing, including Set Schedule, which allows you to set up automatic transfers.

You select the amount you want to set aside, when and how often you want to set it aside, and whether you’d like Stash to automatically invest it in your ETFs and stocks, or simply place the money in your cash account. It’s an easy way to save and invest regularly, on a schedule that works for you.

Follow the Stash Way

You can invest in a diversified portfolio that’s tailor-made to you. You can start small, adding more money over time. Investing regularly in a diversified portfolio with the long-term in mind is part of the Stash Way, our guide to financial wellness.

The best time to start investing is today. And you can start with just any dollar amount.²

The post The Stash Way: Invest Regularly appeared first on Stash Learn.

At Stash, we believe diversification is a critical part of a good investing strategy.

Diversification is also one of the pillars of the Stash Way, our guide to helping you achieve financial wellness, that includes a long-term, regular investment strategy.

When you diversify your portfolio, you’re buying a broad selection of securities, including both stocks and bonds.

When you diversify your stock holdings, you’re making sure you’re not over-investing in one industry or one sector. And to fully diversify, you could consider investing not just in the U.S., but globally, in both developed and emerging markets.

And just as you can diversify your investments in stocks, you can also create a diverse portfolio of bonds.

Stash’s Portfolio Builder tool can help you create a portfolio with a mix of investments according to your risk preferences.

Special note: Whenever you put money in the stock market, your investments can lose money, and diversification is not a guarantee against market volatility. It’s possible that during a serious market correction, diversification may not protect you. Further, it’s also possible to over-diversify or purchase too many investments, which could wind up costing you extra fees, or leave you with overlapping investments.

What’s a bond?

First, let’s define what a bond is. A bond is a form of debt. It’s essentially an IOU from a company, government, or some other entity. When you buy a bond, you are buying the IOU from that company or government.

Bonds have three key components—a maturity date, a price, and an interest rate. The interest rate, sometimes referred to as the coupon, stays the same, while the price of a bond typically fluctuates. Together the price and the interest rate combine to give you the yield of the bond. While the interest rate of the bond is fixed, the yield can fluctuate, based on market conditions.

Different kinds of bonds

There are lots of different types of bonds, and choosing a variety of bonds can help you diversify your investments.

Treasuries

The U.S. federal government issues bonds called Treasuries and T bills, which help finance the running of the federal government. The federal government has an obligation to repay Treasuries, so they are considered among the safest bonds out there. The maturity for Treasuries can be either from a few days to 10 years, or even 30 years.

Municipal bonds

States or municipalities issue municipal bonds, also called munis, to pay for their own operations, or special projects. Say, for example, a fictitious town called Sunnyville wants to build a new mass transit system or a new dam. It might issue bonds to finance these projects.

Corporate bonds

It’s not just governments that issue bonds, companies do too, and for many of the same reasons. Businesses may want to raise money for research and development or to expand operations. There are different kinds of corporate debt, however. Generally speaking, you can lump corporate bonds into two buckets:

• Investment grade: The companies that issue this debt are often larger companies with a long track record of earnings and revenue, so analysts may deem them a higher grade investment that has a higher likelihood of being repaid.
• Junk: These bond are not really junk, but they’re often considered higher risk because the businesses that issue them may have less of a history of stable revenue and sales, or they may have some other issue, like high amounts of debt. To compensate investors for the risk, the company will often pay a higher interest rate on the bonds.

Inflation and interest rate bonds

Bonds are sensitive to both interest rates and inflation. It’s a little complicated, but we’ll explain.

When interest rates rise, the coupon, or interest rate, paid by existing bonds stays where it is. That means the interest rate paid by the bond is worth less, and that can cause the price of those bonds to fall, and along with it the yield.

Two different kinds of bonds protect against inflation and interest rate increases.

• Treasury Inflation-Protected Securities (TIPS), are slightly different from conventional bonds. They’re bonds that factor in inflation. As their name suggests, they are Treasury bonds issued by the federal government.

