Top 3 Investing Apps That Let You Invest For Free In 2019

Investing Simple is affiliated with Webull and M1 Finance. This relationship does not influence our opinion of this platform.

For the average retail investor, there has never been a better time to get started with investing in the stock market. Improvements in technology and algorithmic trading over the last 10 years have allowed new types of investment apps and brokerages to emerge. Many of these apps and brokerages are offered completely free to United States users.

In this article, we are going to outline 3 of the top free investment platforms and apps. Some of these picks are very well known and others still growing in popularity. Here is our review of the M1 Finance, Webull, and Robinhood investing apps. Each platform offers a different user experience, so it is important that you do your research before choosing which investing app to use.

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Best Free Investing Apps 2019

1. M1 Finance App

M1 Finance is a new type of investing app that allows you to automate your investing 100% for free. You can invest in a variety of ETFs and stocks on the M1 Finance platform. Once you build your portfolio and deposit funds, you can sit back and allow your portfolio to be automatically rebalanced by the M1 Finance platform. Your entire stock market portfolio can be put on autopilot!

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M1 Finance Investing App

M1 Finance works by creating a portfolio called a pie. Within each pie you choose the specific stocks and ETFs that make up your pie. For example, you could have a pie that is 50% Facebook stock and 50% Netflix stock. You can have an unlimited number of pies on the M1 Finance platform as well as the option to put 100 holdings within one pie. For example, you could have a growth pie and an income pie on M1 Finance!

M1 Finance also offers expert pies created by securities professionals on their platform. M1 Finance is the only platform we have come across that offers this service on a completely free investing app. These prebuilt pies are designed for specific investment goals. You can invest for your retirement, follow specific industries and sectors, as well as follow your favorite hedge fund managers. M1 Finance offers these prebuilt pies completely 100% free. For those who do not want to build a portfolio from scratch, this can be a great option.

Click here to get started with M1 Finance!

M1 Finance Expert Pie
M1 Finance Expert Pies

Pie investing through M1 Finance allows you to maintain a diversified portfolio even if you have a smaller investing account. One of the problems investors have faced for years is having a well diversified portfolio without having tens of thousands of dollars to invest. M1 Finance has created a solution by allowing you to invest in fractional shares for free!

For example, you can invest $100 into a pie that is 50% Alphabet stock and 50% Netflix stock. Traditionally, you would need over $1,000 dollars to build a portfolio consisting of only these 2 companies. M1 Finance has changed the game by offering fractional shares. This allows you to hold smaller portions of stocks within your portfolio and increase your overall diversification.

Automation is a big part of the M1 Finance platform. M1 Finance has a variety of features that allow you to passively manage your investments. Out of the 3 platforms we are comparing in this review, M1 Finance is the most automated. That is why, in most cases, M1 Finance is the best choice for passive investors.

M1 Finance Features

Dynamic Rebalancing: This is one of M1’s most useful features, giving you the ability to streamline your investments. When you deposit funds, M1 Finance will allocate those funds across the holdings in your portfolio. When you withdraw funds, M1 Finance will sell off proportional positions in your portfolio making sure you stay fully diversified. Dynamic rebalancing allows you to withdraw and deposit funds knowing that you will always be fully invested and you won’t need to actively buy or sell positions yourself.

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M1 Finance Automatic Rebalancing

Built In Tax Efficiency: M1 Finance allows you to minimize your tax liability by using tax efficient strategies when selling investments. M1 Finance is the only free investing platform we have come across that offers a tax efficient selling strategy for free.

When you withdraw money from your M1 Finance account, your investments are sold in this order:

    1. Losses that offset capital gains

    1. Securities or groups of securities that result in long term capital gains (lower tax rate)

  1. Securities or groups of securities that result in short term capital gains (higher tax rate)

By using these tax minimization strategies, M1 Finance aims to keep more of your money invested. By doing so, they are saving you money in the long term and allowing for more compounding to build in your account over time.

Click here to get started with M1 Finance!

Investing Schedules: Within the M1 Finance app, you have the ability to set up recurring deposits or withdrawals into and out of your account. M1 Finance will automatically invest or sell funds in order to satisfy your cash needs. When we said you could automate your entire portfolio with M1 Finance, we meant it!

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M1 Finance Recurring Investments

Cash Balance Control: M1 Finance allows investors to set their preferred cash balance within their account at all times. If you were to need cash out of your account, you have it ready to go. You may also wish to hold a cash balance if you are dollar cost averaging into the market. Investing portions of your cash into the market over a period of time may be less risky during volatile market conditions. If you do not enable this feature, you will remain fully invested through M1 Finance.

The Verdict: M1 Finance

In most cases, M1 Finance is a great platform for passive investors. Most of their features cater to a long term passive investor who is sensitive to fees and taxes. M1 Finance has many strengths such as their smart rebalancing, tax minimization strategies and fractional shares. Another advantage is the ability to create your own portfolio of stocks and ETFs that fit your specific needs. If you are not comfortable with building your own portfolio, you can choose from M1’s expert pies that are built by their own securities professionals. M1 Finance would not be an ideal platform for active traders or people who make frequent trades in and out of the market. If you are looking for a platform for active traders, keep on reading!

Click here to get started with M1 Finance!

2. Webull App

Webull is an investing app you probably have not heard of before, but it made our list for a number of good reasons. Webull is a commission free stock and ETF trading app. Webull is designed for the active trader who is looking for a more dynamic, research oriented interface. Webull has a variety of features that benefit traders such as technical indicators, research agency ratings, financial calendars and free margin trading as well as short selling. With easy access to margin, research tools, and live data, Webull has built an ideal platform for active traders.

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Webull Investing App

Webull is an app that is designed for the intermediate trader who already has some experience with the stock market. If you are a complete beginner, you might experience information overload. If you are a somewhat experienced trader, Webull will give you all of the data you will likely need.

Webull Free Stock Promotion!

If you sign up via our link, you will get a free stock worth up to $1,000! You don’t need to fund the account to get the stock, you just have to open it.

Click here to open an account and receive a FREE stock with Webull!

Webull Features

Technical Indicators: Webull has a variety of technical indicators available on the platform. You can choose from up to 22 technical indicators such as moving averages, relative strength indexes and more. Here is the full list in our complete Webull review.

