robinhood vs m1 finance

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

One of the common questions we get from people that want to start investing is what is the best free stockbroker or app to start investing. When I started investing over 20 years ago, there were not many options for people to buy stocks.  In addition, it was expensive to buy stocks because there were ticket charges and usually a $10,000 dollar account minimum to open an account. Investors can now start buying stocks and ETFs with $100 or less and 100% free trades!

Two of the most popular online free brokerages are Robinhood and M1 Finance.  For fair disclosure I use both and think are both great options for anyone looking to trade stocks online.  This brings us to the question, “Robinhood vs M1 Finance, Which is a better trading app and broker.” The short answer is both are great options, but I recommend M1 Finance for new investors and people that are looking to build up a trading portfolio and hold positions. I also like the buckets that M1 Finance sets up and beginners can use to get started quickly.  Robinhood is better for those looking to make day trades but lacks the investing buckets or Robo investing which is ideal for new investors. 

In this article, we will take a look at M1 Finance vs Robinhood. We realize that we all are living through a particularly volatile time since we deal with this global crisis, and financial markets also have seen a drastic change, affecting all investors. Our mission has always been to help individuals make the most educated decisions concerning how, where, and when to invest. Given current market volatility, and also the fluctuations in the online brokerage industry, we are more committed than ever to providing our readers with unbiased and expert reviews of the top investing platforms for starting investors.

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 M1 Finance and Robinhood facilitate stock trading for free. However, we can evaluate their different underpinnings as far as investment selection, tools, mobile platforms, and account selection.

All brokerages working within the U.S. Have to get $500,000 of SIPC protection, which includes a $250,000 limit for cash. This means that any holdings with a brokerage that exceed $500,000 may be lost in the event that a broker goes bankrupt or is liquidated. That said, retail investors, particularly beginners, are unlikely to have accounts that exceed $500,000. Therefore, there’s little cause for concern when it concerns the safety of your money in a brokerage account.

Trading vs. Investing

Generally, when people talk about investing, they are referring to the practice of purchasing stocks, ETFs, mutual funds, REITs, etc to be held for a very long period of time. Investors maintain their funds for the long term so that they may reach a retirement target so their money can grow faster than it might in conventional savings accounts accruing interest. And selling assets in a short time period with the goal of earning quick gains. Trading is typically seen as riskier than investing and must be averted by the inexperienced and people brand new to the stock market.

Although both can be used for trading and investing online, Robinhood is geared more toward day traders, while M1 Finance is geared toward investing. To better help investors, we did a very quick review of Robinhood and M1 Finance.

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

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.

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 Free Stock

One cool thing that Robinhood offers is free stock. Most of the time it is around $5, but you could get one worth over $100. This is definitely a cool bonus.

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

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.

Robinhood and M1 Finance Compared

Features M1 Finance Robinhood
Free Trading Yes – Stocks and ETFs Yes – Stock, ETFs, Options & Crypto-Currencies.
Fractional Trading Yes Yes – new
Margins No Yes
Account Minimum $100 $10
Robo-Advising Yes No
Loans Yes No
Account Types Individual, Joint and IRA Individual Only
Debit Card Access Yes No (Pending?)

Should You Choose Robinhood or M1 Finance?

Selecting the best trading option based on the above factors is subject to each investor’s 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 loans. 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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