But in contrast to bonds that aren’t inflation protected, the yield on TIPS will increase as inflation rises. Essentially, the face value of the bond is adjusted upwards twice a year to account for increases in the Consumer Price Index, or CPI, which the federal government uses to measure price increases on a wide range of consumer goods and services.

• Floating interest rate bonds. When interest rates go up, the return on floating rate bonds should also increase. Unlike conventional bonds, the price of the bonds doesn’t fall. In other words, the yield goes up with interest rates.

Short and long-term maturity bonds

Some bonds may mature in a matter of days or months. Others mature in years. Ten-year Treasuries, as their name implies, mature in 10 years. But there’s also something called the 30-year Treasury. The same goes for corporate bonds. They can mature in a matter of days, months, or years.

Short-term bonds tend to have less risk because they are paid back more quickly, and consequently, they have a lower interest rate. Longer maturity bonds have more risk—more can happen to a company or government over years or even months—so to compensate investors, these bond can have a higher interest rate.

Bond funds

Some ETFs and mutual funds also let you buy a basket of bonds in one investment.

Some of these funds even let you buy a basket of bonds that represents the entire bond market, including bonds with short and long maturities, corporate bonds, and Treasuries. The theory is that you can diversify by buying one investment.

Diversification can be an important strategy for investors to apply to their stock market purchases. And diversification applies not only to stocks but to bonds as well.

Stash lets you choose between dozens of stocks and funds, including bonds. You can start investing with any dollar amount today*.

The post The Stash Way: Diversify with Bonds appeared first on Stash Learn.

After plenty of hype, suggesting Uber’s IPO would be one of the largest in a decade, the company’s stock fell 7% from its offering price of $45 on its first day of trading on May 10, 2019.

It is trading at about 9%  below its opening price as of Wednesday, May 15.

And that’s not all. By the end of its first trading day, Uber’s valuation stood at $76 billion, far below its initial estimate that it could reach as high as $120 billion, according to reports.

In that regard, what’s going on with Uber is similar to what happened to its rival Lyft after its own IPO. Lyft’s stock price is currently 26% below the high range of its opening price of $72 since the end of March. And it’s current valuation of $15 billion is about a third lower than the valuation Lyft sought at the time of its IPO.

What happened?

It’s unusual for a company to stumble on its first day of trading, according to the New York Times. In the last 20 years, only 18 companies have seen their stock price fall in their public offerings.

Uber’s value may have been set too high, according to multiple reports. Uber spent more than a decade as a private company, with a value set by a small group of investors, and it never had to face the scrutiny of public markets.

Another theory is that Uber may have waited too long before going public, diminishing investor enthusiasm about the stock. Uber was founded by Travis Kalanick and Garrett Camp in 2009. It started out as UberCab in San Francisco, and then quickly moved on to other cities and countries, dropping “Cab” from its name in the process.

Over the last decade, the company has raised more than $24 billion in 22 rounds from venture capitalists.

The company, which allows customers to hail a ride by using an app that matches consumers with nearby drivers, is the dominant player in the ridesharing industry with about 70% of the market.

And there are other potential reasons for its stumble.

IPOs can be volatile

When a company has an IPO, it’s typical for a newly issued stock to be subject to significant increases and decreases, at least in the short run. That’s known as volatility. Volatility for the stock can be especially high in the first few months following an IPO, and so can the potential for short-term losses as a result.

Why? Investors, analysts, and other stock market participants are often uncertain about the prospects of a newly public company, and that can all factor into the share price. For example, investors typically want to know if a company is worth the valuation it achieved at the time of its IPO. They may also want to know if a company will be profitable in the years to come, or whether it will continue to have losses.

In Uber’s case, it had revenue of $11 billion for 2018, an increase of more than 40% compared to 2017. But Uber lost $1.8 billion in 2018, and it has reported operational losses of more than $13 billion since 2015.

Uber also listed in its summary of risk factors that expenses for operations were expected to increase considerably in the future, and that the company may never make a profit.

