M1 Finance vs. Robinhood [2022]: How They Compare and Who They’re Best for

Robinhood and M1 Finance offer investors various investment options, but the better service for you depends on your needs.
Last updated Sept. 6, 2022 | By Lance Cothern
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Choosing an investing app can feel overwhelming because there are lots of options out there and you want to make sure you make the best choice for your money. M1 Finance and Robinhood are two popular investing platforms that are worth considering if you want to start investing.

Both of these apps offer unique features that will appeal to certain types of investors. Comparing these characteristics to your investment goals could help you find the best option for you and your personal finances.

If you’re thinking about investing with M1 Finance or Robinhood, the following information can help you decide which company better suits your needs.

In this article

M1 Finance vs. Robinhood

M1 Finance and Robinhood each have different benefits and drawbacks when you compare them to each other. Here’s a quick summary of the basics of each option.

M1 Finance Robinhood
Minimum investment $100 for taxable accounts; $500 for retirement accounts None, except for margin accounts, which require a $2,000 minimum
Account fees None for a basic account

$125/year for an M1 Plus account

None for a basic account
$5/month for Robinhood Gold
Asset classes
  • Stocks
  • Exchange-traded funds
  • Stocks
  • Exchange-traded funds
  • Options
  • Cryptocurrency
  • American Depositary Receipts (ADRs)
Account types available
  • Individual taxable
  • Joint taxable
  • Traditional IRA
  • Roth IRA
  • SEP IRA
  • Trusts
  • Cash management
  • Individual taxable
  • FDIC-insured spending account
Features
  • Fractional shares
  • Customized or pre-built expert portfolios
  • Recurring investments
  • Dividend reinvestment
  • Automatic rebalancing
  • Commission-free trades
  • Margin trading with M1 Borrow
  • Fractional shares
  • Recurring investments
  • Dividend reinvestment
  • Real-time trading
  • Commission-free trades
  • Margin trading with Robinhood Gold
  • Robinhood Cash Card
Distributions Withdraw money to your bank account, required minimum distributions apply to IRAs Withdraw money to your bank account
Taxes No tax-loss harvesting, but offers a tax minimization feature No tax-loss harvesting
Best for... Investors looking for the convenience of pre-built portfolios and automatic rebalancing. Investors who want to pick individual investments and trade in real time.
Visit M1 Finance Visit Robinhood

How does M1 Finance work?

M1 Finance is a money management tool that offers an investing component with two account tiers. With its free version, you can invest in stocks and ETFs with virtually any amount thanks to fractional-share investing. The option to invest in fractional shares can make investing more accessible because buying a portion of a share of stock can be much less expensive than buying a whole share.

In addition to making investing more accessible, M1 Finance also focuses on making investing easy for beginners with pre-built portfolios and automatic rebalancing. When you sign up for an account, M1 offers the option to pick an expertly built portfolio, referred to as an expert pie, or you can choose to build your own. The platform also offers educational materials to help you learn about investing.

Investors have the option to upgrade to M1 Plus. An M1 Plus account costs $125 per year and offers some added benefits. With M1 Plus, the rate for borrowing funds to trade on margin is 2%, which is 1.5% lower than what you would get with a basic M1 account.

You also get access to expanded trading with M1 Plus. To keep costs low, M1 Finance offers a single trading window with its basic account, but you get a second afternoon trading window with M1 Plus. You also get additional cash management account benefits with an upgraded account, such as 1% cash back on qualifying debit card purchases and an interest-bearing checking account that earns 1.00% annual percentage yield (as of Feb. 8, 2021).

Read our M1 Finance review.

How does Robinhood work?

Robinhood was a pioneer in the world of commission-free stock trading when it launched in 2013, and since then, many companies chose to follow Robinhood’s example.

Robinhood offers two tiers of investment accounts: a free version and a premium version. With its free version, you can choose to trade individual stocks, ETFs, options, and cryptocurrency in real time. And like M1 Finance, Robinhood offers fractional-share investing, so you don’t necessarily need a lot of money to start investing.

