Robinhood vs M1 Finance


2022: M1 Finance versus Robinhood for online investing. Compare cost, brokerage fees, IRA accounts, and differences. Which firm is better?



Robinhood vs. M1 Finance Introduction


If you currently have an investment account at an old, traditional brokerage house that your grandmother recommended, you may want to wake up to the 21st century and check out some modern firms. Two such brokers are Robinhood and M1 Finance. They have some really fresh ideas on trading and investing with several new tools and services. But which one should you choose?


Pricing


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
Robinhood $0 na $0 per contract $0 na
M1 Finance $0 na na $0 $0


Promotions


M1 Finance: Up to $500 cash bonus for funding account at M1 Finance.

Robinhood: Get one FREE stock when you open an account.



Investment Styles Have Changed


M1 Finance offers trading in Pies. These are collections of securities. Technically, they’re not funds, although they are very similar. M1 builds Pies that its customers can trade, and they can also build their own. A Pie can have between 1 and 100 slices.


M1 vs Robinhood


And what can be placed inside a Pie? Currently, there are only 3 asset classes: stocks, ETF’s, and closed-end funds.

Robinhood doesn’t have Pies. Instead, it offers self-directed trading in the following asset classes:


Robin Hood or M1


- Cryptocurrencies
- Options
- Stocks
- Exchange-traded funds

Right now, there are 7 digital currencies available for trading.

Winner: M1 Finance


Websites Are Easy to Use


Instead of offering trading on a desktop platform and account management on a website, both investment firms in this survey merged everything into simple and user-friendly websites.


Robinhood versus M1


The Robinhood site has a watchlist on the right-hand side of the screen. It’s actually multiple watchlists divided into categories. Clicking on an entry generates the asset’s profile. Here, there is a simple chart with up to five years of price history. But there’s an expand icon that produces a full-screen chart.

Here, there are a few technical studies and candlesticks. There’s also a trade button that spawns the broker’s order ticket. There are six order types, including a rare one (recurring investment).

On the original asset profile, there is a button to trade option contracts on the underlying asset. Although Robinhood’s software doesn’t have integrated spreads, individual calls and puts can be added to a multi-leg order. Even better, Robinhood’s site now has color-coded profit-loss diagrams.

As already mentioned, M1 Finance doesn’t offer options trading, so chains won’t be found. Nevertheless, we did find the M1 site to be easy to navigate. The Invest tab at the top is where account information will be located. There are buttons to rebalance and edit a Pie. Details on Pie slices will be found here as well.


M1 or Robinhood


To construct a new Pie or look through broker-created Pies, there is the Research tab. Every stock and fund profile has a simple chart with no tools and no full-screen mode. There is no order ticket as M1 Finance sends orders to the exchanges. Customers add securities to their Pies, and M1 takes it from there.

M1 sends orders during two trading windows each market day. Trading is not possible during the entire session.

Winner: M1 Finance


Mobile Apps Are Easy, Too


The M1 Finance mobile app actually has better charting than its website (a chart can be shown full screen on a mobile app). The mobile platform is easy to use thanks to an intuitive menu at the bottom. Nevertheless, there still is no order ticket, although Pies can be searched and created.


M1 versus Robin Hood


On the Robinhood app, we found many of the same tools the website has, including the broker’s very good order ticket. For options trading, there’s actually more information compared to the website: descriptions of various strategies and when they gain or lose based on the price of the underlying instrument. Profit-loss diagrams are on the app as well.


Robinhood vs M1


Winner: M1 Finance


Margin Accounts Are Handled Differently


Instead of a traditional margin service with a tiered interest rate schedule, Robinhood has rolled out something called Robinhood Gold. The cost is a flat $5 per month, and the service includes $1,000 of borrowing power. After that, there is a flat 4.25% charge on any amount borrowed. Besides borrowing power, Gold includes other benefits like Level II quotes, which aren’t available at M1 Finance.

M1 Borrow is another contemporary version of margin borrowing capability. There is no monthly fee for it (brokerage accounts are automatically signed up), although there is a $5,000 account minimum to use the service. The broker’s margin rate is a flat 5% for any amount borrowed, and this can be an even lower 3.5% with a $125 annual fee. Like Gold, extra perks come with this program, such as interest earned on free cash balances and the ability to send paper checks.

Winner: M1 Finance


Other Services Are Oftentimes Available


Extended Hours: M1 Finance doesn’t offer either pre-market or after-hours trading. Robinhood has both.

Cash Management Tools: Robinhood and M1 Finance offer debit cards and more with zero fees.

Individual Retirement Accounts: Robinhood still doesn’t have IRA’s, but M1 Finance does.

DRIP Availability: M1 Finance and Robinhood offer dividend reinvesting. M1 has a $25 minimum investment amount. Robinhood does not.

Fractional-share Trading: Whole-dollar investing is possible with either firm, and with M1 Finance, it is the only option.

Winner: M1 Finance


Here Are Our Recommendations


Beginners: Both firms do a decent job of delivering a fairly simple trading experience. We suggest M1 Finance.

ETF & Stock Trading: For traders it’s Robinhood.

Small Accounts: M1 Finance.

Retirement Savers and Long-Term Investors: Without IRA’s, Robinhood loses here. Be sure to check out M1’s target-date Pies.


Promotions


M1 Finance: Up to $500 cash bonus for funding account at M1 Finance.

Robinhood: Get one FREE stock when you open an account.



Robinhood vs M1 Finance - Judgment


Pie investing is definitely a unique service, and for many it’s enough to overcome the trading power Robinhood delivers.


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.