Stash vs M1 Finance 2020


Compare M1 Finance vs Stash Invest for online investing: cost, brokerage fees, IRA accounts, and differences. Which firm is better?



Overview of M1 Finance and Stash


M1 Finance and Stash Investing are two of the top apps for investors, both new and experienced. M1 offers user the ability to create a portfolio called a “pie” based on percentages and does so at no cost. Stash makes investing more accessible with weekly challenges and recommendations for investing, based on your individual risk tolerances and interests. Stash does cost $1 a month, but it comes with a lot of great options.

Either of these would be an excellent choice for investing, as they are both easy to use. They each have different options that may appeal to different investor types, but both provide a high-quality service for investors with a range of experience levels.


Investment Options


Stash Investing is a great first investing app. It makes the process extremely easy and is as interactive or passive as you want.

It has a robust educational section, with blogs covering all the topics you need to know in order tin invest intelligently. While checking your account 10 times a day isn’t really doing anything to improve your rate of return, if you read a 2- or 3-minute article each of those times, you will have increased your knowledge base significantly. In terms of investing options, these articles will help you decide what your timeframe and risk tolerance is, which will help guide your investment selections.


Stash investments


If you are risk adverse and need liquidity in the short term, investing in “Park my Cash” or “Uncle Sam”, both of which invest in low risk bonds and funds. If you are willing to assume risk and have a long investing horizon, individual stocks or “Social Media Mania” might be good funds for you. Stash does an excellent job informing the investor on how to think about investing, and then what to invest in.

M1 Finance does offer a research function, but it is a much less user-friendly platform for a beginner. The “Research” button in the app allows you to search for articles about certain stocks, funds, and expert “pies” (how M1 refers to investment mixes). It also gives the investor access to the top trending articles from across the web and includes articles from well respected sources like Fortune Magazine and Business Insider.


M1 vs Stash


M1 offers investors the ability to individually tailor their investment portfolio or “Pie” to meet their individual risk tolerance and preferences. It offers pre-made Pies for investors to use for free, but it also allows you to build your own. For example, if you are interested in building a portfolio made up of your favorite Dividend Aristocrats, you can research each one I the research tab, and add it to your Pie. When creating your Pie, you input all the stocks, bonds, or funds you wish to invest in, and then assign each a percentage (totaling 100%). When you put money into the account, it purchases fractional shares of each according to your Pie.


Account Set Up and Investing Process


Both Stash and M1 are extremely easy to set up. Just like any other banking institution, it requires an investor’s social security number, full name, address, and a link to an exterior bank account for funding. It takes less than 30 minutes to set up either account, and can be done through the respective investment service’s website or app.

Over the past year to eighteen months Stash has increased the number of options available to investors. Initially, Stash only offered investors the option to invest in electronically traded funds (ETFs), which has simply been renamed for ease of understanding. Currently, Stash offers many individual stocks, and has increased the variety and number of ETFs available.

It has also started offering the option of having a retirement account. In the future it will be offering a debit account. These offerings help it to provide a wider variety of options than traditional brokerages.

M1 offers several expertly crafted Pies, which appeals to those new to investing. The expert Pies are free to use and are designed for 8 different investing objectives. Whether you want an income producing Pie, or socially responsible investing, there is an expert pie for you. Or, you can design your own. It is free either way.

M1 offers individual and joint accounts, as well as retirement accounts (IRAs and 401k rollovers), as well as trust accounts. This is a great variety of options for any investor.


Fees


Stash investing charges $1 a month management fee for accounts with balances under $5,000. The fee changes to 0.25% annual fee once the account balance hits the $5,000 mark. The retirement account is $2.50 a month. These fees come out of the originating bank account, not the investment portfolio. While this may not seem like a lot of money for the services provided, most firms charge a percentage of the funds under management. Average rates are between .25% to 1% of your money. This means that for an account balance of under $1,000, Stash is making much more money off you than most other providers.

Stash management fees are on top of the fees charged by the individual ETFs as well. These two factors can make Stash quite an expensive option for new investors. Stash does mitigate this somewhat by offering a $5 incentive for opening an account and offers challenges during the year that can result in a month of management fee waived. Additionally, this fee is much better than traditional brokerages, so it is a good option. Finally, since it is a flat $1 a month, those with large accounts can get their money managed for an extremely small percentage.