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Webull Trading App

Virtual Trading Simulator: Webull has a very useful feature called the virtual trading simulator. This feature lets you create a virtual portfolio with fake money to test out strategies before risking real money. This is an ideal feature for someone just starting out, who may need to gain more investing knowledge and know how before investing real money.

Smart Alerts: Webull lets you set a variety of alerts for different holdings. You can be alerted when a price level is hit, or a rate of change has hit a defined level. There are also alerts for volume levels or changes, this can be useful for traders get a sense of where the stock may be headed in the short term.

Financial Calendar: The financial calendar feature keeps you informed on all the latest and upcoming financial news. Important events such as upcoming IPOs, dividend payouts and earnings releases are all provided to you in a calendar format on the Webull app.

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Webull News Stream

Margin Trading: Webull allows margin trading on its platform to certain users. You must have a minimum account balance of $2,000 to be approved for margin trading.

After Hours Trading: Webull offers after hours and premarket trading for free. You can trade securities from 4 am to 8 pm on the Webull platform offering more flexibility in placing trades.

Commission Free Short Selling: There are no trading commissions to short a stock in Webull. Short selling occurs in a margin account, but all trades are completely free.

The Verdict: Webull

Webull is a relatively new and growing trading platform, with new users discovering its unique functionality everyday. In most cases, Webull is an ideal platform for active traders looking to place trades 100% for free. With easy access to margin, research tools, and live data Webull has built a great platform for active traders.

If you sign up via our link, you will get a free stock worth up to $1,000! You don’t need to fund the account to get the stock, you just have to open it.

Click here to open an account and receive a FREE stock with Webull!

3. Robinhood App

Robinhood is one of the most well known commission free trading platforms. It is easy to use and targets the beginner investor who is looking to save money by avoiding commission costs. Robinhood allows you to trade stocks, ETFs, cryptocurrencies and options commission free. The Robinhood user interface is simple and digestible and provides a good user experience for a complete beginner.

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Robinhood Investing App

What you will find after using Robinhood for a while is that the platform becomes very limiting. While it is easy for a beginner to use, you will probably outgrow it in a few months. The lack of sophisticated charting and technical/fundamental metrics is a common complaint among Robinhood users. On the other hand, Robinhood was designed to be a beginner friendly platform.

Robinhood Features

Commission Free Trading: Robinhood allows users to trade stocks, ETFs, options and cryptocurrencies completely free. All investors benefit from saving money on fees. This is specifically useful for active traders who make frequent day to day trades.

Simple Interface: Robinhood is known for its user friendly interface. Its application is easy to use and not overwhelming like other platforms can be. This may be a benefit for certain investors who are just starting out and would like a simple and easy to use platform. For investors looking to conduct more research and build trading strategies, you may find the Robinhood platform is fairly limited.

Robinhood Gold: Robinhood offers a subscription service called Robinhood Gold. In the Robinhood Gold plan, you have the ability to trade pre and post market starting at 9 am and ending at 6 pm. Robinhood Gold lets you trade on margin once your account has a $2,000 minimum balance. Robinhood Gold costs $10 to $15 per month for this service.

The Verdict: Robinhood

Robinhood is one of the most well known free investing platforms. Being one of the first, Robinhood has spread in popularity faster than many of its competitors. That being said, we believe Robinhood may lack features that other free trading platforms offer. For example, margin trading and after hours trading is offered for free by Webull. You can only access these features on the Robinhood Gold subscription platform which costs $10-$15 per month. Short selling and research tools are additional features offered by Webull that Robinhood does not provide on their platform. Robinhood’s greatest strength is it’s ease of use and accessibility compared to other similar trading platforms. Robinhood also lacks many of the automation features offered by M1 Finance.

FeatureM1 FinanceWebullRobinhood
Commission Free TradingYesYesYes
Account TypesIndividual Taxable, Joint, IRA, Roth IRA, SEP IRA, Trust AccountsIndividual TaxableIndividual Taxable
Account Minimum$100$0$0
InvestmentsStocks and ETFsStocks and ETFsStocks, ETFs, Options, Cryptocurrencies
Prebuilt PortfoliosYesNoNo
Automated RebalancingYesNoNo
Tax MinimizationYesNoNo
Fractional SharesYesNoNo
Short SellingNoYes (Commission Free!)No
MarginYesYesYes
After Hours TradingNoYes (For Free!)Yes (Robinhood Gold $10-$15 A Month)
Analyst Ratings NoYesNo
Technical IndicatorsNoYesNo
Virtual Trading SimulatorNoYesNo

Which App Is The Best?

Everyone has a different preference for the ideal features offered on their investing platform. We believe the best platform completely depends on what type of investor you are. If you are an experienced active trader who likes to make frequent trades then Webull may be a better fit for your investment style. For those of us who are passive long term investors, who don’t make frequent trades, then I would check out the M1 Finance platform. Robinhood may be the best platform for beginner investors or traders who are looking for a relatively easy to use platform. Dividend investors would likely lean toward M1 Finance as this platform allows automated reinvestment of dividends. Each platform has its own unique features. In the end they are all free so you can try all three platforms to see which one you like best.

M1 Finance: What Is An Expert Pie?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

Times have changed, and investing in the stock market is not the same as it was 10 years ago. The rise of the roboadvisor and algorithm based trading have taken the brokerage industry by storm. One of the most established examples being M1 Finance.

M1 Finance is a pie based investing platform. No, this is not the kind of pie your grandmother would make, but instead this is a pie based investment portfolio.

Within M1 Finance, your portfolio is referred to as a pie. Your pie breaks down what positions or securities you would like to hold in your account as well as how much weight they carry in your portfolio. You can create your own custom pie in M1 Finance and choose your own investments or you can invest in an M1 Finance expert pie.

In this article, we talk more about fractional shares on M1 Finance.

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M1 Finance Pie Based Investing

M1 Finance also offers expert pies on the platform. These expert pies are created by M1 Finance and are offered to provide increased diversification as well as low cost alternatives to some of the other investment options on the market. These expert pies can also be a suitable choice for beginners who do not want to build an investment portfolio from scratch. These expert pies can make up your entire investment portfolio or just a portion of it.

