Why auto-invest?

Making small deposits on a regular basis is one of the keys to smart investing. This strategy can help you to manage the highs and lows of the market to your best advantage.

Set up Auto-Invest to make automatic, recurring deposits and investments. Choose a schedule that works for you (every week, every two weeks, or every month), and Auto-Invest can deposit cash into your account or invest it directly into your favorite investments.

Auto-Invest and the market: Why it’s your best friend

Will the market go up and down? YES. For example, the markets have recently reacted to the spread of Covid-19. And often with noise comes volatility, or turbulence.

Long-term investors (that’s you) shouldn’t be concerned with timing the market. No one can predict exactly what the market will do tomorrow or next week.

Consider market fluctuations as opportunities to continue adding to your portfolio at lower prices. If the market keeps dropping, keep adding those little amounts. If the market goes up, keep adding those little amounts. As a reminder, investing involves risk. Please take your financial situation into consideration when making investment decisions.

This is the idea of regular investing, which has dollar-cost averaging benefits, and it is a key to the Stash Way.

Never mind the market, hold steady

Look back at the last few decades. There were gains and declines through the dotcom bust, 9/11, the Great Recession, wars in Iraq and Afghanistan, and three separate presidential administrations. But staying the course has proved to be the way to go.

Imagine if you’d bought small amounts of these investments all through these ups and downs. You could have harnessed the gains from when the market was up, and bought more when the market was down As a reminder past performance is not a guarantee of future results.

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.

You can start investing on Stash with any dollar amount and build a diversified portfolio of stocks, bonds, and ETFs according to your risk preferences*.

The post Auto-Invest! How it Can Help You Get the Most Out of Your Investments appeared first on Stash Learn.

Volatility is a measure of risk

When it comes to investing, risk isn’t necessarily a bad word. All investing involves some measure of risk that you could lose money. That’s where understanding volatility comes in: it can help you measure the amount of risk a particular investment carries.

Highly volatile investments are those that experience large price swings. A stock with lower volatility generally involves less risk than a stock with higher volatility, because the amount by which the value may drop tends to be lower. And while a higher volatility stock suggests greater risk, it may also provide the opportunity for a greater return if the price increases quite a bit.  

You can think of stock market volatility like the waves on an ocean. When you’re rowing your boat on the open sea, some journeys are smooth sailing: small waves, pleasant breezes, clear skies, and straight-ahead navigation. Journeys to more exotic, hidden destinations, however, might require navigating waters that are a bit choppier, with bigger waves, unexpected gusts, and storms rolling in. If you have a more ambitious destination in mind, you might decide the more turbulent waters are worth the risk.

Stock market volatility and investing

Risk and change can be scary, particularly when your money is concerned. Knowing your risk profile can help you decide how much risk you’re comfortable with and, in turn, the level of volatility you can tolerate in your portfolio.

A higher volatility stock suggests more risk, but may also provide opportunity for a greater return.

If someone tells you they can predict the future of the market, run the other way! No one has that ability. Regardless of the futility of attempting to predict what the market will do, we all want reassurance that we’re investing with as much information as possible. That’s what volatility is all about: a measurement you can use to get more insight into the potential risks of investing.

We’ve learned to predict other uncertain things in our lives, like the weather forecast, based on available information. To navigate the waves of an unpredictable stock market, investors seek to forecast and analyze the volatility of stock prices. Two common ways to do that are looking at standard deviation and the beta coefficient.

What does standard deviation mean in stocks?

One way experts try to predict the risk of an investment is by looking at its behavior in the past. That might mean investigating the history of a stock or fund’s performance to gauge its realized, or historical, volatility. Based on that information, investors can calculate the standard deviation, a measure of how much the investment’s returns tend to vary from its average return. 

A smaller standard deviation means a less volatile investment. The larger the standard deviation, the higher the volatility and, therefore, the higher the risk. 

What does “beta” mean in stocks?

You might hear finance folks talk about “beta” in stock market volatility. They’re referring to something called the beta coefficient, which can tell you how volatile a stock is compared to the overall market. 

Calculating the beta of a stock indicates whether it’s more or less volatile than the market as a whole or if it’s about the same. The market’s beta is 1.0. If a stock has a beta of 1.0, its volatility is the same as the market. If a stock has a beta of less than 1.0, however, it is less volatile. For example, a stock with a beta of 0.9 will move at a rate of 90% of the market. The same is true of the opposite: a stock with a beta over 1.0 is more volatile than the market. That might offer the possibility of higher returns, but it also carries more risk that the stock price will drop significantly.  

