The world of investing has changed dramatically with the rise of the digital age. Years ago, you would have needed to work directly with a stockbroker to start investing, and you would probably need to bring a meaningful sum of money to the table along with you.
Those days are long gone. Today, you can invest from your phone with just a few taps on the screen. And, you can get started with very little money, making the investment world more approachable for all.
Two of the major players in this modernized investment space are M1 Finance and Robinhood. These two popular apps share many common features, and each has plenty of satisfied users to its credit.
So, which is right for you? We aren’t going to declare a “winner” in this article, since both apps have plenty to offer, and each could be a great choice for your investment needs. Instead, we'll explore the features, fees, account types, customer service, and ease of use of Robinhood vs M1 Finance. Let's get started!
M1 Finance Overview
Let’s get started by taking a closer look at M1 Finance and what it has to offer. The tagline on the homepage of the M1 Finance website sums it up pretty well – “The Finance Super App”. This line gives you a good indication of what kind of service M1 Finance is trying to offer. They aren’t aiming to just serve one area of your financial life. Rather, this app is trying to cover your bases from a financial perspective so you can handle everything in one powerful, convenient location.
There are three general categories of service offered through M1 – Invest, Borrow, and Spend. Broken down this way, you can see how these three categories really cover just about everything you could need to do with your money. You can spend your money on goods, services, and bills, you can borrow money to cover big expenses, and you can invest money you don’t need to spend at the moment. That pretty much covers your financial life, and M1 offers it all.
The Robinhood app is a simple and convenient way to invest your money. Using Robinhood, you can invest in the stocks of individual companies, ETFs, gold, and more. You can even buy and sell options through Robinhood, and they have cash management tools available, as well.
The feature that made Robinhood famous and brought it a significant share of the market is the commission-free trading. Traditionally, individual investors have needed to pay a commission each time they purchased a stock, but that is not the case with Robinhood. The removal of commissions makes investing both more affordable and more appealing to a large segment of the market.
So, if you are ready to invest, is M1 Finance or Robinhood a better choice for your needs? Let’s take a closer look at the differences between these two by walking through a few different categories.
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M1 Finance vs Robinhood – Features
Before getting started with either app, you’ll want to understand what they offer in terms of features. Of course, there is going to be a lot of overlap in this area, but there are some key differences to note.
As a starting point, both M1 Finance and Robinhood allow you to purchase stocks and ETFs. If all you are looking for is an easy way to get into the stock market without much friction or a massive upfront investment, either of these apps will serve your needs nicely. Even those who are completely new to the stock market will find it quick and easy to get started with investing. And, since you don’t need to invest a large sum of money – more on that later – you can test the waters without going beyond your financial comfort zone.
There is one notable feature offered by each that is not present in the features list of the other. For M1 Finance, that feature is borrowing money. If you want to have the option to borrow money for various reasons, M1 will serve you well. You’ll be able to use margin to borrow as much as 35% of the value of your portfolio. This lending can happen quickly, it comes with a modest interest rate, and flexible terms.
On the Robinhood side, an important feature to consider is options trading. This is something that will likely not appeal to the complete beginner, but more advanced traders may want to have it available. Trading options is more risky than other traditional investment vehicles, but there are enhanced rewards available, as well. Even if you don’t plan on getting started with options trading right away, knowing that your account will offer this feature may be appealing if you plan to expand your investment activities in the future.
Both platforms offer a great mobile app for easy use and management of your investments.
M1 Finance vs Robinhood – Offers
Both M1 Finance and Robinhood have lucrative offers for new customers to take advantage of.
M1 Finance offers up to $2,500 for new customers when you deposit over $1,000,000.
Robinhood offers new customers a free stock worth anywhere from $2.50 to $10 when registering.
M1 Finance vs Robinhood – Fees
When considering any kind of financial management tools, you always want to pay close attention to the fees that are charged to use those platforms. While fees can seem like a minor expense at first, they can quickly add up if you aren’t careful. Picking the right platform to avoid lofty – and repeated – fees is one of the best things you can do to help your account grow over time.
Fortunately, both M1 Finance and Robinhood excel in this area. No matter which platform you choose, you won’t need to pay anything for standard investing activities. That means you don’t pay commissions when purchasing a new stock or ETF, for example. If you have been trading stocks with a broker that requires you to pay commissions on each trade, this change will be a welcome improvement. Or, if you have been staying out of the investment game because you didn’t want to deal with costly transaction fees and other costs, M1 Finance and Robinhood offer an excellent solution to that problem.
Aside from investing, another important place to look for fees is in your checking account. With both M1 Finance and Robinhood, you can manage your cash and get a debit card to easily access that cash. Of course, this is not such an appealing feature if lofty fees are charged to use the service – but that isn’t going to be a problem. These are both free services that don’t have fees for things like opening an account or failing to maintain a minimum balance. Neither of these services charge an ATM fee, although you may incur a fee at the ATM depending on where you are and which one you use.
M1 Finance vs Robinhood – Account Types
When you sign up for either M1 Finance or Robinhood, you will need to decide what kind of account you would like to open. Each of these platforms has a couple of options for you to consider, so let’s review the basics to give you an idea of what they offer.
We’ll start this part of the discussion by talking about M1 Finance account types. You will have two options here – an M1 Basic account, or an M1 Plus account. The M1 Basic account is free, and it will provide much of what you would want to get out of this service. At the free level, you get $0 commission trades in the AM trading window, a free digital checking account, and the ability to borrow at a $3.5% if your account has a minimum balance of $10,000.