M1 Finance creates these professionally built pies based on generally accepted investing principles as well as past performance data. They offer a variety of expert pies, each composing of 2 to 20 securities depending on the type you choose. Expert pies are designed by M1 Finance investment professionals as well as third party partners such as Cambria Investments. M1 Finance offers 9 different categories of expert pies.

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M1 Finance Expert Pies

Here are the categories of the M1 Finance expert pies…

  1. General Investing: Choose from risk levels ranging from ultra conservative to ultra aggressive.
  2. Plan For Retirement: Invest for your target retirement date. Your portfolio allocation will adjust over time to become more conservative as you approach retirement.
  3. Responsible Investing: Socially conscious investing. This investment category invests in companies that are concerned about financial obligations as well as social and environmental obligations.
  4. Income Earners: Contains dividend and interest paying securities.
  5. Hedge Fund Followers: Pies that track public funds such as Berkshire Hathaway and Icahn Enterprises.
  6. Industries & Sectors: Invest in one segment of the overall economy.
  7. Stocks & Bonds: Multiple options of diversified stock and bond exposure.
  8. Other Strategies: Other investment options like blue chip stocks, domestic growth, domestic value and more.
  9. Trinity Portfolios: Portfolios created by Cambria Investments. Learn more about Cambria Investments here.
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M1 Finance Expert Pies

M1 Finance has a quantitative model for choosing the specific ETFs within each expert pie. This model takes into account variables such as fees, assets under management, and tracking error of standard deviation. These variables are considered and result in low cost ETFs that track the underlying benchmark(s) better than others.

There are no fees associated with using M1 Finance or the expert pies. However, all ETFs have management fees associated with the fund. M1 Finance chooses ETFs with some of the lowest fees. They are also very transparent about the management fees charged by ETFs on their platform.

Click Here To Get Started With M1 Finance

How Does M1 Finance Make Any Money?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

Times have changed, and investing in the stock market is not the same as it was 10 years ago. The rise of the roboadvisor and algorithm based trading have taken the brokerage industry by storm. One of the most established examples being M1 Finance.

M1 Finance has an offer that on the surface might seem too good to be true. First of all, they offer commission free trading. Second of all, the minimum account balance is just $100. Is M1 Finance operating as a charity? Not quite.

First, M1 Borrow

M1 Finance makes money in a couple of different ways. The first way that M1 Finance makes money is by offering a feature known as M1 Borrow.

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M1 Borrow

M1 Borrow allows investors to take out a portfolio line of credit. Your investments in your M1 Finance account serve as the collateral. M1 Borrow allows you to borrow up to 35% of your M1 Finance account balance at an interest rate of 3.75% per year. Essentially, M1 Finance extends a loan to you and in return if you do not pay it back they can sell your investments to cover the loan. The risk on M1 Finance is relatively low, so this is easy money.

Second, lending shares to short sellers 

Short sellers are borrowing shares to bet against them. Short selling is a relatively complicated subject, and that is a topic for another article. However, M1 Finance is able to loan shares held by investors to short sellers and profit from doing this.

Third, uninvested cash in your account

You know that cash sitting in your investment account? Depending on what brokerage you are using, you may or may not be earning interest on it. Free investing platforms like M1 Finance do not offer interest on the cash in your account. Instead, they keep the interest earned on the cash balances.

On a cash balance of $10,000 this could be as little as $50 per year. However, when you consider that M1 Finance has millions of dollars in cash sitting in investment accounts these small bits of money add up.

Fourth, directing order flow 

Brokerage accounts like M1 Finance can receive commission or compensation for directing orders to different parties for execution. The brokerage receives a small payment for directing the order to different parties.

Between these methods, M1 Finance is able to make money and offer a brilliant investing platform completely free.

Click Here To Get Started With M1 Finance

How Does M1 Finance Work?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

Times have changed, and investing in the stock market is not the same as it was 10 years ago. The rise of the roboadvisor and algorithm based trading platforms have taken the brokerage industry by storm. One of the most established examples being M1 Finance.

M1 Finance allows you to create your own portfolio of ETFs and stocks with no trading fees or commissions. What separates M1 Finance from competitors is the offering of partial shares and automated investing features. Partial shares allow investors to create their own portfolio of stocks or ETFs by buying as little as 1/10,000th of a share at a time. Your M1 Finance account can be set up to automatically invest your cash balance. In doing so, M1 Finance automatically rebalances your portfolio by buying whatever you are low on. For the first time ever, investors can build a well diversified investment portfolio with as little as $100.

Click Here To Get Started With M1 Finance

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M1 Finance Website Homepage

What Is M1 Finance?

M1 Finance was launched in 2016 and is an online roboadvisor and brokerage hybrid designed for everyday people who want to invest in stocks or exchange traded funds (ETFs). M1 Finance focuses on low cost passive investing with additional features such as automatic rebalancing of your portfolio and tax minimization strategies. M1 Finance operates by creating portfolios of stocks and ETFs called “Pies”. Each pie can be customized meaning you can choose specific stocks and ETFs that you want to add. For example, you could build a pie with 50% Tesla stock and 50% Google stock. There are also prebuilt pies that M1 Finance has created based upon the amount of risk you would like to take, investment time horizon, and personal preferences. All of these features are included free of charge.

Other platforms like Stash and Acorns offer these prebuilt portfolios, but they charge an asset management fee for this. M1 Finance is one of the only reputable investing platforms that offers expert created portfolios for free.

Click Here To Get Started With M1 Finance

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M1 Finance Custom Pies

M1 Finance also allows you to buy fractional shares of a corporation within your pie. For example, if your M1 Finance account had a total of $1,000 in it, but you would like to buy a share of Amazon for $1,885.60 then you would be offered a fractional share of Amazon to hold in your portfolio valued at $1,000 or less depending on its weight in your pie. With fractional shares, you can buy as little as 1/10,000th of a share! This allows you to have a well diversified portfolio with as little as $100, the minimum balance required to open an account with M1 Finance.

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Amazon Stock, August 8th 2018

How Does M1 Finance Work?

Step 1: You can create your account here. When you sign up, you will be guided through a process to build your portfolio or pie. You may choose to create a custom pie from a variety of ETFs and stocks offered on the M1 Finance platform. You can also choose from a variety of expert pies that are designed by M1 Finance that offer templates for ideal pie creations. Your pie may contain 1 stock or up to 100.