What is volatility’s relationship to your portfolio?

Your investing goals and risk profile can help determine how much volatility you’re comfortable with in your portfolio. For instance, if you have an aggressive risk profile or are planning to keep your investments over a longer time period, you might be able to tolerate more volatility because you have time to weather the ups and downs of the market. Are you more of a conservative investor? Choosing securities with less volatility may better align with your risk tolerance. 

Stash recommends a diversified portfolio in order to spread your risk across a number of different types of investments and help balance some of the possible risks of stock market volatility.

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The post What is volatility in the market? appeared first on Stash Learn.

In today’s world, it’s hard to imagine getting through the day without smartphones, computers, and even smartwatches or speakers that talk back to you. These products are all part of one of the most innovative sectors in the economy: Technology.

But the tech sector is much more than just a bunch of gadgets. It’s a vital part of the economy, employing more than 12 million people and producing almost $2 trillion worth of products, accounting for 10.5% of the U.S. GDP. Companies in this sector also produce parts such as semiconductors and microchips for new technologies, build electronic devices, develop software, and provide telecommunication and information technology (IT) services. Social media companies, which provide digital platforms for communication and commerce, are also a new and ever-evolving segment.

Many consider the tech sector to consist of two different sectors—information technology (IT) and communication services. The IT sector includes companies that provide networking infrastructure, make software, provide software services, produce hardware such as desktops and laptops, routers and other computer networking equipment. They also  manufacture semiconductors and semiconductor parts, not to mention security systems that keep networks safe. Media and entertainment businesses, as well as telecommunication operations, are part of the communication services sector. In this guide, we’ll explore IT and communication services as components of one sector: technology.

The tech sector continues to grow. In fact, as of 2020, there are 585,000 tech businesses in the U.S., up from 525,000 in 2018, according to the Computing Technology Information Association. And new and innovative products and services are expected from tech companies as consumers become increasingly dependent on technology.

About three-quarters  of Americans own either a desktop or laptop computer. Similarly, 85% of Americans own a smartphone, which was up from 35% in 2011, according to Pew Research Center. Meanwhile, 72% of Americans use some sort of social media outlet, compared to only 5% in 2005. 

Companies in the tech sector frequently respond to consumers’ expectations. Cisco makes new internet routers with faster service and better security to power home and business networks. Apple introduced an iPhone with a choice of two or three cameras. Instagram is toying with the idea of removing likes and has innovated with its new dark mode. And as semiconductors find their way into more products, processes, and services, companies like NXP and Toshiba search for faster and more resilient materials to make their products.

The tech sector also intersects with just about every other industry in the economy, including education, healthcare, utilities, manufacturing, and more.

Why invest in the tech sector?

Investors looking for innovation and growth may want to consider investing in the tech sector, which has a wide range of companies.

Companies in the tech sector vary in size and influence. You can invest in big technology companies such as Facebook (now known as Meta), Amazon, Apple, Netflix, and Google, known by the acronym FAANG. Other large companies involved more exclusively in the IT sector include Cisco, which manufactures routers, Hewlett-Packard, which makes laptops and cloud data centers , and IBM, primarily involved in the manufacture of software. Or if you’re interested in tech companies that are relatively new to the sector, you can invest in smaller start-ups that are working to disrupt their industries.

You can have your pick of companies that are building everything from computers, games, and websites, to networks, artificial intelligence, and apps that increasingly run the economy.

Volatility in the Tech Sector

The tech sector, with its constant innovation and evolution, is generally thought to be volatile, meaning there’s greater potential for risk, as stock prices can change frequently. 

One reason is that tech stocks have historically been cyclical, meaning they move up and down based on the economy and consumer demand. But that may be changing, as business models for tech companies change to include subscription models and services, according to experts. 

Companies in the tech sector may also face an overvaluation problem, or the possibility that their stocks trade far above their actual value. That can add to volatility, as the stocks may be likely to move up and down with greater speed.

U.S. tech companies are also facing more competition from countries such as China, South Korea, and Taiwan, among others. Competition can add to volatility. 