After an IPO, prices may fluctuate due to the expiration of something called a lock-up period, where company insiders such as employees sign an agreement that prohibits them from selling shares for a specified period of time. (In  Uber’s case, the lock-up is 180 days.) When lock-up periods expire, insiders can tend to sell their stock in order to realize profit, depressing the stock price in the process.

Other companies that saw big fluctuations in their stock prices following their IPOs include Facebook, Twitter, Alibaba, and Snap, to name just a few.

Do your homework

It’s important for investors to carefully examine any company whose stock they plan to buy. Remember, as a public company Uber is required to file paperwork with the Securities and Exchange Commission (SEC) on a regular basis, detailing its financial performance and providing other critical information about the company that investors will want to know about.

That information, which includes a company’s revenue, profits, and losses is available to the general public—meaning anyone can look at it.

You can find out more about the Uber’s lock-up period and other information about Uber by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Follow the Stash Way!

Stash recommends following the Stash Way, which includes regular investing, diversification, and investing for the long term.

Investing for the long term can help insure that you aren’t locking in your losses due to short term fluctuations in the price of a stock.

And remember: All investing involves risk. It’s possible for stocks, bonds, and other securities to lose their value due to changing market conditions.

The post What Happened With Uber’s IPO? appeared first on Stash Learn.

The company, which allows customers to hail a ride by using an app that matches consumers with nearby drivers, is the dominant player in the ridesharing industry with about 70% of the market. It hopes to raise $10 billion in its initial public offering, according to its prospectus, or the paperwork it filed with the Securities and Exchange Commission (SEC).

Uber is also seeking a valuation of $91.5 billion, about three times that of rival Lyft, which went public on March 29, 2019. At that valuation, Uber’s IPO would be one of the largest in years, on par with e-commerce company Alibaba, and social media company Facebook, according to reports.

Its stock could range between $44 and $50 a share when it begins selling, according to experts.

Here are some more highlights from Uber’s IPO paperwork:

• Uber reported revenue of $11 billion for 2018, an increase of more than 40% compared to 2017.
• Uber lost $1.8 billion in 2018, and it has reported operational losses of more than $13 billion since 2015.

• Uber claims to conduct 14 million rides a day in more than 700 cities around the world.
• Uber drivers have made more than 10 billion car trips since the company launched in 2012.

Plenty of questions

• Uber listed in its summary of risk factors that expenses for operations were expected to increase considerably in the future, and that the company may never make a profit.
• Uber may price its shares at the low end of the spectrum, according to some analysts. By contrast, its rival Lyft had priced its IPO shares at the high end, only to see the stock price fall in recent weeks.
• Uber drivers in the U.K. and the U.S. are planning strikes, to push for better working conditions, including better wages and more regulated fares, according to reports.

More about IPOs

Following an IPO, a new stock can be subject to significant increases or decreases in market price. That’s known as volatility. Stock volatility can be particularly high in the first few months following an IPO and as a result, so can the potential for short-term losses. If you’re in this stock for the long haul though, it could be an opportunity for dollar cost averaging.

Oftentimes, fluctuations in price are due to the expiration of something called a lockup period—this is when company insiders, such as employees, sign an agreement that prohibits them from selling shares for a specified period of time. (According to Uber’s prospectus, the company’s lockup period is 180 days.)

When lockup periods expire, insiders tend to sell their stock in order to realize profit, sometimes causing the stock price to fall, or experience large changes in price in the process. You can find out more about the lockup period and other information about Uber by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Remember the Stash Way—invest for the long-term, invest regularly, and don’t put all of your eggs in one basket.

More about Uber

Uber, was founded by Travis Kalanick and Garrett Camp in 2009. It started out as UberCab in San Francisco, and then quickly moved on to other cities and countries, dropping “Cab” from its name in the process.

Over the years, the company has raised more than $24 billion in 22 rounds from venture capitalists.

According to Uber’s prospectus, the company has expanded beyond ridesharing to develop additional businesses in bike sharing, scooter sharing, meal delivery, and freight logistics.