Here is more information on these expert pies.

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Opening M1 Finance Account

Step 2: Once your account is open, you will be guided to create your brokerage account. This is where you will put in your personal information and decide which type of investment account you are going to open up (individual brokerage account, retirement account, etc.). You may open up multiple types of accounts if you’d like.

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M1 Finance Account Type

Step 3: After you have set up your M1 Finance account, you will be able to link a bank account and begin funding your account. M1 Finance requires a minimum deposit of $100 ($500 for retirement accounts) to begin investing.

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Custom M1 Finance Pie

If you are new to M1 Finance, you may want to consider a steady entry into the market. In the investment community, we call this dollar cost averaging. This is simply investing your money into your portfolio over a period of time rather than all at once. We talk a great deal about dollar cost averaging in our beginner’s guide to the stock market.

Say you have $100,000 to invest. You may want to invest just $10,000 into the market every month for 10 months. By doing so, you lower your risk of investing into an overheated market. When you invest over time using dollar cost averaging, you have less risk of getting in at the top of the market. However, the disadvantage to dollar cost averaging is that you may miss out on exceptional market performance by not being fully invested during that period of time. Most financial professionals and seasoned investors would agree that dollar cost averaging is the way to go.

What Are The Fees?

M1 Finance has grown a great reputation for its no fee structure. There are no trading commissions or mark up fees for using M1 Finance as long as you open a brokerage account and fund it with $100 ($500 for retirement accounts).

You may be asking yourself, so how do they make money? M1 Finance makes money  in a way similar to Robinhood, by directing order flow and offering margin to investors. Here is our article on this.

What Are The Features Of M1 Finance?

M1 Finance offers a variety of additional features, the two most prominent being tax minimization and smart rebalancing. Using a simplified method of tax loss harvesting, M1 Finance offers options to sell positions in the most tax favored way.

For some investors, the tax loss harvesting offered by other roboadvisors is worth paying for the annual management fee. However, if you are looking to take advantage of this tax minimization M1 Finance offers this for free.

Betterment is a roboadvisor that offers tax loss harvesting. Betterment, however, charges an asset management fee of 0.25% while M1 Finance charges nothing. You can read our review of Betterment here.

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M1 Finance Tax Minimization

Another feature of M1 Finance is smart rebalancing. Using smart rebalancing, all deposits will be automatically invested into your “pie” without your manual input. When withdrawals are taken out of your account it will automatically rebalance your pie so it has the correct weight of your holdings at all times.

Have you heard of the old saying “buy low, sell high?” Well, M1 Finance will do this for you! When you add money to your portfolio, you can opt to have M1 Finance automatically invest this money. This money will be used to purchase whatever you are low on in your portfolio. If you decide to withdraw and take money out, M1 Finance will sell whatever you are overweight or high in. This ensures that your portfolio is well balanced at all times.

Is M1 Finance Safe?

M1 Finance is a member of Financial Industry Regulatory Authority (FINRA) and the Securities and Investor Protection Corporation (SIPC). Being a member of SIPC, you will be insured in the event that M1 Finance goes out of business or goes financially insolvent. Each account at M1 Finance is insured up to $500,000 in coverage ($250,000 for cash).

Who Is M1 Finance For?

In most cases, M1 Finance is best for someone who is a passive investor, relatively fee sensitive, and does not want to spend a significant time managing their investments. This would not be an ideal platform for active traders. Any individual stock investors should have a minimum time horizon of 5 years. As Warren Buffett has said, investing in stocks with a time horizon of less than 5 years is speculating.

Who is M1 Finance Not For?

M1 Finance would not be an ideal platform for active traders. Anyone who would like to make frequent trades in and out of the market should try alternative platforms to M1 Finance such as Robinhood. M1 Finance is also not a great platform for those looking for hand holding or an in person broker. M1 Finance is able to offer all of these features for free by minimizing the expenses the business incurs. Unfortunately, this means no brick and mortar locations or brokers you can call on the phone.

Click Here To Get Started With M1 Finance

M1 Finance VS Robinhood: Best Investing Platform 2018

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

In recent years, dozens of new online trading platforms and robo advisors have emerged. These services have quietly started to disrupt the traditional brokerage industry. The majority these platforms are geared towards individual investors and offer different types of features that aid the do it yourself investor. Robinhood and M1 Finance are some of the most well known of these platforms. As someone looking to enter the stock market, it can be difficult to decide on what platform is the best for you.

In this review, we will be highlighting some of the key differences between M1 Finance and Robinhood!

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Robinhood VS M1 Finance

First up, Robinhood

Robinhood is an online brokerage that focuses on commission free investing. All buys and sells on Robinhood are completely free. Robinhood is an easy to use platform that simplifies investing and caters towards the millennial investor. Since its release in 2015, Robinhood has gained respectable user growth in the brokerage community, now with over 5 million users. On the Robinhood platform you are free to invest in stocks, ETFs, options and even some crypto assets such as Bitcoin and Ethereum. Robinhood also offers a tiered premium gold service for margin trading. Robinhood has watch lists and corporate action trackers, but performing any company research on the platform is very limited. This is because Robinhood was designed to be as simple and user friendly as possible.

For more information on Robinhood, check out this review by Ryan Scribner.

Robinhood is good for beginners who want to get started with investing without using a complicated trading platform. However, experienced investors will find that this platform is too basic. Many Robinhood users will conduct investment research on other sites or platforms and use Robinhood strictly for transactions.

Robinhood certainly met the goal of being the most accessible investment platform out there with a $0 minimum account balance and $0 in trading commissions. For this reason, Robinhood is the easiest brokerage account to get started with.

There are, however, a number of areas where this platform falls short. Here is our list…

  1. Robinhood does not offer a DRIP or dividend reinvestment plan. You will need to reinvest your dividends on your own.
  2. Robinhood only offers purchase of whole shares. This is more bad news for dividend investors, as you cannot reinvest those dividends into partial shares. You will need to save up until you can afford another whole share of that stock.
  3. Robinhood does not offer automation of the portfolio. While you can automate deposits to your Robinhood account, you cannot automate investments. Sorry passive investors!
  4. Robinhood does not offer retirement accounts. They have stated that they hope to offer this down the road, but no timeline has been mentioned.
  5. Robinhood does not offer any portfolio guidance or prebuilt investment portfolios. You are on your own!