Regulations and the tech sector

FAANG stocks including Facebook, Amazon, and Google are dealing with increasing scrutiny from lawmakers in Washington over issues about consumer privacy, security, as well as fears that they may be monopolizing entire industries.

Conservative politicians have also accused tech companies such as Facebook and Google of having a liberal bias, which the companies themselves contest. Former President Trump also sued social media companies for banning him for his role in inciting the January 6, 2021 riot on the U.S. Capitol.

Technology is also becoming more politicized as concern grows over political advertising on social media. Mark Zuckerberg, Facebook’s founder and chief executive officer, has testified on more than one occasion before Congress about the information Facebook collects about its customers. For example, he testified in 2016 about Facebook allowing the data firm Cambridge Analytica to access and use information of 50 million Facebook users to advertise to them politically.  

Numerous politicians from both sides of the political spectrum as well as regulators, are grappling with the extent to which social media companies may be monopolies. Some have called for increased oversight, including breaking up some of the biggest tech companies such as Google, Amazon, and Facebook.

What companies can I invest in? 

In 2021, more than 130 technology companies had initial public offerings, or IPOs, raising approximately $60 billion by offering their stock to the public for the first time. These include food delivery app DoorDash, home-sharing  site Airbnb, intelligence software company Palantir, and more. 

Investors in the U.S. can buy shares of these companies and any other public company in the tech sector individually, or through funds—such as exchange-traded funds, or ETFs—that invest in baskets of those companies.

Investing in the tech industry: single technology stocks

A single stock is just that, a share of ownership of a company. For example, investors can purchase shares of stock in companies like Alphabet, Apple, IBM, Netflix, and Microsoft.ª

Investing in tech ETFs (exchange-traded funds)

Exchange-traded funds (ETFs) are a basket of investments bundled into a fund that’s traded on an exchange like the Nasdaq or NYSE.

When you invest in an ETF, you are effectively buying small fractions of the companies within that ETF. The fraction depends on the weights of stocks held in that fund. That fund owns the stocks within it and generally tracks an index–or group of investments that represent part of an industry or investment theme.

Tech ETFs vs tech stocks

ETFs have become popular in recent years as they give investors the opportunity to invest in the performance of a group of stocks without having to buy every single stock in the fund or handpicking single stocks.

Not only can this save time and research, ETFs can offer diversification, which many consider being an essential investing strategy.

Want to invest in the tech sector? You can check out the themed investments offered on Stash, as well as single technology stocks.

The post What’s the Tech Sector? appeared first on Stash Learn.

We built Stash with a single-minded mission—to make investing easy, affordable and accessible for everyday Americans. We believe in the tried and tested principle of regular, long term, and diversified investing as the key to building wealth.

Stash is not a day-trading app

We do not advocate day-trading and have never promoted it to our customers. On the contrary, we provide a range of educational guides and tools, such as Auto-Stash and Diversification Analysis, to help customers invest in a regular, automated and affordable manner, and help build healthy, balanced portfolios for the long term.

Although we believe everyone should have access to investing, we caution against stock speculating and trying to time the market, which is why we have always operated with only four trading windows throughout the day. Over the past few days, there has been extraordinary trading activity in the shares of a few companies, resulting in something called a short squeeze. (You can find out more about that in our article here.)  

Short-term volatility will always exist when it comes to investing. We encourage you to focus on your long-term goals and position your portfolio to achieve them. Invest regularly throughout moments of volatility towards your goals, and don’t attempt to time the market. 

We care about our customers, and their long-term success, which is why we’ve embedded education and guidance into every corner of the Stash app, helping our customers ride out these market swings throughout their investing journey.

Learn to diversify

The biggest lesson that we can take from this week’s events is the importance of portfolio diversification. Don’t put all your eggs into one basket, especially with stocks that swing significantly. As a fiduciary¹, Stash  is required to act in your  best interest, which is one of the reasons why we created our diversification analysis tool to help you reduce risk. 

Finally, you might be wondering if the trading behavior we’ve seen this week might extend to other stocks. No one knows for sure, but it could continue with other stocks that have been widely talked about on message boards and trading forums.

When a high degree of trading volatility exists for any stock, our advice is to proceed with extreme caution. Attempting to speculate with these stocks—or any stock—is a super high-risk activity that could end up being a price bubble, and people could be left without a seat when the music stops. 

We’ll say it one final time, at Stash we preach buy and hold, investing for the long term, and diversification. 

