Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.
Investors will be happy to know that fees and commissions throughout the brokerage industry have been on the decline over the past 5 years. This has resulted in some great low fee or no fee investing platforms. With the introduction of roboadvisors and algorithm based investing platforms, downward pressure on fees has greatly benefited the everyday investor. Two of these new platforms are Stash and M1 Finance, and in this review we will be discussing the differences and similarities between them.
M1 Finance is an investing platform focused on long term investing in a relatively passive way. M1 Finance offers a free online investing platform and mobile app for its users. It is easy to open an account and you can begin investing with as little as $100.
You start by creating your portfolio which M1 Finance calls a pie. You can customize your pie with a variety of stocks and ETFs offered on M1’s platform. You can also choose from a variety of expert created pies offered by M1 Finance and its partner Cambria Investments. One of the biggest pros of investing with M1 is that M1 Finance offers this feature 100% free, no commissions or management fees.
One feature unique to M1 Finance is the ability to buy fractional shares. This means you can have broad diversification even if you have a small account balance. You can purchase as little as 1/10,000th of a share of a stock or ETF.
M1 Finance offers a variety of other features such as tax minimization, automated deposits, automated rebalancing and dividend reinvestment all for free. Considered to be the next generation broker, M1 Finance has had a wave of users switching over to the platform since they launched. The emphasis on passive low cost investing has resonated with many other investors across the United States. The best part being that M1 Finance is completely FREE to use.
You can begin investing in Stash with as little has $5. However, be cautious because there is a minimum fee of $1 per month to use Stash. You may want to wait until you have more cash to begin investing.
After opening an account, you will be guided through a questionnaire where Stash will ask a variety of questions to analyze your risk tolerance, investment horizon, and personal preferences. Once Stash has an idea of what type of investor you are, they will offer you a variety of portfolios customized to your investment objective.
Most portfolios are composed of a group of ETFs as well as a limited number of individual stocks. Stash uses clever names and easy to understand themes for their portfolios such as “American Innovators” “Blue Chips” and “Clean & Green.”
Similar to M1 Finance, Stash offers the ability to buy fractional shares of stocks or ETFs. This will allow for increased diversification for smaller accounts. Stash also offers a variety of educational material to teach investing principles to new investors. Stash aims to make investing simple and offers their platform in an approachable way for novice to moderate level investors.
To use stash there is a minimum fee of $1 per month for accounts below $5,000, and 0.25% annual fee on accounts greater than $5,000. There is also a $2 per month fee for retirement accounts (however, this fee is waived if you are 25 years old or younger).
Which investing platform is better?
M1 Finance and Stash are very similar platforms with some significant differences in their approach. Both platforms have a similar ideal user in a moderate level investor who follows a DIY approach and is relatively fee sensitive. M1 Finance offers their service completely free of charge, while Stash charges a relatively small monthly fee for servicing your account. M1 Finance also offers a variety of additional features such as dividend reinvestment, margin trading, and tax minimization. M1 Finance has more features than Stash and is also free to use. For these reasons we believe M1 Finance is the superior investing platform.
|Minimum Account Balance||$100 ($500 Retirement Accounts)||$5|
|Fees||No Fees||$1/Mo ($2/Mo Retirement Accounts) under $5,000 or 0.25%/Yr over $5,000|
|Accounts||Taxable Account, Roth IRA, Traditional IRA, SEP IRA, Joint Trusts||Taxable Account, Roth IRA, Traditional IRA, Custodial|
|Investments||Stocks and ETFs on NYSE, NASDAQ and BATS||ETFs, Limited Individual Stocks|
|Average ETF Expense Ratio||As low as 0.04% with Vanguard ETFs||On average, 0.34% higher than industry average|