Robinhood offers a great free service and has gotten millions of people to invest in the stock market by significantly lowering the barriers to entry. However, as we mentioned there are some areas where this platform falls short.

Next, M1 Finance

M1 Finance aims to take Robinhood’s idea of commission free investing a step further. M1 Finance has features the DIY investor and the passive investor will love. The M1 Finance platform allows you to build a custom portfolio with whatever stocks and ETFs you choose. M1 Finance also allows you to buy fractional shares of companies (up to 1/10,000th of a share) which allows investors to have complete diversification even within smaller accounts.

Once your portfolio is built, M1 Finance will allocate any deposits into your account to the group of holdings you chose. With M1’s automated reinvestment feature, you won’t have to worry about idle cash in your portfolio as you can remain fully invested. Dividends within the account will be reinvested once the cash balance hits $10. M1 Finance also offers tax minimization strategies, recurring investments, as well as professionally created portfolios. The best part? M1 Finance offers their service 100% free with no commissions on trades and no price mark ups.

For more information on M1 Finance, check out this review by Ryan Scribner.

Which one is the winner?

Robinhood and M1 Finance both offer a similar product, but with one big difference being their target user.

The ideal user of Robinhood is a relatively active trader, someone who is making a considerable amount of buys and sells in their account. With Robinhood offering options and crypto trading you can see how their platform gears towards a more active individual.

M1 Finance on the other hand offers a service designed for a long term relatively passive investor. M1 Finance puts a strong emphasis on the difference between trading and investing on their website. If you are an active trader making a lot of buys and sells, Robinhood is going to be a better platform for you. For those investors who are long term oriented and have a more passive strategy, M1 Finance will be the better platform for you. You could always try both platforms to see which is a better fit for your investment style.

For dividend investors, M1 Finance is the clear winner. The automated reinvestment of cash in the account above $10 and the offering of fractional shares make this the ideal platform for long term income investors.

Click Here To Get Started With M1 Finance

FeatureM1 FinanceRobinhood
Minimum Account Balance$100 ($500 Retirement Accounts)$0
Trading Commission$0$0
InvestmentsStocks and ETFs on NYSE, NASDAQ and BATSStocks and ETFs on NYSE, NASDAQ, Options, Cryptocurrencies
Account TypesTaxable Account, Roth IRA, Traditional IRA, SEP IRA, Joint TrustsTaxable Account
MarginAll accounts over $2,000 have automatic access to margin Robinhood Gold tiered subscription starting at $6 per month, $2,000 minimum account balance
Short SellingNoThrough Options
AutomationAutomated Deposits, Automated Rebalancing, Automated InvestmentsAutomated Deposits
DividendsAutomated Reinvestment No DRIP
Fractional SharesYesNo
Tax HarvestingTax MinimizationNo
Best ForLong Term Investors, Passive Investors, Dividend InvestorsShort Term Investors or Traders

M1 Finance VS Vanguard: Best Investing Platform 2018

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

Most people have heard of Vanguard, one of the largest fund companies in the world. If you have a 401k plan, there is a good chance that this is through Vanguard! This is one of the most prominent fund companies around. M1 Finance has recently taken a strong foothold in the brokerage industry, disrupting the traditional investing model. So, are you better off investing through Vanguard or though M1 Finance?

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Vanguard Logo, www.vanguard.com

M1 Finance is a relatively new investing platform that launched in 2016. M1 Finance has goals that are in line with Vanguard. Both platforms have offerings that appeal to passive long term investors. Comparing M1 Finance to Vanguard is like comparing red grapes to green grapes. They are very similar, with only a few minor differences. Both companies have high value propositions being offered to their users, but each has unique features and characteristics.

Click Here To Get Started With M1 Finance

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, including Vanguard ETFs. 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/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.

Read our full review of M1 Finance here.

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M1 Finance Website Homepage

Vanguard is one of the largest fund companies in the world, with assets under management of approximately $5.1 trillion. They offer a variety of mutual funds and ETFs available on most investment platforms and brokerages. To directly invest in most of Vanguard’s mutual funds you must have a minimum account balance of $3,000.

Vanguard Retirement funds and STAR funds have a minimum of $1,000. Vanguard also offers a variety of exchange traded funds which have no minimum investment, and you can buy shares through brokerage accounts like M1 Finance. Vanguard is a mutual fund company, and it is owned by the funds that it offers. In essence, all of the Vanguard investors own shares of the funds and they own Vanguard itself.

Now, don’t let the word mutual fund scare you! What Vanguard offers is low fee index mutual funds. They offer some of the lowest fee investment products on the market.

Vanguard was started by a famous investor named John Bogle, known as the man who created the first index fund. Bogle created Vanguard to be a company devoted to its people and its underlying shareholders. Vanguard is based on the premise of Bogle’s own thesis of low fee index fund investing over the long term. That is why Vanguard has some of the lowest fees in the fund industry.

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John Bogle Vanguard Founder, sensibleinvesting.tv

M1 Finance and Vanguard differ in many ways, though they both have the same goal of attracting long term passive investors. M1 Finance is an online trading platform geared towards a do it yourself investor who is relatively fee sensitive. Vanguard offers funds at record low fees within the industry, along with investing discipline from one of the greatest minds in the investing community. Vanguard is more of a traditional fund company with a focus on low cost passive investing. Barriers to invest into Vanguard mutual funds can be moderately high from $1,000 to $3,000. That being said, investors can find many Vanguard ETFs offered on a variety of platforms, including M1 Finance.

Vanguard and M1 Finance are very similar platforms. If you are on the fence trying to decide whether or not to invest in Vanguard ETFs through M1 Finance or investing in funds directly through Vanguard, consider the following…

    • With M1 Finance, you will be able to automate your deposits, allocation and rebalancing
    • You will be limited to Vanguard products through the Vanguard platform
    • M1 Finance allows you to invest in thousands of stocks and ETFs for free
    • The minimum balance to get started with M1 Finance is $100 while the minimum investment for most Vanguard funds is $3,000
  • ETFs have greater liquidity than funds

Using M1 Finance allows you to build your own portfolio of ETFs and/or stocks. You can choose from thousands of investments, and decide where you would like to invest your money. Since M1 Finance allows you to buy partial shares, you have the ability to build a well diversified portfolio with as little as $100. This lets you virtually create your own customized fund, containing the companies and ETFs you’d like to hold in your portfolio. You portfolio will also be frequently rebalanced in the most tax efficient manner, meaning you wont have to worry about constantly managing deposits and withdrawals.