Keep calm and Stash on. 

Co-Founders Brandon & Ed

The post You Can Stay the Course Through Volatile Markets appeared first on Stash Learn.

What does it mean to short a stock? 

Typically when you buy a stock, you create a “long” position, meaning you purchase it at its current trading value. 

Shorting is the reverse of buying long. It’s basically betting against a stock, and it’s a key technique used when an investor believes that the price of a stock will be lower in the future. In simple terms, it allows an investor to sell a share at the current price, while requiring them to buy the shares at some point in the future at an unknown price. This tactic involves borrowing shares from a broker, selling them to someone else, and betting that prices will drop before they decide to buy it back. At that point, the investor buys back the shares at the cheaper price, returns them to the broker—and pockets the difference (minus interest charged by the broker). However, if the share price is higher, the investor will lose money.

Short selling requires what’s called a margin account with a broker. There are lots of SEC rules and limitations on margin accounts—and plenty of risk. At Stash, we believe that shorting is best left to the pros, so we do not offer this to investors.

What’s a short squeeze?

Sometimes a large group of investors might believe that a company’s prospects are not good, and take very large short positions in the stock. In that case, investors are betting the stock will go down, and a significant percentage of the company’s outstanding stock is sold short. This can make the company vulnerable to something called a short squeeze. 

A short squeeze happens when the stock price of a heavily shorted company starts to increase. Short sellers are forced to buy the stock back at higher prices.  As they begin to buy the shares, it forces the stock to go even higher. This “squeezes” other short sellers, who are also then forced to cover their shares, and the cycle continues.

Usually a short squeeze happens when a company announces surprisingly good news. Imagine a company that is heavily shorted because many investors believe that the company’s revenue will decrease significantly. Let’s say that company instead announces that it has a new product line and revenues are going up.  In that case, the stock price may start to head up, and a short squeeze may begin.

Sometimes, although not typically, investors band together to buy a company’s stock, driving it ever higher. These investors may not be buying based on fundamentals, and are simply bidding up the stock to create problems for short investors. 

While there’s nothing illegal about this practice, in recent months short squeezes for various companies are reportedly being driven by small-time investors involved in options trading. Options trading can get complicated, but essentially in this scenario it means investors purchase a contract for a particular stock at a specified price, often much lower than the current trading price of the stock in question. 

That can also lead to continued increases in that stock’s price, and the risk of increased volatility. 

Blackberry, Gamestop, and more

Companies that have been involved in investor short squeezes in recent months include the video game retailer GameStop. The smartphone maker Blackberry and entertainment giant AMC have likewise been the subject of squeezes in January, 2021. And in fact, investment bank Goldman Sachs’s list of the most shorted stocks is reportedly up 25% in 2021, showing that shorting activity has increased dramatically this year.

Follow the Stash Way

At Stash we don’t believe in speculative investing. We believe in time in the market, not timing the market.

Remember, all investing involves risk, and you can lose money in the market. Stash recommends following the Stash Way, which involves investing for the long term, investing regularly, and diversification.  

The post What’s a Short Squeeze? appeared first on Stash Learn.

But how, exactly, investing pays is something of a mystery to many investors. For some people, the idea that you can stash money away in an account or security and that it could grow into more money seems at best, like magic and at worst, suspicious.

We all know people that have made money “investing”. But what they actually did (and where they figured out how to do it) can seem like a Mulder and Scully-level mystery.

So how does your money actually make money?

While almost everyone invests their money with the goal of turning a profit, investing involves risk.

Markets can be volatile and investors need a sound strategy to weather the ups and downs over the long term.

That said, over the long run, though, markets (and returns) trend up:

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. Source: Yahoo Finance. Source: Yahoo Finance.

The Dow Jones Industrial Average, for example, saw big gains over the past two or three decades. After the market bottomed-out during the financial crisis in 2009, the Dow more than doubled, briefly topping out above 29,000 points in early 2020.

Here are the three primary ways that companies pay back their shareholders, or, by which investments can earn you money.

1. An increase in share value

Perhaps the most obvious way in which an investment can make you money is that it gains value. As stock prices rise, shares become more valuable. And if you’re a shareholder, you can sell your stocks, earning you a profit, or return, on your initial investment.

The same applies to bonds, exchange-traded funds (ETFs), and other investments. When a company’s shares are worth more, shareholders reap the benefits.