Uber’s growth has often been controversial, with problems related to background checks for its drivers, and pushback from metropolitan areas worried that Uber could be destroying the traditional taxi and black car businesses in those locales.

Big questions have also arisen about whether Uber fostered a culture of sexual harassment against women, according to reports.

Kalanick was forced to step down from the company in 2017.  Dara Khosrowshahi replaced him as chief executive officer.

The post Find out More About Uber’s IPO appeared first on Stash Learn.

And as they do, now might be a good time to make sure you have your investing priorities in order. Why? Markets tend to move around a lot—they can go down as well as up. And the movement of markets in the short run is less important than achieving your long-term financial goals.

Read on and we’ll explain.

So what happened?

On Tuesday, April 23, the S&P 500 gained 25.71 points, closing at 2,933.68. Its previous record was 2,930.75, reached on September 20, 2018, according to the Associated Press.

Similarly, on the same day, the Nasdaq jumped 105.56 points to 8,120.82, beating its record high of 8,109.69 on August 29, 2018, according to AP.

The Dow Jones Industrial Average (DJIA), is also close to the record it achieved last year.

Why now?

Generally speaking, investors believe the economy is on strong footing, according to reports. Here are a few reasons why:

• Uneasiness about trade tensions between the U.S. and China, the world’s two largest economies, have reportedly moderated as the two sides work towards a resolution.
• Investors may be reacting to the March decision by the Federal Reserve to hold off on increasing interest rates. Higher interest rates can have a negative impact on business.
• Solid corporate earnings from companies including Coca Cola, Twitter, and Procter & Gamble may also be playing a role, according to sources.

Volatility is normal

Markets go up and they go down, it’s a natural part of investing called volatility. Volatility is essentially the tendency for stocks and markets to fluctuate. You can find out more about volatility here.

It’s important to realize that the last decade, where we’ve experienced fairly steady market gains each year, hasn’t been normal. We’ve been in the longest bull market since the one experienced in the decade after World War II.  At some point that is likely to come to an end.

Remember the Stash Way

It’s easy enough to feel great about investing when stocks and stock markets are climbing. But when you see your portfolio start to head south, there’s often a strong temptation to cut your losses and head for the hills.

When markets fall, the temptation might be to sell your holdings. We get it. Losing money is no fun. But by selling when markets drop, you could end up locking in your losses.

Instead, we recommend investing for the long haul. In fact, it’s part of our investment philosophy, called the Stash Way, which boils down investing into three core principles. These are investing regularly, investing for the long term, and diversification.

By investing regularly, sometimes you’ll be putting money into markets when they’re up, and sometimes you’ll be investing when they’re down. Over time, the highs and lows are likely to balance themselves out.

You can find more about the Stash Way here.

Don’t pay attention to the short-term market noise. Keep on Stashing.

The post Markets Are Reaching Records (Again). appeared first on Stash Learn.

We generally have good intentions when it comes to putting money aside for the future. Many of us promise ourselves we’re going to put money aside every week, but often, we don’t.

We hesitate and worry that we’ll need the money immediately, so we put it off.

Instead of reminding yourself to put money aside every week, consider automating it. It’s the easiest way to change a nagging chore into a seamless habit.

That brings us to Recurring Transactions (formerly Auto-Stash) and its quiver of powerful tools for developing better money habits.

What is Recurring Transactions?

Recurring Transactions (formerly Auto-Stash) is an easy-to-use tool on Stash, and we consider it to be one of the most important financial tools. Recurring Transactions features can help you save or invest small amounts of money consistently over time, regardless of market conditions. You won’t have to worry about trying to pick the right time to invest or “timing the market” which we don’t recommend.

Auto-Invest

Auto-Invest is Recurring Transactions’ bread and butter. It’s the feature that allows you to set up automatic transfers.

You select the amount you want to set aside, when and how often you wish to set it aside, and whether you’d like Stash to automatically invest it in your ETFs and stocks, or simply place the money in your cash account.

It’s an easy way to save and invest regularly, on a schedule that works for you.