Vanguard takes a different approach where you will be allowed to invest in strictly Vanguard products only. Vanguard’s model is very traditional and used by most fund companies. Most of their funds have extremely low expense ratios and holding fees. Both M1 Finance and Vanguard cater to long term passive investors, but if you’d like more flexibility with your investments, as well as tax efficient rebalancing then M1 Finance may be a better platform for you.

Click Here To Get Started With M1 Finance

What Are Fractional Shares On M1 Finance?

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

If you have been exploring the M1 Finance app, or researching the platform online, you have probably come across this term; fractional shares. 

To put it simply, a fractional share is a fraction of one share of a company.

But wait a second… a share of a company is a fraction of that company. So, why do we need a fraction of a fraction of a company?

The answer: not all shares are created equally.

Take Amazon for example. Right now, there are around 488 million shares of this company. The market capitalization, or market value, of this company is around $935 billion. As such, each share is valued at around $1,916 per share.

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Amazon Stock August 14th, 2018

Now, let’s consider Ford. Right now, there are around 3.91 billion shares of this company. The market capitalization, or market value, of this company is around $37.7 billion. As such, each share is valued at around $9.64 per share.

Ford Stock
Ford Stock August 14th, 2018

Now, we don’t know exactly how many shares of Ford or Amazon are out there, so that results in some price deviation. But what we have here is two popular stocks with a drastically different share price.

So, let’s say you are an investor and you like Ford and Amazon. You want to own an equal amount of Ford stock and Amazon stock. You are just getting started with investing, so you have $3,000 to invest.

In a perfect world, you could invest $1,500 into each stock. (Spoiler alert, you can)

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Portfolio Allocation Goal

BUT! You are only able to invest in whole shares of each of these stocks.

Your only option is to invest $1,918 in one share of Amazon stock and invest the rest in Ford stock. After buying your share of Amazon stock, you have $1,082 left. You are able to purchase 114 shares of Ford stock. On top of that, you end up with $3.56 left over.

This is what your investment portfolio would look like…

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Actual Portfolio Allocation With Whole Shares

Wait a second… you liked both of these companies equally! You wanted to invest half of your money in Amazon and half of your money in Ford. Now, you are overweight in Amazon and underweight in Ford.

This exact situation has been a frustrating predicament for investors for years. You set your goals for diversification, but that pesky share price causes your actual allocations to change.

Enter M1 Finance. M1 Finance was launched in 2016 and is an online roboadvisor for everyday people who want to invest in stocks or exchange traded funds (ETFs). One of the biggest benefits of this investing platform is the fact that you can invest in fractional shares.

M1 Finance splits every share into 1/10,000th of a share. This allows you to trade the exact amount and achieve your portfolio allocation goals.

Back to our example, let’s consider Amazon stock. With M1 Finance, you can buy as little as 1/10,000th of a share of this stock. Each of these fractional shares would have a value of 19.18 cents.

Now, your $1,500 investment in Amazon stock would actually be about 78% of one whole share. (7,819/10,000 for the math people)

This means that with M1 Finance, you can set your allocations for each stock and meet those allocations regardless of the share price.

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Actual Portfolio Allocation With Fractional Shares

M1 Finance allows investors to purchase fractional shares. The fractional share allows small investors to invest in stocks with a high share price. Traditionally, you could not buy Amazon stock unless you could afford a whole share. This also allows investors to better diversify their portfolio without ending up overweight in a certain stock simply due to the share price. Finally, fractional shares also allow investors to remain fully invested.

Remember that $3.56 left over from the first example? While it may seem insignificant, that is money that is sitting in cash that is not being put to work through investment. With M1 Finance, you could invest that money in fractional shares.

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M1 Finance Website

Now, did M1 Finance invent this concept of fractional shares? The answer is no. In the past, brokers have offered fractional shares to investors but they would typically charge a fee for this convenience. M1 Finance does not charge a penny.

To recap, fractional shares have these benefits:

  1. They allow small investors to consider stocks with high share prices like Amazon or Google
  2. They allow you to remain fully invested and reduce or eliminate idle cash
  3. They allow you to reinvest your dividends into partial shares of the issuing stock
  4. They allow you to allocate your portfolio as close to your allocation targets as possible
  5. With M1 Finance, fractional shares are available free of charge

Click Here To Get Started With M1 Finance

M1 Finance VS Stash: Best Investing Platform 2018

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.

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M1 Finance Home Page

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.

Read our full review of M1 Finance here.

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.

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M1 Finance Expert Pies

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.

Here is our full article on M1 Finance fractional shares. 

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.

Click Here To Get Started With M1 Finance

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Stash Home Page

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).

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Stash Pricing

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.

Click Here To Get Started With M1 Finance

FeatureM1 FinanceStash
Minimum Account Balance$100 ($500 Retirement Accounts)$5
FeesNo Fees$1/Mo ($2/Mo Retirement Accounts) under $5,000 or 0.25%/Yr over $5,000
AccountsTaxable Account, Roth IRA, Traditional IRA, SEP IRA, Joint TrustsTaxable Account, Roth IRA, Traditional IRA, Custodial
Investments Stocks and ETFs on NYSE, NASDAQ and BATSETFs, Limited Individual Stocks
Fractional SharesYesYes
SIPC InsuredYesYes
Automated DepositsYesYes
Dividend ReinvestmentYesNo
Tax MinimizationYesNo
Average ETF Expense RatioAs low as 0.04% with Vanguard ETFsOn average, 0.34% higher than industry average

M1 Finance: Tax Minimization vs Tax Loss Harvesting

Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.

One of the cons of the M1 Finance platform is that they do not offer tax loss harvesting. While this is one of the only cons I see for this platform, it is still worth mentioning. Roboadvisors like Wealthfront and Betterment offer a feature called tax loss harvesting. This is simply the process of selling a security that has experienced a loss and buying back a similar security. As a result, a capital loss is recognized and this can be used to offset capital gains from your investments.