2. Dividends

A dividend is your cut of a company’s earnings. If you own shares in a company, you own a part of the company — and therefore, you get a cut of the profits.

Typically, dividends are cash payouts to shareholders which can be reinvested, or sent to your accounts t through a dividend reinvestment plan (DRIP). With Stash, you can turn on DRIP and have dividends automatically reinvested. They can, however, be issued in the form of additional shares.

3. Interest payments

Interest payments are generally associated with fixed-income securities, like bonds. Bonds are a form of debt, meaning that you’ve loaned a company your money. In exchange, a bondholder is due interest payments and the bond’s full amount upon maturity.

If you’re a bondholder, then, you can expect periodic interest payments.

A quick note about stock buybacks

Sometimes, companies will engage in stock buybacks, which is when a company buys its own stock on the market. There are a few reasons why a company might do this, but one of the most common is to consolidate stakeholder value, and to increase share prices.

While somewhat controversial, a stock buyback is another way that companies can effectively “pay back” their shareholders.

The post How Your Investments Earn You Money appeared first on Stash Learn.

Follow the Stash Way!

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

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.

Also, check out Portfolio Builder, a new tool that can help you instantly build a diversified portfolio according to your risk profile, as you start your investment journey.

Portfolio Builder portfolios are designed to follow the Stash Way.

The post A Beginner’s Guide to Investing in the Legal Cannabis Industry appeared first on Stash Learn.

I wanted to write to you today to give you some insight about what’s going on in the markets.

The three major equity indexes—the Dow, the S&P 500, and the Nasdaq have all fallen. The Dow itself is down more than 500 points as of noon Wednesday, October 2, 2019.

Here’s what may be happening: Some investors are worried about a slowdown in the overall economy. There is some concern about an industry index produced by something called the Institute for Supply Management (ISM). This index basically shows how much companies are ordering from manufacturers in the U.S. And the ISM said U.S. manufacturing activity fell in September to its lowest level in more than 10 years.

That has sparked fears that global growth might be slowing. There are other things going on as well, such as the trade war with China, Trump impeachment talk, slowing auto sales, and falling bond yields that are causing uncertainty too.

While this may be true, it may also not be. Tomorrow we may see another data point suggesting growth. While single data points may move the markets up or down, as Stashers we should always focus on the long term

Okay, so now that you know what’s going on, which is important, zoom out and take a long-term view! Today’s news is short-term noise, and markets can go up just as easily as they can go down. What I recommend is setting your sights on long-term investing, and making regular investments regardless of whether markets are moving up or down. We built Stash so you can add small amounts of money on a regular basis, and for long-term investing. 

Invest for the long term!

I’m a long-term investor, and here’s what I know:

When the market moves sharply down, it’s understandable for someone to be nervous. It can be tough to see your portfolio go up and down. That’s especially the case if you’re investing for the first time during one of these periods. Hey, I was a beginner investor once, too.

During my first bear market in the early 2000s, right after the dot-com bust, it wasn’t fun seeing my account balance decline; however, I always had a long-term perspective. In 2008, I lived through another big market correction. But again, I thought long term and maintained my focus.

The most important thing I want to say is that volatility is a completely normal part of investing. Don’t get caught up in short-term market noise. Over time, staying in the market and long-term investing is the way to go. 

No matter what the market does, continue to buy small amounts of your investments on a regular basis.

For some insight into the importance of long-term investing, take a look at this chart, which shows the compounding value of stocks since right before the Great Depression. 

Turn on Recurring Transactions

It’s an easy way to add small amounts of money on a regular basis into your investments. This way, you can avoid the emotional aspect of investing and won’t get fooled into trying to time the market, which means trying to make guesses about which way the market is heading. (No one can predict exactly what the market will do tomorrow or next week. If anyone tells you they can, run away.)

The key to long-term investing is to build wealth over time.

That means some weeks you’ll consider buying shares when they’re high, other weeks when they’re low, and over time, the highs and the lows can balance themselves out. 

Here’s why Recurring Transactions can be a great tool. By putting small amounts of money into your investments on a regular basis, you can feel good about ignoring market volatility and focus on investing for the long term. Even $5 a week can make a difference.

Recurring Transactions is an incredibly powerful tool, and an essential part of the Stash Way.

