Commission-free trading on investment platforms is more popular than ever, and today we are going to look at M1 Finance vs. Robinhood.
Whether you’re looking to invest in the stock market, trade currencies, or even buy gold – there’s an app for that! Everyone should be getting in on this since it’s one of the best way to earn a passive income and start bulking up your bank account!
But with so many investing platforms available, it can be hard to know which platform is best for you.
To help you decide which investment platform is right for your needs and goals, let’s compare two of the most popular options on the market: M1 Finance or Robinhood.
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M1 Finance Vs. Robinhood: TL;DR
Fees
Both Robinhood and M1 Finance have no fees associated with buying or selling stocks. They’re both commission-free, and Robinhood was the first to enter the market as such.
However, Robinhood does charge a monthly inactivity fee of $6 if you do not buy/sell any stock at all during the month while M1 Finance charges an inactivity fee of up to 0.15% based on your account balance.
But according to some research, M1’s fees are less than half of Robinhood’s fees.
This may surprise some of you who have been hearing about all of the buzz over Robinhood and the fact that they don’t charge trading fees.
It’s always worth doing comparisons and reading the fine print!
Investment Options
Both offer stocks, ETF’s, and options, as well as giving you the chance to invest in fractional shares.
Fractional shares give you the opportunity to use as much of the money in your accounts as possible, so we think it’s fantastic that Robinhood now offers them!
M1 Finance has a wider selection of investment types, including retirement and IRA options, that are available in all 50 states.
Robinhood investment options are more limited and it does not yet allow the transfer of assets from your bank account to their mobile app, but M1 Finance has been able to do so since day one.
Robinhood also offers cryptocurrency, but only in 46 states.
At M1 Finance, you can link as many individual accounts as you want while Robinhood users only have the option to link a single bank account.
Account Minimum
M1 Finance requires $100 for taxable accounts and $500 for retirement accounts, but Robinhood requires no minimum except for margin accounts, which is a $2,000 deposit.
Additional Features
M1 Finance does not yet support portfolio margin, but Robinhood does.
Robinhood has integrated options trading while M1 Finance is working on adding this feature in the future.
The two services also offer different features like webhooks and extra research tools for paying members under M1 Plus and Robinhood Gold.
Best For
M1 Finance: For those looking to invest in a wider variety of stocks and other securities, M1 Finance is the better choice. The platform is better for long-term investors and dividend seekers.
Robinhood: For those who don’t need the investment options or variety, Robinhood is still a great platform. It is very popular with people who are new to investing, but it’s always worth looking at other platforms to see if they are easier to use as a beginner.
M1 Finance Features
Investment Options
Stocks and ETFs, Options, Cryptocurrencies
Investment Types: Individual taxable accounts and IRAs; Joint taxable accounts and SEP IRAs.
M1 Finance offers fractional shares on stocks and ETFs, and they try their best to keep it affordable with the minimum order size for each stock being $1.
Fees
Account Fee: $0
Brokerage is commission-free for users that maintain a balance of $1,000 or more.
M1 Finance charges an Asset Under Management (“AUM”) fee between 0.15%-0.25% depending on your account size and activity level.
The AUM fee is less than half the industry average of 1%. It’s worth having a read through their fees page, as there are some to bear in mind. Always read the small print!
M1 Invest: Account Details
M1 Invest is designed with self-directing, more experienced investors in mind. They have put their tools together to help you act on what investment strategy is best for you.
You will put together a Pie-based portfolio, and then M1 will automate all of the trading activity for you!
Minimum
M1 Finance requires a minimum balance investment of $100 for taxable accounts and $500 for their retirement accounts.
Account Types
M1 Finance offers stocks and ETF’s.
M1 has also added individual bonds to all 50 U.S. states after the company acquired BondIT. And don’t forget their cash management accounts either!
M1 Finance supports taxable accounts, including individual and joint taxable accounts, and IRAs, which include Traditional IRA, Roth IRA, and SEP IRA accounts.
Their accounts have something special though, that we haven’t seen before.
We love that M1 Finance offers are Pies. Sadly not the kind of pies that you eat though!
The Pie on M1 Finance is how you can build your portfolio customized to your own personal needs.
Each holding that you have will count as a “slice” within your pie. You can choose the % of the pie that you’d like each to take up.
You can choose to do it fully yourself or choose to use an Expert Pie, where it has already been set up for you, and you just need to fund it.
M1 Basic
Cost: $0
M1 Finance has no minimum account balance, but if you want to use M1’s built-in pie and stock screeners your account balance must be at least $10.00 on the web and $5.00 on the mobile app.
There is also only one trading window unless you subscribe to M1 Plus.
M1 Plus
Cost: The first year is free for M1 Plus, and then after that, it’s $125/year.