These realized capital losses can offset capital gains and reduce your ordinary taxable income by up to $3,000 per year. If you have more than $3,000 in capital losses, they can be recognized across multiple years.

It is common for roboadvisors to offer automated tax loss harvesting, however these platforms like Wealthfront and Betterment charge a fee for using the platform. Both Betterment and Wealthfront charge a 0.25% annual management fee, while M1 Finance does not have any fees associated with the platform.

You may be asking yourself, so how do they make money? M1 Finance makes money in a way similar to Robinhood, by directing order flow and offering margin to investors.

Now, before you write off M1 Finance we need to talk about what they offer instead. M1 Finance offers a feature known as Tax Minimization. This is essentially a simplified version of the tax loss harvesting offered by other roboadvisors.

When you request a withdrawal from your M1 Finance account, the investments will be sold in the most tax efficient way possible.

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www.diffen.com

If an asset is held for one year or less, the capital gain recognized on that investment is considered to be a short term capital gain. This type of capital gain is taxed at the highest rate possible, typically the same rate as your ordinary income tax rate.

If an asset is held for over one year, the capital gain recognized on that investment is considered to be a long term capital gain. This type of capital gain is taxed at a lower tax rate.

When you withdraw money from your M1 Finance account, your investments are sold in this order:

  1. Losses that offset capital gains
  2. Securities or groups of securities that result in long term capital gains (lower tax rate)
  3. Securities or groups of securities that result in short term capital gains (higher tax rate)

For some investors, the tax loss harvesting offered by other roboadvisors is worth paying for the annual management fee. However, if you are looking to take advantage of this tax minimization M1 Finance offers this for free.

Click Here To Get Started With M1 Finance

M1 Finance Review 2018: Best Free Investing Platform?

Investing Simple is affiliated with M1 Finance and Betterment. This relationship does not influence our opinion of these platforms.

Times have changed, and investing in the stock market is not the same as it was 10 years ago. The rise of the robo advisor and algorithm based trading have taken the brokerage industry by storm. One of the most established examples being M1 Finance.

Traditional online brokerage platforms have costly trade commissions, on average ranging from $4.95 to $6.95 per trade. These same brokerages often require minimum account balances of $500 or more. These fees and minimum balances create high barriers to entry for someone who is just beginning to invest.

In recent years, the offerings for individual retail investors have gotten a lot better. Brokerages like Robinhood and M1 Finance learned that by handling everything electronically and not having brick and mortar locations they could offer their services for free! As a result, these free brokerage accounts have been extremely disruptive to the industry.

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M1 Finance Website Homepage

What Is M1 Finance?

M1 Finance was launched in 2016 and is an online robo advisor and brokerage hybrid for everyday people who want to invest in stocks or exchange traded funds (ETFs). M1 Finance combines features of a traditional brokerage account with a modern robo advisor. First, you select your investments and your allocations. Then, you automate the entire portfolio!

M1 Finance focuses on low cost passive investing with additional features such as automatic rebalancing of your portfolio and tax minimization strategies. The only fees you pay are the fees associated with any ETFs you invest in. M1 Finance is a completely free investing platform!

Click Here To Get Started With M1 Finance!

What Is An ETF?

An exchange traded fund (ETF) is an investment vehicle that holds a collection of stocks, bonds, or commodities in a portfolio. The fund then splits into thousands or millions of shares and the shares are sold on a major exchange. Typically, this is the NYSE or NASDAQ exchange. There are a wide variety of investment options with ETFs such as index funds, bond funds, or international funds. ETFs trade just like stocks on public exchanges. By investing in ETFs, you are gaining diversified exposure to a particular market.

ETFs can give you diversified exposure to a certain sector or industry as well. For example, let’s say you want to invest in the semiconductor sector but you are not sure who the clear winner will be. Instead of buying individual semiconductor stocks, you could invest in an ETF that gives you exposure to the whole sector. One example of this is the PHLX Semiconductor Sector ETF.

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PHLX Semiconductor Sector ETF

Compared to a mutual fund, the fees associated with an ETF are often significantly lower. This is primarily due to the fact that mutual funds are actively managed while ETFs are passively managed. An ETF simply replicates the performance of an underlying benchmark, like the S&P 500 for example. With a mutual fund, a team of people are deciding what to buy and sell within the portfolio.

How Does M1 Finance Work?

M1 Finance operates by creating portfolios of stocks and ETFs called “Pies”. Each pie can be customized meaning you can choose specific stocks and ETFs that you want to add. For example, you could build a pie with 50% Tesla stock and 50% Google stock.

Within each pie, you can have up to 100 stocks or ETFs. Each can carry a different weight in the portfolio. There is no limit on the number of pies you can have in your M1 Finance account! For example, you could have one growth oriented pie and one income oriented pie in your M1 Finance account.

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M1 Finance Custom Pies

There are also prebuilt pies that M1 Finance has created based upon the amount of risk you would like to take, investment time horizon, and personal preferences. These are called custom pies.

It is important to understand that these portfolios or custom pies are not tailored to any one person. Each investor has a unique set of circumstances. If you want a personalized portfolio, you should consider a robo advisor like Betterment or a financial advisor. Betterment is another cutting edge platform that saves investors money by leveraging technology.

Most investing platforms charge an asset management fee in exchange for any kind of investment guidance. M1 Finance offers these prebuilt pies for free. They do not charge any fees outside of the ETF expense ratio. This is an expense you pay regardless of what platform you invest with.

M1 Finance also allows you to buy fractional shares of a corporation within your pie. For example, if your M1 Finance account had a total of $1,000 in it, but you would like to buy a share of Amazon for $1,885.60 then you would be offered a fractional share of Amazon to hold in your portfolio valued at $1,000 or less depending on its weight in your pie. With fractional shares, you can buy as little as 1/10,000th of a share!

In this article, we talk more about fractional shares on M1 Finance. 

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Amazon Stock, August 8th 2018

Is M1 Finance Safe?

A lot of people are skeptical about M1 Finance. They hear about everything this platform is offering and how they are doing it for free. Don’t worry, this isn’t too good to be true! M1 Finance is a member of Financial Industry Regulatory Authority (FINRA) and the Securities and Investor Protection Corporation (SIPC). Being a member of SIPC, you will be insured in the event that M1 Finance goes out of business or goes financially insolvent. Each account at M1 Finance is insured up to $500,000 in coverage ($250,000 for cash).