Remember the Stash Way

Investing can be confusing, and maybe even scary, when markets become volatile.

That’s why we’ve boiled down our investing philosophy into three basic principles that we hope can guide you as you make your first investing decisions. We call our approach the Stash Way. Here are its three pillars:

• Invest for the long-term. (Don’t time the market.)
• Invest regularly. (Turn on Recurring Transactions.)
• Diversify. (Don’t just buy stocks.)

When in doubt, follow the Stash Way, which you can learn more about here.

Work hard, and then make your money work hard for you. By taking a long-term view and consistently investing small amounts of money, you can build wealth over time, and put yourself on a path toward a more secure financial future.

The post Here’s What’s Happening With Markets 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.

Let’s talk about volatility, since there’s a good chance swings up and down are going to be the new normal for markets.

Quick recap: What’s market volatility?

Volatility is the tendency for markets to fluctuate up and down. And it’s a normal part of investing.

Have markets been this volatile before?

Yup.

It’s important to realize that the last ten years, 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. And at some point, that was likely to change.

Take a look at this chart of the S&P 500 from 1928 to 2018.

You can see just how much markets fluctuate over time. Some of this is related to severe economic events such as the Great Depression and the 2008 financial crisis.

But most of the variation is related to normal market conditions. Markets go up and down.

So why are markets volatile now?

There’s no one thing that’s causing volatility, but many. Here are some of the main causes:

• Fear over rising interest rates, and whether the Federal Reserve will continue raising short-term rates over the coming year.
• Escalating trade tensions, including tariffs with China, are causing some emotional angst.
• Something called the yield curve.
• Slowing growth of the global economy.

What can you do about market volatility?

Try not to pay too much attention to the daily fluctuation of the market. If you do, it’s likely you’ll sell when prices go down, and buy when prices for investments go up.

You don’t want to invest according to your emotions. That’s what a lot of investors tend to do, and you’re likely to lose money that way, by locking in your short term losses.

Think of investing in the stock market like owning a house. You expect the value of your home to increase over time, but you don’t check its value every day, and you probably don’t consider selling if there’s a short-term drop in housing prices either.

Never mind the volatility, invest for the long-term

Invest for the long haul. It’s what we recommend as part of the Stash Way. If you invest regularly over the years, you’ll be buying stocks at a range of prices, both high and low. Over time, prices should average out.

Another way of thinking about this is that if you sell on days when the market is falling, you could easily miss out on days when the market rises soon after.

Having exposure to the market on these good days is very important if you want to maximize your portfolio’s potential for growth. Long-term success with investing is all about time in the market, not about market timing. Investing regularly over the long term, even with small amounts, is potentially the best way to maximize the growth of your money.

So stay calm, keep on Stashing.

The post Why Stock Market Volatility is the New Normal appeared first on Stash Learn.

After all, no one knows what the future holds. The market, by nature, is unpredictable. So is life. We never know when the rain may fall.

If we’re in the throes of a market correction, bear market, or personal financial crisis, you’ll probably be glad you have a set strategy in place.

Here are some FAQs to help keep you on the right track:

Saving money

Establish a budget

Budgets don’t have to mean depriving yourself. Think of it as a blueprint to reaching your goals while still getting your bills paid.

We get it, it can be scary to face the facts about your financial situation. You may not even fully realize how much you’re spending on random things—and how quickly these things add up.

Looking to get started? Check out how to set up a 50-30-20 Budget.

Why do I need an emergency fund?

An emergency fund is the most important aspect of any economic survival guide. This money, which sits in your saving account, should be easy to access in times of crisis.

A crisis can be a medical emergency, a move, or a layoff. It’s not for groceries, vacations, or holiday or birthday gifts.

How much should I save in my emergency fund?

At Stash, we recommend 3-6 months of expenses that you’ll need to pay: rent, food, credit card, and student debt payments. This money should be used for when the chips are down and you need to break the glass. You can always rebuild it.

You can use Auto-Stash to keep funneling your money toward your emergency fund. That’s probably way easier than remembering that you have to put aside money to save.

Investing

Why should I create a diversified portfolio?

Wait, what’s diversification again?

A quick refresher: Diversification means making multiple investments, so your portfolio’s performance is not tied to a single asset class, industry, company, or region.

You can create a diversified portfolio in a number of ways, which leads us to another important concept: asset allocation.