Tips for investing automatically

Still uneasy about automating your finances? Fear not, here are some tips on how to get started:

• Start small. Pick an amount of money that you can handle leaving your bank account on a weekly, bi-weekly, or monthly basis.
• Ramp up. Feels good? Ramp it up and automate a little more. Another $5 or $10 a week can really add up over the years.
• Go at your own pace. It’s not a competition. Everyone’s financial situation is different. It’s up to you to find the right amount of money that you can comfortably save and invest.
• Be realistic. You don’t want to overdraft your account or not leave enough money in your account for the essentials.

Remember, though, that no matter the amount or the frequency, investing always involves risk.

Commit to yourself

Automating your savings is a cornerstone of our philosophy, The Stash Way. And by automatically saving and investing on a regular basis, you’re reinforcing good money habits.

Consider Recurring Transactions as your commitment device—a commitment to saving for your future goals.

Turn it on, and harness the power of automation.

The post The Stash Way: Automate Your Savings appeared first on Stash Learn.

Maybe you want those cool boots, or slick sneakers, or even a shiny new car. And you’ve got the money now, so why not just spend it? (Worse, you might be tempted to pay for things using a credit card or some other type of consumer loan where you could wind up paying interest.)

The problem is that short-term spending can really interfere with your long-term saving goals.

Here’s how to tackle the problem.

Let’s talk goals

You can get around the desire to impulse spend by setting up a financial plan, which should include setting up a budget that includes putting aside a portion of your income every month toward savings.

Then it might be helpful to divide your savings between short term, long-term and longer-term goals.

• Short term goals might be an emergency savings fund, a new car or a vacation, even the occasional impulse purchase.
• Long-term goals might be paying for a college education or buying a house.
• Longer-term goals include saving for your retirement.

Good to know: Short term savings are best kept liquid, in a bank savings account where you can access them quickly if you need them. The downside of a bank account is that most tend to pay low interest.

You might consider setting up a brokerage account to meet your longer-term goals, since you want the money to grow, and won’t be needing the money right away. A brokerage account will let you invest in stocks, bonds, funds, and other securities that could earn you more money than a basic bank account.

And unlike a retirement account (IRA), you won’t pay a penalty for accessing the money when you need it.

The value of thinking long-term

In contrast to short-term goals, you may want to consider putting your money into an investment account for your longer-term goals like retirement. Two of the most common investment accounts are a traditional or Roth Individual Retirement Account (IRA), which anyone can set up, and a 401(k), which is a workplace plan that some employers offer.

Prioritize retirement savings

Retirement saving is perhaps the hardest thing of all to keep in mind. In fact, some 40% of consumers have no retirement savings at all. That’s because it can seem so many years away, that time in your life where you’ll no longer have to work.

It’s important to keep in mind that investing in stocks, bonds, and funds always carries the risk of losing money.

Over the years, however, market gains have outpaced standard savings rates in bank accounts. Looking ahead, experts expect markets to return about 5%. With the power of compounding and regular investing, you have the ability to build wealth for the financial future you want.

Auto-Stash toward your goals

No matter if you’ve got short-term goals (like an emergency fund) or long-term goals (saving for retirement), automation is your friend.

Tools like Auto-Stash will help you invest money automatically each month.

While some experts recommend trying to put aside up to 20% of your income each year, you can start with a small amount, maybe 5%, and then increase that amount over time.

If you get a raise, rather than spend the extra money, attempt to save the extra income.

Stick with The Stash Way

Investing for the long-term is part of the Stash Way, our guide to helping you achieve financial wellness, encompassing smarter budgeting and saving, a diversified approach to investing, as well as planning for the future with retirement accounts and insurance.

Now you’re ready to make a plan. Nice!

The post The Stash Way: Think Long Term appeared first on Stash Learn.

For example, you may feel the urge to eat an entire package of Oreos. But that type of behavior can be highly destructive over the long term, both for your health, and maybe for your dating prospects.

