M1 Finance vs Robinhood: where to invest?

  • Pie investment
  • One-click rebalancing
  • No cost for a basic account
  • No minimum account
  • Easy to use
  • Cryptocurrency trading

When comparing M1 Finance and Robinhood, these are two good options for new investors, albeit for different reasons. But despite their difference, both have seen their popularity increase due to the “app-ification” of investing.

While this is a trend mainly popular with young investors at the moment, it is unlikely to change as we live in an increasingly digital world. These investment apps are beautiful and easy to use. And while they lack some of the advanced features expected by advanced traders and investors, they still do the job for those who want something simple.

The same changing tide gave birth to these two apps, but they’re still quite different. So, this article will take a look at how they stack up and help you decide which one is right for you.

M1 Finance overview

M1 Finance is an investment application that allows you to partially or fully automate your investment strategy. You can invest in individual stocks, ETFs, or choose from one of M1’s expert pies, which are already diversified portfolios.

The advantage of M1 is that it makes it easier to manage your portfolio, which makes it ideal for first-time investors. For example, if you have a portfolio of 10 different ETFs or 30 different stocks, rebalancing can be painful.

When you want to rebalance your portfolio on M1, all you have to do is click on “rebalance” and it does the rest for you. No more manually buying and selling stocks!

For those who invest for the long term, M1 is ideal if you don’t want to spend a lot of time in the mobile app. Once you’ve set it up, you can just spend a minute or two to check things out and maybe rebalance.

Otherwise, there isn’t much you can do once you’ve decided on your investment strategy; maintaining a healthy asset allocation is a snap.

M1 Finance Details

0.25% (digital); 0.40% (premium)

IRA, SEP IRA, brokerage, trusts, verification

Exchange Traded Funds (ETFs)

M1 gives you more control over your investments than robo-advisers like Improvement, but it is better for those who are not actively negotiating. The reason is that it only has one trading window (two for M1 Plus members) which means you are limited in how often you can trade. Any changes you make to your M1 Finance wallet will be applied in the next available trade window.

M1 Finance also offers dividend reinvestment, also known as DRIP, so you can fully automate your strategy.

M1 Finance offers brokerage accounts and IRA. In addition, it supports trust accounts and offers checking account and debit card through M1 Spend. There are, however, some types of accounts that you won’t find on M1, such as custodial accounts or 401 (k) plans. For those, you might want to consider blooom.

Plus, M1 Borrow lets you borrow up to 35% of your portfolio balance at a rate as low as 3.5% (2% for M1 Plus members). You must have a balance of at least $ 10,000 to use this feature.

And, of course, there is no charge to use the service unless you sign up for M1 Plus ($ 125 / year). Besides the extra trading window, M1 Plus gives you 1% APY on their checking account and other perks. However, most investors can get by with a free account.

While M1 Finance does not offer every type of account imaginable, this is ideal for most passive investors. If you just want to invest in a taxable investment account or a long-term IRA, M1 is a great option.

M1 financing costs

When it comes to M1 Finance fees, there isn’t much to report. As mentioned, there is no charge to use the service unless you sign up for M1 Plus. Other than that you will pay expense ratios on ETFs if you invest in them.

However, the expense ratios on M1 ETF offers are also quite reasonable. For example, the Ultra Aggressive Expert Pie has a charge of 0.07%. All in all, fees are basically not an issue with M1.

M1 Finance Pros

  • Pie investment
  • One-click rebalancing
  • No fees for a basic account

M1 Finance Cons

  • No harvest of tax losses
  • Only supports IRA for retirement accounts

For more details on M1 Finance, see our M1 Finance Review. Or opening an account with M1 and start investing for free!

Robinhood overview

Robin Hood is a simple trading application with a beautiful interface, and day trading is possible on this application, unlike M1 Finance. It was launched in 2013 with commission-free trading, but saw a resurgence in popularity when people were stuck in their homes due to the COVID-19 pandemic.

Like many trading and investing apps these days, there are no minimum or monthly account fees, which contributes to its popularity. Although Robinhood was shrouded in controversy during the pandemic, it remains a simple trading app that does what it does well.

Besides, you can get free stock when you sign up for a Robinhood account. The stock you get is random but could be valued at over $ 200.

Robinhood Details

Stocks, options, ETFs, cryptocurrency

With Robinhood, you can trade and invest in stocks, ETFs, options, and cryptocurrencies. Part of what helped Robinhood gain notoriety is the simplicity of the app. It doesn’t have the advanced charting or analysis tools you see with brokers like Fidelity or TD Ameritrade.

It can be seen as both a blessing and a curse; this makes new traders less likely to be overwhelmed by the whole experience, but may leave something to be desired for experienced traders.

In addition, Robinhood recently introduced fractional shares, which significantly reduces the barrier to entry. With a Google stock over $ 2,000, it’s hard for many investors to imagine spending that much on a single stock.

With no monthly fees, no commissions, and with an easy-to-use interface, it’s easy to see why Robinhood has grown in popularity. Plus, it now supports automatic investing, so you can passively invest in your favorite stocks.

That being said, it only supports brokerage accounts, so those who want to manage their retirement accounts should look into M1 Finance or blooom. Robinhood does not offer retirement accounts at all.

Robinhood fees

Like M1, Robinhood doesn’t have much to say in terms of fees. It charges $ 75 for outgoing transfers, which is common for most brokers.

The only other fees that Robinhood charges are $ 5 per month for Robinhood Gold, which adds features like Level II market data, $ 1,000 of margin trading, and instant transfers to your portfolio.

Robinhood pros

  • No minimum account
  • Easy to use
  • Options and crypto trading

Against Robinhood

  • Limited reporting tools
  • Offers brokerage accounts only
  • Limited assistance

M1 Finance vs Robinhood: comparison

$ 0 or $ 125 / year (M1 Plus)

$ 0 or $ 5 / month (Robinhood Gold)

IRA, SEP IRA, brokerage, trusts, verification

Robinhood vs M1 Finance: which one is right for you?

Is M1 Finance or Robin Hood may be good choices for your investment accounts depending on your needs. Both are beautifully designed and are extremely easy to use. You are unlikely to feel lost or completely overwhelmed by either one.

However, which one is the best depends on what you hope to accomplish. For example, M1 cannot be used for day trading because it only has one daily trading window; you can’t trade more often than that. You can increase it to two trading windows with two with an M1 Plus subscription, but it’s as high as it gets. So if day trading is what you are looking for, Robinhood is what you want.

But Robinhood can’t do it all, either. It doesn’t support mutual funds, bonds, or any type of retirement account, for that matter. Anyone who needs support with tax-efficient accounts should consider M1 over Robinhood.

As you can see, which app is best for you depends on your needs. For active traders, Robinhood is your choice, but for those who want to trade passively or invest in retirement accounts, M1 Finance is the best option.

Ready to start? Try M1 Finance or Robin Hood.

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