M1 Plus says that it is everything that you love about M1 Finance, plus more. There are some perks that you can get with the M1 Plus account that you can’t with the M1 Basic, such as:
- Smart Transfers
- Custodial accounts
- Borrowing at a lower rate (2%)
- 1% APY on spending
- 1% cash back
- 4 monthly ATM fees reimbursed
- All international fees reimbursed
- Send checks
- 2 trading windows
The extra trading window really stands out if you want additional trading opportunities each day.
M1 Plus account users get access to more features and may be worth it for more advanced traders.
Usability
We enjoy the usability of M1 Finance and think that the Pies that they offer will be really beneficial, particularly for the newer investor.
The customer service that M1 Finance offer is only available during trading hours, and you will have to submit a support ticket request or phone them.
Additional Services
M1 Borrow
APR: 0% – 4.95%
M1 Borrow is essentially a line of credit that uses your securities as a loan.
Your Borrow account gives you the ability to borrow money on margin at competitive rates of interest for 12 months.
M1 Spend
APR: 0% – 0.45%
M1 Spend offers a free debit card that earns 1% cash back on all purchases and doesn’t charge any monthly fees or foreign transaction fees.
The M1 Spend account also connects to your investing account, you can easily transfer from your Spend account into your M1 Invest account.
Why Use M1 Finance?
M1 Finance is a fantastic robo-advisor that can create great portfolios for you and rebalance them as needed, without you having to put in much work and time!
Not only can M1 handle many account types but also offers things like built-in portfolio management and individual retirement account support.
If you want the ability to deposit small amounts of money every month M1 Finance, its monthly AUM fee might be a better choice over Robinhood.
Pros & Cons
Pros
Portfolios- Expert Pies & Individual Pies
M1 offers two kinds of portfolios, expert pies, and individual pies. Expert pies are baskets of investments based on themes created by M1’s research team.
For example, if you wanted to invest in companies that make most or all of their money from e-commerce M1 would create a pie for you made up of 30+ different companies.
Individual pies are based on your individual preferences and allow you to decide where M1 invests your money.
If you plan to invest in a specific company and also some REITs and large-cap stocks, but not mid-cap stocks then you can create an “Invest in Apple” pie that is made up of Apple stock with REIT and large-cap stock investments.
Even though M1 only offers one currency (USD) all of the company’s investments are in US stocks so there isn’t any currency risk.
Rebalances Automatically
M1 acts as a robo-advisor to make your investments run smoothly. They rebalance your portfolios automatically and at no cost which is very useful for people that like to leave their money in the market.
More Account Options
M1 Finance supports both taxable accounts and IRAs.
M1 also offers multiple account types including the prebuilt-pie account, Basic account, Plus account, and Borrowing Account to suit different needs.
M1 is currently offering IRA options for Roth Solo 401(k)s only–a type of retirement account that few other brokerages offer.
Cons of M1
Controls All Accounts from One Place
M1’s interface can be a bit confusing to use, especially for beginners.
You have to log into the web platform, the mobile app platform, and then check your e-mail to confirm each transaction.
Few Trading Windows
Only one trading window for basic members can be a bit difficult, and you have to pay $125 for M1 Plus for another trading window.
You can only trade on Wednesdays and Saturdays between 9:00 am and 1:30 pm EST.
Still Lacking A Few Investment Options
M1’s are great, but you can’t invest in mutual funds or bonds here, and they don’t offer cryptocurrency if you’re a risky investor.
Robinhood Features
Free Stocks
They offer completely free stocks for creating a Robinhood account, which is something that has garnered them a lot of attention!
Investment Options
Stocks and ETFs, options, and cryptocurrency
Robinhood now offers fractional shares for stocks and ETFs, which is new to keep up with competitors like M1 and Betterment.
Robinhood also only currently offers individual bonds in select US states, we’ll see if that option grows.
Fees
Account Fees: $0
No commission, trade, or sign-up fees!
Account Details
Minimum
A Robinhood account requires $0 to open an account but doesn’t let you invest until you fund it. But as long as you have money in your account, you’re able to invest, especially since they offer fractional shares now!
However, the margin accounts do require a $2,000 minimum balance.
Account Types
Robinhood only offers individual taxable accounts and cash management accounts.
There are 3 types of accounts that Robinhood offers:
- Robinhood Instant
- Robinhood Gold
- Robinhood Cash
Robinhood Instant
Cost: $0
Customers who use Robinhood will be fine with the free version and get access to premarket and aftermarket trades.
Robinhood Gold
Cost: $2,000
The Robinhood Gold account is similar to the Robinhood Instant, but you are able to do margin investing and have larger instant deposits.
Robinhood Cash
You can downgrade from the other Robinhood accounts to Robinhood Cash whenever you like. With your Robinhood Cash account, you can access up to $1,000 but not over it.