And the same goes for your finances. You may want to spend, spend, spend, but when you think years down the road, it’s clear that you should probably be considering a strategy fit for the long term.

It’s part of the Stash Way. Wait, what’s the Stash Way?

• Invest for the long term. Over the years, market gains have outpaced standard savings rates in bank accounts. Looking ahead, experts expect markets to return about 5%. With the power of compounding, regular investing, and a long term approach, time is on your side.
• Invest regularly. It may seem counterintuitive to invest when the market is dropping, but it actually makes financial sense. Why? Because you’re likely to be getting investments at a discount. An easy way to make sure you’re sticking to your schedule is by using Auto-Stash.
• Diversify. You can attempt to curb your risk by diversifying your investments—that means you’re spreading your money around into stocks and bonds (and other securities) from different sectors and countries.

When thinking long-term, zoom out

As an investor, you’re probably focused on what’s happening with your money—possibly on a day-to-day basis. That means every hiccup in the market—including dips into correction territory—bring with them opportunities to panic.

And the market has bad days, and there are times when investors have to endure bear markets, or prolonged market declines. It happens. But what’s important to remember is that, historically, the markets have recovered.

If you look at the performance of the Dow Jones Industrial Average index over the past few decades, you’ll see that despite some downturns, the market trends upward over time:

An investor focused on the short-term may have sold during one of the downturns over the years, afraid that they’d see all of their investments disintegrate. But had they “zoomed out”, or kept the bigger picture in mind, they’d know that it’s all a part of the cycle.

If you sell your investments during a downturn, you’re effectively locking in your losses, and potentially missing out on future market gains.

Case study: The 2008-2009 financial crisis

The economy crashed in 2008 and stocks entered a bear market for roughly a year and a half. Many investors panicked, sold their investments, and as they sold and pessimism spread and the markets were dragged down even further.

Eventually, the Dow bottomed-out at around 6,500 (a loss of more than 50%) the U.S. stock market shed $13 trillion in value from its previous highs. Since then, however, the market has been bullish. As of October 2018, the Dow is hovering around 25,000—it’s nearly quadrupled over the past ten years.

Think about this

How can you stop worrying about the day-to-day ebbs and flows of the market, and become a steadfast, steely-nerved investor like Warren Buffett? While you can prepare your portfolio by adopting The Stash Way, here are some other things to consider:

• Don’t forget the risks. While you should have a strategy in mind, don’t forget that there is always going to be a degree of risk to investing.
• Remember, the market moves in cycles. While it may not come as much comfort when your portfolio is losing value, keep in mind that markets ebb and flow. They go down, and historically, they’ve recovered. There’s no guarantee of a recovery, of course, but history is probably on your side.

The post Investors: Here’s How to Think Long-Term With Your Money appeared first on Stash Learn.

It’s easy enough to tell you to keep your cool. But when you see your portfolio start to head south, there’s often a real temptation to cut your losses and head for the hills.

Here are some things to consider when dealing with market volatility.

Don’t lock in your losses

When markets fall, the temptation might be to sell your holdings. We get it. Losing money is no fun. But, unless your beliefs have changed about a stock or market sector growth over the long-term, selling when markets drop is likely unwise. You could end up locking in your losses.

(We know we say this a lot, but we think it’s really important!)

By continuing to invest regularly, even when stock prices go down, you have the potential for more gains over time, although you could also risk more losses, particularly in the short run.

Consider diversifying

If you can’t handle the volatility in your portfolio,  you can also help adjust it by investing more in bonds. Bonds have their own risks, but in addition to being a good way to diversify your portfolio, bonds are generally considered safer than stocks, and their performance tends not to move in tandem with equities.

Some bonds, such as U.S. Treasuries, are considered among the least risky investments.

You can also add investments from different sectors (and different parts of the world) to your portfolio. Just because tech stocks and funds are stumbling doesn’t necessarily mean that your healthcare investments will suffer the same fate. It’s called sector diversification.

And if the US gets some bad economic news, your investments in Asia or Europe may be on the upswing. That’s called global diversification.