Why does asset allocation matter?

Asset allocation is the process of dividing the investments in your portfolio into different asset classes across the globe. These classes include stocks, bonds, cash, and alternative asset classes like commodities. (Learn more about commodities here).

In a nutshell, the term refers to the particular mix of investments you own, and you can calculate the allocation out to get an idea of how diversified your portfolio is.

So, if you want to create a diversified portfolio (or further diversify your portfolio), your goal should be to hold a balanced mix of investments. A well-diversified portfolio has exposure to a variety of different industries and companies, asset classes and geographical areas.

Asset allocation is a big part of the Stash strategy. With Stash, you can get diversified exposure to stocks, stock sectors, bonds, and commodities through exchange-traded funds (ETFs).

Should I keep Auto-Stashing if the market goes down?

We say yes. If you continue to invest regularly, contributing small amounts to your investment account during both market highs and lows, you will be improving your long-term outcomes in two ways. You can maximize the potential for growth in your wealth and help smooth out your risks over time.

Auto-Stash is a tool that helps you invest regularly in a disciplined way. You won’t need to worry about predicting where the market will go. (Fact: almost no one can do this successfully.)

When economic times are tough, you won’t have to remember to keep adding money to your savings. By keeping Auto-Stash turned on, you can take the emotions and worry out of the equation. You’ll keep saving on a schedule without the pain of remembering to do it.

Since Auto-Stash also helps you to invest regularly, it may lead to lowering your average share price in a given investment. Wait, what? That means that you’re buying shares at different prices, so that your average purchase price is neither at a market high or low. As always, keep in mind, that investing always come with risk.

If the market goes down, should I sell my investments?

At Stash, we want you to think long term. Don’t think of your investments and savings in terms of days or weeks. Think years, or even decades ahead. If you sell your assets during a market correction, or even during a full-fledged bear market, you’re locking in your losses. That’s something you do not want to do.

In short, you can ride it out—markets typically bounce back, and if you sell during a drop, you might miss out on potential recoveries.

Retirement

Should I open an IRA or retirement account?

It may seem counterintuitive. Why save for retirement when the market is down? This is where thinking long term comes into play.

It’s about time in the market and not timing the market and the sooner you start investing, the better off you will likely be in the long-term.

In short, we recommend staying the course and holding steady.

Should I take money from my retirement accounts?

No. Your retirement accounts are for one specific goal: retirement. If you withdraw money from them at an early age, you’re really only doing two things—losing a percentage of your savings to taxes and fees, and setting your retirement plan back.

Plus, you may have to pay a penalty.

You’re way better off creating that emergency fund to tap into if you get hit by a layoff or you need to pay an emergency bill. Consider your IRA or 401K  to be a “do not touch” account.

Stash for life

Creating a plan to get you to your goals is a great way to keep calm and carry on with your life.

Keep saving so you don’t get caught out in the rain without a financial umbrella.

The post How to Manage Your Money During Good (and Bad) Times 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.

What now?

Our best advice is to look at investing as a long-term plan. No one knows what the market will do today, next week, or next year. Even the experts make a lot of guesses. From 1928 through the end of 2017, even with periods of volatility, the S&P 500 index has produced gains of 9.65% annually.¹ (TLDR – Consider  setting your Recurring Transactions (formerly Auto-Stash) and enjoy the ride.)

What can you do today?

Here are three ideas to consider:

1. Buy “Bonding with America” – Bonds are great investments to hold during times of high volatility, or when you feel like you want to reduce your risk in stocks. Consider buying some bonds and holding them for the long term.
2. Buy Your Mix – There are three flavors of a mix: Conservative, Moderate, and Aggressive. We recommend choosing a mix because it is a blend of both bonds and stocks, and you can think of it as a cocktail of investments to either complement your stock holdings or serve as your core holding at Stash. You will find the mixes in the “I want” category of investments. If you’re wondering what risk level you should pick, you can find our recommendations in your “account” screen. Read more about your mix investment here.
3. Single Stocks – If you’re really in this for the long term and can handle some short-term risk, another option may be to keep buying your favorite stocks. This is called “buying the dip”, in Wall Street lingo. Remember to add smaller amounts on a regular basis so you can benefit from dollar-cost averaging. When stocks drop consider it a SALE! Who doesn’t love a bargain? The trick is to keep adding small amounts on a regular basis. You can either buy a small amount now or turn on Recurring Transactions and let it happen automatically.
4. Diversify – much of the market turmoil today is due to one sector—technology. (In fact, an index that primarily represents tech stocks called the Nasdaq is having its worst month since 2008.)When you diversify, it means you’re not putting all of your eggs in one basket, so you can better weather the stock market’s ups and downs. 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 also be choosing investments in numerous economic sectors—not just the hot industry of the moment—as well as in different geographies around the globe.