Upgrading to M1 Plus will cost $125 per year, although you may be able to get a free trial when you sign up. So, what do you get for adding that expense? There are several perks associated with an M1 Plus account, including the following –
- 2% borrow rate, as opposed to 3.5%
- 1% APY on money in your Spend account
- 1% cash back on purchases
- 4 monthly ATM fees reimbursed, as compared to 1 on the free account
- Trade in the AM or PM trading window
For many people, the standard M1 Basic account will work just fine for those who want to invest, as the additional features of an M1 Plus account may not be used. However, if you are going to spend frequently with your M1 debit card, or if you plan to use the Borrow feature, upgrading to M1 Plus may be an easy decision.
Let’s turn to look at the accounts offered by Robinhood. Here, we find a similar structure, with a standard account called Robinhood Instant. If you choose to upgrade to a premium account, that is called Robinhood Gold, and it comes with some added features that we will cover in a moment. There is also the option to downgrade from either of these accounts to a Robinhood Cash account, which removes the option for instant deposits or instant settlements, but it still provides access to commission-free trading.
If you go with the standard Robinhood Instant account, you will have access to instant deposits, as the name would indicate. Also, there isn’t any wait for processing funds if you sell stock, up to $1,000. You’ll also gain access to the other features of this service that you may want to use, such as cash management.
Should you consider upgrading to Robinhood Gold? Just like with M1, the decision of whether or not to upgrade depends on what you plan to do with the account. Plenty of excellent features come standard with the regular account, but Gold opens up advantages like larger instant deposits and investing on margin. Given the modest cost of only $5 per month, this is an affordable upgrade and is an appealing option if you want to use margin to enhance your investment options. A Gold account includes up to $1,000 of margin, and margin used beyond that mark will cost 2.5% yearly interest.
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M1 Finance vs Robinhood – Customer Service
If you are going to trust one of these platforms with your money, you’ll want to know that they are going to offer quality customer service at every turn. You should be able to get answers to your questions or concerns, and you shouldn’t have to wait too long for those answers to arrive. Let’s look at the basics of how each of these platforms provides customer service once you get started with an account.
When you click on the ‘Help’ link on the M1 Finance website, you are taken to a page with a search bar and some other resources. So, before even trying to contact someone at M1 directly, you can use this search function to seek an answer to your question. For example, if you search ‘minimum deposit’ on this page, you will be provided with a list of resources from the M1 Knowledge Base. Here, you will quickly learn that the minimum to get started with M1 is $100. If that was the question you needed to have answered, you would have solved the problem without needing to contact anyone directly.
If you do need to contact someone with a question that you can’t get answered otherwise, you’ll have three choices. There is Instant Help, Email, and Phone Calls, all available through M1. According to the website, the Client Success Team at M1 is available during U.S. stock market hours.
Let’s shift over to Robinhood to see how customer service is approached on that platform. Perhaps not surprisingly, you can click on ‘Support’ on the Robinhood website, and you’ll land on a page similar to the one found at M1. There is a search bar here as well, and there is plenty of information broken up into various categories that you can explore. Any basic questions that you may have are likely to be answered quickly and easily through this information database.
Contacting Robinhood directly is not as easy as with M1 Finance. There is no ‘Contact’ link available in the footer of the site, for example, and a phone number is not readily displayed.
M1 Finance vs Robinhood – Ease of Use
Part of the appeal of using a modern financial application like one of these two options is the way they can make investing easy, approachable, and even fun. What might seem like a stuffy and boring pursuit to a member of a younger generation is suddenly far more interesting when packaged up properly.
Not surprisingly, both M1 and Robinhood rank well for ease of use. You’ll find both of these platforms to be very user-friendly, and there is a minimal learning curve to get started. It’s important to do plenty of research before you start making investment choices, of course, but there isn’t much to know in terms of how to use these apps.
You can easily check out each of these on your own to see how their interfaces look and how easy they are to work with. Below, we’d like to quickly highlight a few points for each platform that touches on some ease-of-use benefits.
- Automation options. You can choose to create investing schedules to automate your process and avoid the work of completing manual trades.
- Customization. It’s possible to build your own custom portfolio on M1, while you can also choose to learn on portfolios that have already been created by experts.
- Versatile debit card. You can use your M1 Spend card anywhere you can use a Visa card, and you can add on 1% cash back if you upgrade to M1 Plus.
- Transfer between M1 areas. Another M1 Plus feature is the ability to set up conditional statements that will move money between your Invest, Borrow, and Spend accounts automatically.
- Real-time trading. When you place a trade while the market is open, the trade is executed right away, allowing you to know the price you are going to pay for the trade.
- Extensive education. One of the best ways to make an investing platform easy to use is to add plenty of educational material, which is what Robinhood has done.
- Debit card use. With a Robinhood debit card on hand, you can make purchases almost anywhere you can use a Mastercard.
You shouldn’t find any meaningful struggles with learning how to use either M1 Finance or Robinhood. Taking just a little bit of time to get up to speed is all you should require to get comfortable on either platform.
Final Thoughts on M1 Finance vs Robinhood
There is a lot that is shared between M1 Finance and Robinhood, and either can make a great option to get started on your investing journey.
Both M1 Finance and Robinhood offer great investment accounts for many people. Between taxable accounts, retirement accounts, and others, both platforms offer a variety of features to get started investing.
Beginner investors will likely want to choose Robinhood, but more seasoned investors will like the feature-rich options M1 Finance offers.