Don’t try to time the market

Remember, trying to predict which way the market is heading is called market timing. It’s when you try to make guesses, often with incomplete or incorrect information, about whether markets will go up or down, and then buy or sell according to whether you think your investments will make or lose money.

Over time, various studies show investors who try to time the market tend to lose money relative to those who just buy and hold diversified portfolios.

Look to The Stash Way

With the power of compounding and regular investing, as well as purchasing a wide variety of stocks, bonds, funds, and other securities, you have the ability to build wealth for the financial future you want.

On the Stash platform, you can get diversified exposure to stocks, stock sectors, bonds, and commodities through ETFs. You can also invest in a wide array of single stocks across all sectors. Stash’s ETFs also allow you the opportunity to get global stock and bond exposure by investing outside the U.S.

It’s important to note that all investing carries risk, and you can also lose money in your investments. But if you’re disciplined in following the Stash Way, you can truly mitigate these risks and likely end up on top in the long-term.

Keep calm, keep Stashing

Keep reading Stash Learn to help you stay in the know and don’t let emotions guide your decisions.

Stash lets you start investing for as little as $5. You can buy select single stocks and ETFs on the Stash platform, which can help you build a diversified portfolio.

In short: Stay calm, turn on Auto-Stash, stay diversified.

Take a deep breath and keep Stashing.

The post The Stash Way: Volatility appeared first on Stash Learn.

When the Dow and S&P 500 and other important indexes take a nosedive, and your stock holdings and other investments lose money, you may have the overwhelming temptation to sell them.

We understand that impulse. But selling based on the day’s market news is one of the easiest mistakes for new investors to make.

Beginner investors may be tempted to buy when the markets are high and sell when they go down. It’s just human nature to want to be part of the good times and to exit when things get tough.

Here are some things to consider.

Don’t try to time the market

But trying to predict which way the market is heading is called market timing. It’s when you try to make guesses, often with incomplete or incorrect information, about whether markets will go up or down, and then buy or sell according to whether you think your investments will make or lose money.

Over time, various studies show investors who try to time the market tend to lose money relative to those who just buy and hold diversified portfolios.

Here are some things to think about before you hit the “sell” button:

Over time, markets tend to rise

From 1928 through the end of 2017, the S&P 500 had an annual return of 9.65 %. Going forward, experts predict its returns will be closer to 5.5%.

If you make even small, regular investments, your money is likely to grow over time. This is particularly true, thanks to the power of compounding. Compounding is when the interest and earnings on your principal investment also earn interest and returns.

By selling when markets go down, you’ll be locking in your losses.

If you invest for the long run, meaning you stay invested for 20, 30 or even 40 years,  you can put yourself in a better position to partake in the gains of the market over time.

Consider adjusting your portfolio.

For example, when your holdings perhaps grow too big in one area, such as technology, financial services, or some other industry. Then you should consider shifting assets in your portfolio to other areas, to achieve better balance and diversification.

You can also adjust your portfolio to invest more in bonds.

Bonds have their own risks, including being subject to interest rate increases and inflation.  But in addition to being a good way to diversify your portfolio, bonds are generally considered safer than stocks as their performance tends not to move in tandem with equities. For example, when stocks go down, bond prices tend to increase, particularly when the economy is entering a recession. You should never panic as there is a relatively simple way to reduce the volatility of your portfolio—just allocate more of your portfolio holdings to bonds.

Some bonds, such as U.S. Treasuries, are considered among the least risky investments.

Always important to note: All investing requires risk. There is no reward otherwise.  It’s possible for markets to go through a period of sustained losses, as they did during the financial crisis of 2008, which can result in a negative return on your investments.

Get to know the Stash Way

We think the best approach is to take a long-term view of the money you invest. It’s part of the Stash Way.

• Invest regularly.
• Diversify your portfolio.
• Invest for the long-term

Learn more about The Stash Way.

The post What If The Market Takes a Downturn? Should I Consider Selling My Investments? appeared first on Stash Learn.