Whatever you decide, just remember that investing is for the long term, while selling is sometimes a knee-jerk reaction that you might regret.

Stash on

We created Stash to provide you with the education and tools to invest for yourself, for the long term, in all types of markets. No one can predict the future but we can say that investing on a regular basis (especially when the market is volatile) can be a  proven strategy for growing wealth.

We hope the three ideas above can help you diversify your portfolio and keep investing for the long term.

Have a great day.

Stash

The post What Now? We Recommend Bonds, Your Mix, and Recurring Transactions for Stocks appeared first on Stash Learn.

The Dow Jones Industrial Average increased 1.5%, after tumbling 608 points the previous day, and the S&P 500 gained 1.7% by mid-day Thursday, October 25, following decreases of more than 8% from their respective and recent all-time highs.

These fluctuations are a normal part of how markets work. Read on and we’ll tell you all about it.

What sent shares up on Thursday?

Positive earnings reports from Ford, Microsoft, Twitter, and Visa sent shares up on the Dow, S&P 500, and Nasdaq.

How to cope with volatility

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

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.

By buying and holding onto your position, and even adding to it as stock prices go down, you have the potential for more gains over time if you can handle the volatility in your portfolio.

Consider 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.

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.

Why did stocks fall before?

• Interest rates for benchmark bonds such as the 10 year U.S. Treasury continue to trend higher. This could make it more expensive for businesses and consumers to borrow.
• Corporate earnings have shown some weakness, which might indicate the economy could be slowing.
• More recently, concerns about the trade war with China increasing costs for U.S. businesses has also been a factor. China, the second largest economy in the world, is also one of the big purchasers of U.S. products, and China’s economy has slowed.
• Geopolitical concerns around Italy and recent turmoil in Saudi Arabia have an impact. These types of risks based on political events can make markets nervous.

Look to The Stash Way

We’ve boiled down our investing philosophy into three basic principles that we call the Stash Way:

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

Over the years, market gains have outpaced standard savings rates in bank accounts. 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%.

With the power of compounding and regular investing, a 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.

That said, all investing carries risk, and it’s important to know that you can also lose money in your investments. Keep reading Stash Learn so you stay in the know and don’t let emotions guide your decisions.

Keep calm, keep Stashing

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. Turn on Auto-Stash, take a deep breath and keep Stashing.

The post Yes, The Stock Market is Volatile. No, Don’t Freak Out appeared first on Stash Learn.

One of the questions I get asked when the market goes down is, “Should I sell?”

My answer, which I’ve formed over the past 20 years, is not necessarily.

Selling is often the wrong thing to do. We encourage you to follow the Stash Way.

The U.S. has a strong economy, but occasionally interest rates rise, which the markets sometimes don’t like. Recently rising bond yields and tech stocks triggered a sell-off.

Think of an angry three-year-old child. He or she eventually gets over it. Markets do too. I have seen this movie play out time and time again. (I also have three kids!)

History shows us

Over the past 15 years, there have been turbulent periods in the market. Check out the graph below.

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 is oftentimes the way to go.

The key to “investing” through market volatility, is to invest small amounts on a regular basis. Auto-Stash allows you to do just that. If you have it on, keep it on. If you’ve never tried it, now is the time. It’s an automated way to buy investments while they’re going up and when they’re going down. (This is known as dollar-cost averaging, and it’s really important.)

Long-term investors (that’s you) shouldn’t be concerned with timing the market. I’ve said this before and I’ll keep saying it—no one can predict exactly what will happen tomorrow or next week.

Stash is your investment adviser, and our goal is to look out for you and your interests by helping you continue to save and invest for your future. Although we can’t predict the future, try not to sweat the ups and downs.

It’s all about the time you are in the market that counts, not how you time it.

Brandon Krieg
CEO – Stash

The post Markets Go Down, Don’t Panic appeared first on Stash Learn.