In this article, we talk more about the safety and legitimacy of M1 Finance.

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M1 Finance BrokerCheck Report

M1 Finance Fees And Requirements

There are no trading commissions or mark up fees for using M1 Finance as long as you open a brokerage account and fund it with a minimum of $100 ($500 for retirement accounts). M1 Borrow has a fee of 3.75% APR and a required account maintenance balance of 35% of your initial loan. M1 Borrow allows you to borrow against the securities in your account.

Beyond that, these are the requirements to open an M1 Finance account:

  • You must be a US Citizen
  • You must be a permanent US Resident
  • You must be 18 or older
  • You must have a US mailing address

Click Here To Get Started With M1 Finance!

M1 Finance has very basic requirements and a low minimum account balance, making this investing platform very accessible for new investors.

You may be asking yourself, so how do they make money? M1 Finance makes money in a way similar to Robinhood, by directing order flow and offering margin to investors.

What are the features of M1 Finance?

M1 Finance offers a variety of additional features, the two most prominent being tax minimization and smart rebalancing. Using a simplified method of tax loss harvesting, M1 Finance offers options to sell positions in the most tax favored way.

In this article, we talk more about the tax harvesting feature of M1 Finance.

However, there are alternative robo advisors that offer more effective tax loss harvesting strategies. If you are interested  in this feature, we recommend checking out Betterment, the most popular robo advisor.

Tax loss harvesting in Betterment involves the platform offsetting any gains by selling losing securities in your portfolio and replacing them with a similar security. For example, say you have $2,000 in realized capital gains in your portfolio. You also hold Lowes stock in your portfolio which has a potential loss of $2,000 if you sold it today. To offset your gain, Betterment will sell Lowes stock to realize the loss and buy back a similar security such as Home Depot!

Unfortunately, this feature is only available through a robo advisor like Betterment. It is important to remember that Betterment charges an annual fee of 0.25%, while M1 Finance is 100% free!

Another key feature of M1 Finance is smart rebalancing. Using smart rebalancing, all deposits will be automatically invested into your pie without your manual input. When withdrawals are taken out of your account it will automatically rebalance your pie so it has the correct weight of your holdings at all times.

Rebalancing is a crucial aspect of investing. Rebalancing ensures your portfolio has the correct ratio of holdings and makes sure you are not taking more or less risk than you originally planned.

For example, if you held a portfolio of 50% stocks and 50% bonds and the stock portion grew faster, your portfolio is now 60% stocks and 40% bonds. Your risk has increased by not rebalancing your account because you are more exposed to stocks. To tone back risk you would sell off some of the stocks and buy bonds to get back to your 50% stock and 50% bond portfolio. If you invest with a platform like Robinhood, you will have to manually rebalance your portfolio. M1 Finance does this automatically, for free!

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M1 Finance Automatic Rebalancing

What are the pros of M1 Finance?

  1. M1 Finance is a 100% free investing platform with a wide array of features and benefits that go above and beyond other free investing platforms out there.
  2. M1 Finance is a 100% passive investing platform. This automation is great for people who do not want to worry about remembering to contribute to or rebalance your portfolio.
  3. M1 Finance offers complete flexibility with the custom pies. This flexibility is not available through most roboadvisors.
  4. Fractional shares allow you to remain fully invested and improve diversification.
  5. Automation of your portfolio takes your emotions out of investing.
  6. M1 Finance offers retirement accounts
  7. Bank deposits can be automated.

What are the cons of M1 Finance?

  1. Investments are limited to ETFs and stocks trading on the NASDAQ, NYSE or BATS. No mutual funds or over the counter stocks.
  2. Other roboadvisors offer more efficient tax loss harvesting, however they charge a fee for using the platform.
  3. Market orders are automated. You cannot use any other types of buy or sell orders.

Click Here To Get Started With M1 Finance!

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M1 Finance Website Homepage

Who Is M1 Finance For?

M1 Finance has a great platform for long term investors. The ideal user for M1 Finance is someone who is a somewhat passive investor, relatively fee sensitive, and does not want to spend a significant time managing their investments. M1 Finance offers a greater amount of flexibility because you can choose exactly what you invest in. With other robo advisors, you are limited to a handful of ETFs.

M1 Finance is also a great platform for dividend investors. Your dividends will automatically be reinvested back into your portfolio once the cash balance exceeds $10. Other free investing platforms like Robinhood do not offer any kind of automated dividend reinvestment. Brokerage accounts that offer dividend reinvestment and fractional shares charge a fee for this service.

Who Is M1 Finance Not For?

M1 Finance is not an ideal platform for short term traders or mutual fund investors. It is also not ideal for investors in over the counter stocks or executing other unique investment strategies such as hedging or short selling.

Trading is the goal of profiting off of short term price fluctuations in the market. Trades are usually executed over periods of weeks, days, or even minutes. Many traders use price analysis called technical analysis to exploit predicted movements in the market.

While using technical analysis, there is no consideration of underlying financial stability of a company. Instead, technical analysts use trading patterns, volume and price movements to predict future market prices. Trading is considered highly speculative and can be extremely risky if you don’t know what you are doing. M1 Finance is not the ideal platform for an active trading investment style.

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Warren Buffett, Famous Long Term Investor

The Verdict

Compared to the options available to retail investors even 5 years ago, M1 Finance is truly a fantastic platform. The tax minimization, fractional shares and smart rebalancing make this platform superior to other free platforms out there like Robinhood. M1 Finance is our favorite free investing platform and our top pick for beginners.

We believe that investing is for the long term. History has shown us that the most successful investors follow a long term investing strategy. This can be as long as a few years to decades if not longer. M1 Finance was designed for long term investors who want to build a well diversified investment portfolio.

Through the automated portfolio rebalancing, you are taking advantage of a powerful economic force known as dollar cost averaging. By regularly accumulating shares over a long period of time, you are paying the market average price for these shares. This helps to smooth out any hills and valleys over time.

The automated reinvestment of dividends will allow you to earn compound interest. Your dividends will be used to purchase more stocks, and as a result you will be earning more dividends from each of those shares.

Click Here To Get Started With M1 Finance!