Robinhood’s real-time trading ability might make it an attractive option for investors who are interested in making trades frequently. Robinhood also offers detailed educational materials to help you learn how to invest money, which can be a big help if you’re a new investor.

If you want to upgrade to Robinhood Gold, you get access to research tools and the ability to trade on margin. It costs $5 per month and includes the ability to borrow up to $1,000. Borrowing beyond $1,000 requires paying 2.5% interest.

Read our Robinhood review.

What both investment apps excel at

Both M1 Finance and Robinhood excel in many of the same areas.

Investment options

Robinhood and M1 Finance let you invest in stocks and ETFs — some of the most popular investment types. Additionally, Robinhood provides cryptocurrency, options, and ADR investment choices.

Fractional-share investing

Both platforms offer fractional-share investing, which can be helpful for new investors who don’t have a ton of money to diversify their portfolio. For instance, with fractional shares, you have the option to purchase 1/10th of a $200 share stock for $20 rather than having to save $200 for a full share. This can free up more of your budget to purchase fractional shares in multiple companies or funds, rather than just putting all your money in one place.

No commissions to trade

M1 Finance and Robinhood don’t charge commissions to make trades. This lack of trading fees could potentially save you a lot of money if you’re planning to make trades often. It also comes in handy for long-term investors as well.

7 important differences between M1 Finance and Robinhood

M1 Finance and Robinhood have distinct differences that may make you want to choose one trading platform over the other.

1. Minimum balance requirements

Robinhood doesn’t require a minimum balance to get started. M1 Finance requires a $100 account minimum to open an individual taxable account and $500 to open a retirement account. Robinhood is the clear choice here if having no minimum account balance requirement is important to you.

2. Account types

Editor's note: Robinhood's cash management account is no longer available to new customers as of Sept. 6, 2022.

Robinhood offers an individual taxable investment account and a cash management account. M1 Finance provides a wide variety of options including taxable brokerage accounts, joint brokerage accounts, traditional IRAs, Roth IRAs, SEP IRAs, trusts, and cash management accounts. If you’re looking for varied account options, M1 Finance wins this category.

3. Investing options

Robinhood lets you invest in stocks, ETFs, ADRs, options, and crypto. M1 Finance limits you to stocks and ETFs. If you’d like the option to invest in options or cryptocurrency, Robinhood could be the better choice for you. Neither offers investment in mutual funds.

Robinhood Benefits

  • When you sign up, a surprise stock appears in your account
  • Commission-free trading with no account minimums
  • Trade stocks, options, and cryptocurrencies

4. Upgrade fees and services

Upgrading to Robinhood Gold costs $5 per month. It gives you access to in-depth research, $1,000 of margin to trade with, and additional margin at a 2.5% interest rate. M1 Plus costs $125 per year and gives you access to lower-cost margin at 2%, and cash management benefits like 1.70% (as of Sept. 7, 2022) APY checking, and 1% cash back on qualifying debit card purchases.

Although some of the perks you get with M1 Plus might be attractive, its $125 annual fee is high compared with the $60 annual cost of Robinhood Gold. In this category, Robinhood comes out on top.

5. Trading windows

Robinhood offers real-time trading for investors, whereas M1 Finance does not. M1 Finance limits you to a single daily trading window for standard customers or a morning and afternoon window for M1 Plus customers. If you’re interested in day trading, Robinhood could be the better choice of the two.

6. Portfolio building and maintenance

Robinhood allows you to buy investments but doesn’t manage them on your behalf. M1 Finance lets you choose a pre-built expert portfolio, or you can opt to customize your own portfolio. M1 Finance also automatically rebalances your portfolio to align with your ideal portfolio allocation when you buy more investments. If you’re interested in automated portfolio management, M1 Finance outshines Robinhood in this area.

