M1 Finance vs. Robinhood: Which Is Right for You? | The Motley Fool (2024)

Robinhood pioneered zero-commission trading and has stuck to that model ever since. Robinhood has $0 commissions on all trades of stocks, cryptocurrencies, and ETFs. For that reason, Robinhood is consistently ranked as one of the best ETF brokers. Robinhood continues to push the envelope with $0 commissions on cryptocurrency and options trades. Combine that with no account maintenance fee, and you've got a very low-cost broker. For a $5 monthly fee, users can upgrade to Robinhood Gold, which gets you lower margin rates, higher APYs on uninvested cash, and access to professional research from Morningstar.

M1 Finance offers $0 commissions on stock and ETF trades. Similarly to Robinhood, M1 Finance does not charge an account maintenance fee (though it does charge a fee for low balances with 90 days of account inactivity). M1 Finance doesn't charge a monthly fee, but it offers M1 Plus membership for $3 per month. M1 Plus members get features like discounted margin rates, multiple trading windows, and access to custodial accounts.

Investors on either platform will enjoy low transaction and maintenance fees, at least until they transfer their accounts elsewhere. For outgoing account transfers, M1 Finance charges $100, and Robinhood charges a $100 fee.

Like most brokers, M1 Finance offers stocks and ETFs. By allowing users to trade fractional shares, M1 Finance makes it possible for smaller investors to purchase big names, like Amazon and Google. However, M1 Finance only lets investors trade individual stocks, ETFs, and a few cryptos, which is hardly groundbreaking among brokers.

Robinhood allows customers to buy stocks and ETFs, and it supports fractional trading. However, Robinhood also allows investors to trade options and cryptocurrencies without charging a commission. That means customers can trade a wider range of investment options, without getting hit with transaction fees.

It is important to note that neither M1 Finance nor Robinhood support other investment options. Investors can't trade mutual funds, CDs, bonds, futures, or currencies on either platform.

LEARN MORE: Best Options Trading Platforms

M1 Finance offers individual retirement accounts including:

• Traditional IRAs
• Roth IRAs
• SEP IRAs

Joint and custodial accounts are helpful for transfer of ownership between M1 Finance customers. M1 Finance also offers margin, credit card, and checking accounts, which integrates investing, borrowing, and banking under one roof.

Robinhood investors have access to a taxable brokerage account for trading and a margin account for borrowing. But recently, Robinhood expanded its offerings. It now offers Roth IRAs and traditional IRAs (with a 1% match, or 3% match for Gold members), along with a spending account. There's also the Robinhood Gold Card, a credit card exclusively for Gold members.

Unlike M1 Finance, Robinhood doesn't offer joint or custodial accounts. For that reason, M1 Finance might be a better fit for investors with complex tax or ownership situations.

LEARN MORE: Best IRA Accounts

READ MORE: Best Robo-Advisors

M1 Finance vs. Robinhood: Mobile app and trading platforms

M1 Finance offers a user-friendly platform to both desktop and mobile customers. It offers the typical portfolio holdings, trading activity, and transaction buttons. Plus, M1 Finance's platform stands out with a few features:

• Investors can rebalance their portfolio with the click of a button.
• Users can answer questions about financial goals to make more informed investment decisions.
• You can view an individual stock's weight and performance with an interactive, intuitive chart called "The Pie."

As one of the original investing apps, Robinhood led the pack for streamlined simplicity. Robinhood's platform is so intuitive that some argue that it makes risky trading strategies too accessible. Beyond the traditional trading app trimmings, Robinhood provides its users with a newsfeed for a customizable list of stocks. Especially unique are the text-message-like announcements of IPOs, Robinhood updates, and transaction reports.

Both brokers offer a trading platform that is easy to use and visually stunning. And both platforms offer features you would expect including performance metrics, transaction history, and the ability to buy and sell assets. However, each offers a unique spin on the traditional broker's platform.

For M1 Finance vs. Robinhood, each boasts strengths and weaknesses. Finding the best online stock broker for you largely depends on what you value as an investor:

• Robinhood is a strong contender for an active investor who wants to trade options or cryptocurrencies.
• M1 Finance stands out for a passive investor who seeks to invest, borrow, and bank all under one roof.

If you are an investor seeking a slick platform for trading stocks and ETFs without paying high fees, either of these brokers may be a good choice, depending on your investing needs.