Both accounts could help you; they’re for different time horizons.
Helping you to save money and invest are two core goals at Stash.
We think they’re both are essential to becoming financially smart and financially independent.
You may wonder which one is right for you.
Here’s what they have in common
Both invest and retire accounts will let you choose from more than 50 low-cost ETFs and dozens of single stocks. The funds range from ones that track things like the S&P 500 index, or cool new sectors such as alternative energy and technology. The stocks are some of the biggest blue chip, consumer, or tech-focused companies around.
Both allow you to buy what’s known as fractional shares.
What’s a fractional share?
Often the share price of a stock or fund can be high—hundreds or even thousands of dollars. We let you buy a portion of these shares, based on a budget you can afford. Your investment still works the same way as if you were buying full share amounts.
Here’s a breakdown of Stash invest vs. Stash retire:
Get your feet wet in the investment world with Stash Invest. It’s an account that lets you invest in Exchange Traded Funds (ETFs), or individual stocks of some of the most prominent publicly traded companies around.
You can fund your account with as little as $5.
Stash Invest account is for medium to long-term savings goals. Since you’ll be investing the money, it shouldn’t be for short-term needs. (An emergency fund, or cash that you keep in a bank account for a rainy day, is probably best for that.)
Here are some other things to keep in mind about Stash Invest:
- You can withdraw your money from your Stash Invest account at any time.
- Unlike the retirement accounts that Stash offers, the regular investment account is subject to capital gains taxes on your earnings each year. Find out more about capital gains taxes here.
- There is no limit on how much you put into your Stash Invest account annually.
- The monthly maintenance fee is $1 for accounts under $5,000, and 0.25% annually for accounts with balances over that amount.
Retirement will be here before you know it. And the best time to start preparing for it is by saving now. It may be 20, 30, even 40 years away. Stash Retire could help you meet this long-term goal.
Stash lets you start saving for retirement with $5.
Once you’ve funded your account, you’ll have access to the same funds and stocks as a Stash Invest account.
Here’s what’s different:
- You’ll have a choice between two different accounts. One is called a traditional individual retirement account (IRA). The other is called a Roth IRA.
- You fund a traditional IRA using pre-tax dollars, which could lower your tax rate. Earnings grow tax-free until retirement.
- In contrast, a Roth is funded with after-tax dollars. Like a traditional IRA, however, once you’ve funded the account, your earnings grow tax-free.
- If you withdraw money from a retirement account before age 59½, you’ll owe taxes and a penalty.
- The monthly maintenance fee for a Stash Retire account under $5,000 is $2. For Stash Retire accounts with average daily balances of greater than $10,000, the monthly fee of 0.0208% of the value of the account, or 0.25% annually.
|Stash Invest||Stash Retire|
|Saving for...||Medium to long term goals||Retirement|
|Withdrawal||Withdraw any time||Possible penalties for early withdrawl|
|Taxes||Investment income taxed as capital gains||Investment income taxed as income tax|
|Fees||$1/month; 0.25% annually for accounts over $5,000||$2/month; 0.25% annually for accounts over $5k|
Keep reading: Learn more about retirement and the different kinds of retirement accounts here in our learning retirement learning guide.
Investing vs keeping money in your savings account
Think of your invest and your retire accounts as places where you can put your savings to work. If your money just sits in a typical bank account, it’s not going to earn much interest. In contrast, investment and retirement accounts can benefit from something called compounding.
Compounding is when the interest your account earns also earns interest, which can dramatically increase your rate of savings.
All investing carries risk, and it’s important to know that you can also lose money with your investments.
Get started saving and investing today, with Stash Invest and Stash Retire accounts.
You can start here.