Usability
Robinhood is well known for having great usability – perhaps too good! Newer investors find Robinhood very easy to use.
In terms of customer service, this is an area in which Robinhood needs to improve. You can contact them by phone or reach out to them on socials to get your best chance of a response.
Why Use Robinhood?
Signing up with a free stock is always great, you’re basically able to start your investments with some free money!
People who are more hands-on would want to use Robinhood, as you will be able to watch your investments closely to try and maximize your returns.
Robinhood is still one of the few options that offer options and cryptocurrency trading commission-free! They’re complex investments and can be risky, but cryptocurrencies are growing in popularity, so you may want in on the action.
Robinhood is just simple to use, and that is worth its weight in gold.
Pros & Cons
Pros
No Minimum Balance
Robinhood offers free stock trades with no account minimum, except for margin accounts.
Robinhood offers pre-market and after-market trades whereas M1 doesn’t offer these opportunities.
Easy Set-Up
Robinhood is an easy platform to use, whereas M1’s interface can be a bit overwhelming for beginners.
Cryptocurrency
Robinhood offers cryptocurrency trading, something that M1 doesn’t do.
Cons
Only Taxable Accounts/ No Retirement Accounts
Robinhood doesn’t have any retirement accounts or taxable accounts yet, and they lack a diverse offering at this time.
No Rebalancing
Unlike M1, Robinhood doesn’t automatically rebalance your portfolio.
Hands-On Portfolio Management
Robinhood is not a robo-advisor, which some people are leaning towards. Robinhood is very hands-on, but the lack of premarket and aftermarket trading opportunities makes this platform less ideal for active investors.
Short Term Not Long Term Investing
Robinhood is best for day traders and people who want free trades. M1 has no transaction fees or minimum investment requirements, but this platform doesn’t offer premarket and aftermarket trading opportunities like Robinhood does.
MI Finance Vs. Robinhood: What’s It All Mean For You?
When making the comparison on M1 Finance vs. Robinhood, it comes down to which positive features you care more about for M1 Finance or Robinhood.
While Robinhood users won’t be able to trade before or after the market opens and closes, you’ll get lower prices on a wider range of stocks with this platform.
Both platforms will suit the needs of casual investors, but M1 Finance offers more benefits for people with larger accounts.
M1 Finance is best if you plan on making frequent trades each month because it has no transaction fees or minimum investment requirements.
Robinhood offers lower prices on a wider range of stocks, but this platform doesn’t have any IRA accounts or automatic portfolio rebalancing.
FAQS
Is Investing Worth It?
After reading this article, you should have a better idea of how M1 Finance and Robinhood stack up against each other.
Both platforms offer free stock trades and low-cost investing options, so people who don’t want to spend extra cash will be happy with either service.
M1 has no account minimum or monthly fees so this platform is best for people who plan on making multiple trades each month.
Investors with larger accounts will also benefit from M1’s IRA options and automatic portfolio rebalancing features which Robinhood doesn’t offer.
If you don’t want to pay any fees and aren’t concerned with premarket or aftermarket trading, M1 provides a much better user experience for day traders. If you are more interested in long-term investing then Robinhood is worth checking out.
How Does M1 Finance and Robinhood Make Money?
Both M1 Finance and Robinhood get money from having their subscription accounts with M1 Plus and Robinhood Gold.
In addition, M1 gains money from fees associated with the M1 Spend debit card, the interest on deposits or margin interest from users, and payment order overflow.
Robinhood is similar, gaining revenue from interest and payment order flow as well, but doesn’t have money from a debit card- at least not yet.
What Are Some Other Investment Platforms?
Robinhood vs. M1 Finance isn’t the only option you may need to check out.
Here are some of our other investment platform suggestions:
- Betterment– check out our review of Betterment for more details
- Webull– see how Robinhood stacks up against Webull, plus our Webull review
- Acorns– see how Robinhood compares to Acorns
- Coinbase-is a great platform but also expensive, but is it worth it?
Our Takeaways
So, M1 Finance vs. Robinhood? If you want to pick the best investments, you need to decide what sort of investor you are first.
Both M1 Finance and Robinhood can make your investment portfolio a money maker, but your top pick depends on how you invest and what you want to invest in.
Robinhood is ideal for casual investors who want to invest in a wide variety of stocks without paying fees.
It would also be better for someone who wants to be hands-on and active in their portfolio.
M1 Finance may be the better choice for people who make multiple trades each month, want more diverse account types, and want more IRA accounts with benefits like automatic portfolio rebalancing.
Before you get started on investing your money, it’s always worth learning how to manage it. We recommend checking out services like Empower (formerly Personal Capital) or Mint.