M1 Finance Benefits

  • Build, invest and optimize your money
  • Create your free investment portfolio
  • Automate deposits so you're always fully invested
  • Access your cash with an M1 checking account and debit card

7. Automated investing

Both Robinhood and M1 Finance offer recurring investments. Recurring investments allow you to choose a set interval, such as bi-weekly, to invest a predetermined amount of money you choose. The feature allows you build your portfolio without having to remember to submit a new buy order each payday.

Which investment app should you choose?

Figuring out which of the best brokerage accounts is ideal for your needs boils down to a few key factors.

Automation vs. control

M1 Finance’s features, such as dynamic rebalancing and automatic investment schedules, may be valuable for investors who prefer to take a more hands-off approach to portfolio management. The option to trade in real time with Robinhood and its wider selection of investment options likely make it the better choice for more hands-on investors.

Cryptocurrency

If you understand how to buy cryptocurrency and are interested in investing in cryptocurrency, you don’t have that option with M1 Finance. If this is important to you, Robinhood might be a platform worth considering.

Robinhood Benefits

  • Trade crypto 24/7, commission-free
  • Your coins and personal information are protected
  • $0 minimum account deposit
  • Real-time market data

Account types

Robinhood offers an individual taxable brokerage account. Although this option could be sufficient for you, depending on your needs, M1 Finance allows you to choose from many more options. If you want to invest using a joint brokerage account, traditional IRA, Roth IRA, SEP IRA, or trust accounts, M1 Finance could be the better choice.

FAQs

Which is better, M1 Finance or Robinhood?

Both trading apps provide investors a different set of benefits depending on their investment strategy and goals. Investors that want to trade stocks, ETFs, or cryptocurrency in real time could benefit from choosing Robinhood over M1 Finance. Those who are interested in automated portfolio management might appreciate what M1 Finance has to offer. The better app for you will depend upon your unique needs and situation.

Is Robinhood safe?

Robinhood offers several features that help to keep user accounts secure. Its mobile app supports Touch ID, Face ID, and custom PIN code options to securely access the app on your phone. Robinhood also uses industry-standard hashing algorithms to store your password and encrypt sensitive information such as your Social Security number.

Can you actually make money with Robinhood?

It is possible to make money with a Robinhood account, but all investments come with the risk of loss, so it’s also possible to lose money with Robinhood. Consider educating yourself about the risks and benefits of investing before you start.

Is M1 Finance or Robinhood better for beginners?

Both apps could potentially be good options for new investors because they both allow you to invest in fractional shares, so you don’t necessarily need a lot of money to get started. Overall, M1 Finance might make it easier for beginner investors to build a diversified portfolio. However, Robinhood offers more flexibility with trading, which could make it a more attractive platform. The right option for you will depend on your priorities and investing style.

How do M1 Finance and Robinhood make money?

M1 Finance makes money through M1 Plus fees, margin interest paid by customers, interest on deposits, lending securities, interchange fees from using the M1 Spend debit card, and payment order flow. Robinhood’s revenue streams are very similar and include Robinhood Gold subscriptions, margin interest paid by customers, interest on deposits, and payment order flow.

Bottom line

Robinhood and M1 Finance are a couple of the best investment apps. They provide a variety of investment options for you to choose from. 

Robinhood could be the better choice for hands-on investors that prefer to manage their investments themselves with real-time trading, cryptocurrency, and options support. M1 Finance doesn’t offer as many investment types but uses automation to help simplify portfolio management, which can be appealing for more hands-off investors. 

The right option for you depends on your priorities and investment goals.

Disclaimer: All rates and fees are accurate as of Sept. 7, 2022.

Robinhood Benefits

  • When you sign up, a surprise stock appears in your account
  • Commission-free trading with no account minimums
  • Trade stocks, options, and cryptocurrencies

Author Details

Lance Cothern Lance Cothern, CPA is a personal finance writer and founder of MoneyManifesto.com. Lance's work covering several personal finance topics has been published in U.S. News & World Report, Business Insider, Credit Karma, Investopedia, and several other publications.