Robinhood VS M1 Finance: Which is a Better Free Trading Platform?

Robinhood and M1 Finance are some of the best brokers out there for anyone looking to trade stocks but a trader can only use one, thus the need to identify which of the two is ideal.

Deciding between the two is not exactly a walk in the park, thus the need to dive deep to look at what each offers and then compare the two. For starters, we cannot judge them on costs since they both facilitate stock trading for free. However, we can evaluate their different underpinnings as far as investment selection, tools, mobile platforms, and account selection.

M1 Finance Review

M1 Finance offers a platform that allows you to create your own portfolio or to copy a portfolio that is designed by a pro trader. It even has an option that allows you to automate your strategy. The platform also provides free access as long as traders maintain a $500 minimum in their IRA account or $100 in their taxable account. M1 Finance has more than 60 model portfolios that traders can choose from so that they can achieve their financial goals.

M1 Finance Pros

  • Free Trading: Investors can trade ETFs and stocks for free on the platform.
  • Borrow: Investors can borrow against their investment portfolios.
  • Access Funds: Investors can access their funds through debit cards.
  • Rob-Advising: Investors can use over 60 different model portfolios to invest from.

M1 Finance Cons

  • Requires $100 to fund an account.
  • No Options or Margin Trading.
  • Not Setup For Intra Day Trading

M1 Finance Pies

M1 Finance has a unique feature called pies that is all about choosing the type of distribution you want for your investment funds and it also automates your preferences. Pies are categorized into expert pies and MyPies.

  • Expert pies- This option provides eight categories that contain the most popular investment goals. Retirement is one of the common goals for many investors and the expert pies provide some premade options geared towards that goal.
  • MyPies- This option allows traders to develop their own plans. It also allows traders to customize existing portfolios to match their preferences.

The icing on the cake is that the platform’s algorithm help to balance the trader’s pie while also optimizing their return on investment.

mifinance

Robinhood Review

Robinhood has been around since 2014 and has since then developed into one of the best trading platforms in the market. It has a web and mobile app that helps clients especially newbies to navigate the stock trading segment. As far as variety is concerned, Robinhood has you covered because it also offers other assets such as cryptocurrencies and options.

Robinhood Pros

  • Free Trading: Investors can trade stocks, etfs, options and crypto-currencies 100% Free.
  • Low Account Minimum: Start with $0
  • Margin Accounts: Investors can trade on margin accounts. (Read FINRA Warning)

Robinhood Cons

  • No Fractional Trading: This is a big deal because most new investors can’t afford to $2000 to buy one Amazon stock.
  • No Retirement Accounts: Investors can’t invest with their IRA.

Margin trading through Robinhood Gold

This is one of the most notable features available on Robinhood. Many traders use margin trading to rapidly build their portfolio. This means that you can borrow money from your broker to place a bigger stake especially if you are sure of the direction the market will likely take. There are however some conditions that you should make sure you fulfill as shown below.

  • Your minimum account balance should be $2,000.
  • Your margin should be more than 50 percent of your account balance.
  • There is a fee to be paid for the borrowed amount.
  • The minimum balance must be maintained in a maintenance account.

The Robinhood Gold account also offers some extra advantages such as more trading hours, more predictability as far as monthly fees are concerned, quick access to profits and commission-free trades.

Comparison Between M1 Finance and Robinhood

Features M1 FinanceRobinhood
Free Trading Yes – Stocks and ETFsYes – Stock, ETFs, Options & Crypto-Currencies.
Fractional Trading YesNo (Pending?)
Margins NoYes
Account Minimum $100$10
Robo-Advising YesNo
Loans YesNo
Account Types Individual, Joint and IRAIndividual Only
Debit Card Access YesNo (Pending?)

Should You Choose Robinhood or M1 Finance?

Selecting the best trading option based on the above factors is subject to each investor preferences. Both are great choices. I did my best to outline the current features above.  Both trading platforms are actively adding new features, so our analysis may change. One may be interested in margin trading and so they would likely choose Robinhood while a trader that wants to focus on retirement may choose M1 Finance.

M1 Finance is our current #1 pick for most investors.  It offers fractional shares, IRA accounts, free trading, robo advising, loans on investments and access to your money. Click here to get started with M1 Finance.

Robinhood is our second pick. It falls short in offering Joint, IRA accounts and fractional shares. However, it does offer options, currencies and margins. Click here to get a free stock and started with Robinhood.

Fractional share trading was HUGE factor in determining my pick for trading platform.  Robinhood doesn’t currently offer it.  Given the high cost of many poplar stocks, I can’t recommend investors put all their money into just a couple of stocks or the barrier to purchase them. If Robinhood starts offering it, it could certainly tip the scales in their direction.

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Ruchi Gupta

Ruchi Gupta

Ruchi has an Accounting and Graduate Degree in Business from the International School and Business and Media. She is exceptionally skilled in financial databases like Bloomberg, ThomsonOne,Datastream, CapitalIQ, and Factiva. Her focus at AlphaBetaStock.com is research breaking stocks and investment stories.

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