M1 charges no management, trade, or withdrawal fee. This is much better than most other investing platforms. There are some fees for unusual situations, such as an inactivity fee if you have less than $20 in the account, or a wire transfer fee. Most investors will not need these services, and therefore will not incur the fee. M1 can offer this fee free service by only trading once a day, and a limited number of trades every day at that.


User Interface


Stash has an easy to use website and app. They both offer the ability to invest, do research, and do limited future modeling. An investor can manage their automatic investments, make one-time investments, and buy and sell investments.

One of the more unique features offered by Stash is the Stash Coach. This program guides an investor towards maintaining a balanced portfolio and recommends stocks and ETFs that fit your individual risk tolerance. You gain points which increase your score. While these points don’t earn you any money or perks, it is a nice incentive to help you increase your knowledge and balance your investment portfolio. Stash Coach also has weekly challenges. These challenges are usually a rollup of the week’s investing and business news. There will also be a quiz, and sometimes a challenge to invest a small amount of money in a particular ETF or stock. These each earn points towards increasing your overall rank in the Stash Coach system. There has been talk of incentives for completing the weekly challenges, such as monthly fees waived, but it has only been seen for one month so far.


Stash Portfolio


M1’s website and app are really easy to use. The website is better than the app, offering more detailed understanding of investments and portfolios. The app is fine but is not as easy to use as the website. The app lets you manage investments, view current portfolio information, and do research. The way in which M1 keeps its accounts fee free is by only trading once a day. Once money is put into your account, it gets traded the next open window. It usually takes one to two days to get the trade to execute. This makes it unappealing to day traders but is perfectly fine for those with a longer time horizon for trades.


m1 Mobile App


Dividends, Taxes, and Paperwork


Stash does not reinvest dividends for you. This can either be a good or bad thing depending on your perspective. On the plus side, the investor can reinvest the funds into another ETF or stock if they desire. On the down side, it requires a little more work than the average investment account. This could be a negative for an investor who wants to just set their automatic investing and forget about it.

M1 will automatically reinvest dividends for you, but it takes a little bit of time. M1 reduces the number of trades it makes by requiring every trade to be over $10. As most dividends are lower than that, especially if your account is relatively small, your dividends usually get reinvested with your next automatic investment. Otherwise it just sits as cash in your account.

Both investment services generate the required tax forms and have them available online for easy access. If you choose to do your taxes yourself with TurboTax, you can log into your Stash and M1 accounts and TurboTax retrieves the forms for you. This makes it extremely easy to do your taxes correctly for both Stash and M1.

All the legal paperwork for both M1 and Stash is stored in your profile. They are extremely easy to access through the website. On Stash they are stored under the profile tab labeled “Tax Documents & Statements.” On M1 they are accessible through the profile tab “Settings” and “Documents.”


Client Interaction


Both Stash and M1 have contact information for their customer service listed on their app and website. With almost a year using both apps, the author has never had cause to get in touch with them. This speaks to their excellent products and the ease of use for both their websites and apps.


Promotions


M1 Finance: Pay $0 broker commissions and fees when you open account at M1 Finance.

Stash: none right now.



M1 Finance vs Stash Review


Stash (read review) is a great option for a first-time investor. It allows you to learn a lot, purchase a lot of different types of ETFs and stocks, and the Stash Coach guides an investor to a balanced portfolio. It’s a bit costlier than many other investment apps, but you get a lot of bang for your buck. It is extremely easy to use, and is much less costly than traditional investment brokers, which usually charge per trade. For someone with only a little bit of money to invest, those trading fees eat away at your portfolio. If you have tens of thousands of dollars to trade, a $4.95 trading fee is miniscule. However, if you only have $50, it is significant. This is a much better option than traditional brokerage firms. However, there are better options out there for those with a little bit of experience.

M1 (read review) is one of those options. With zero fees, this is a great option for investors who already know a bit about investing, and don’t need to rely on an automated system to keep their portfolio balanced. While it only trades once a day, it is a good option for those who are looking to invest for the long term. Day traders, this option isn’t for you. If you are a buy and hold investor who likes to set it and forget it, this might be the best option for you. If you already know what you want to buy, you can eliminate the need for and cost of a broker or a financial advisor.