With the advent of a variety of instruments and platforms for investing investors are no longer restricted to a few financial institutions acting as gatekeepers for the market.
Internet has now made it much easier than ever before for investors to create an account and begin trading ETFs, stocks, alternatives, even cryptocurrency However, it’s also led to an increase in the variety of options to get the most value for trades.
In the present, M1 Finance and Robinhood are among the most widely-read and debated Robo-advisors on this topic. Both platforms provide zero commission trading to their users along with a wide range of financial instruments, including cryptocurrency trading.
Although there are some commonalities however, the two platforms are different in a variety of ways that could determine which one is best suited to your investment and trading needs.
Here’s a brief overview of what you can look forward to from every platform.
M1 Finance Overview
The platform was introduced in the year 2015 and M1 Finance has developed to be a one-stop shop for an array of investment options including ETFs and stocks as well as conventional IRA or joint tax accounts.
M1 Finance is a tool for managing money that comes with two investment levels, and the most important thing is its zero-commission policy for every trade.
M1 Finance allows you to invest in fractional shares. M1 Finance you can invest in fractional shares, by buying shares of a company’s shares at reasonable prices.
Additionally, you can invest into ETFs and set up an individual or pre-designed expert portfolio, or set up ongoing investments within your account.
For a fee of $125 for the year in M1 Plus, you can enjoy M1 Plus account, you have access to additional advantages like more research tools as well as the option to day trade, as well as the option to use margin with the rate of 2% that is 1.5 percentage less than the standard option.
Simply simply put, M1 Finance is a world-class personal and investment platform specifically designed for beginners, given that it offers over 80 expert portfolios that are pre-built that beginners can copy.
It is accessible via an app available for the both Android as well as iOS devices to manage your portfolio from anywhere.
One of the biggest issues for a lot of individuals is M1 Finance does not offer crypto trading. M1 Finance does not offer cryptocurrency trading compared to rivals like Robinhood.
- Banking super app for ETFs, stocks, IRAs Credit cards, ETFs, and much more
- Community pies that let you learn from other investors’ strategies
- M1 checking account can offer up to 1.1 percent APR
- Access to crypto-based stock options like COIN Microstrategy, Microstrategy and others
M1 Finance Pros & Cons
- Offers a myriad of educational materials
- Offers fractional shares as well as automatic portfolio rebalancing
- Checking accounts are secured by FDIC insurance coverage
- Features a debit card cash back reward
- The Plus account has an annual cost within the first year.
- The customer service could be better
- Trades are only possible only once per day using the account that is basic
- There is no cryptocurrency
Robinhood pioneered commission-free trading which was later adopted as the norm for Robo-advisors since in 2013, when it launched using its mobile application.
What seemed like an absurdity to the majority of people who saw it has seen the app grow rapidly to be one of the top used investments apps, with over 13 million users currently active.
According to the company’s annual report this number is expected to increase to 20 million over the next few years.
Robinhood operates on a freemium model’ which allows trading in stocks for free although it charges the interest for margin trading.
Beyond stocks, you are able to trade options, ETFs, and cryptos via Robinhood’s platform. In addition, there aren’t any conditions for opening a new account, which means you can start a new account for as little as $5.
Like M1’s Plus account, Robinhood also offers its Robinhood Gold premium service that offers additional benefits like the ability to borrow margins and have instant access to the funds in your account for just $5 per month. There is also an annual interest of 2.5 percent when you make margin call.
Although Robinhood offers trading in crypto as well as fractional shares, they aren’t already-built portfolios that beginners can copy, as it is for M1 Finance.
In addition, crypto traders can’t withdraw their cryptos directly into a third-party wallet. Instead, they must sell their cryptos and transfer the value of their coins in fiat to an account with a bank outside of the country.
In addition, verifying your account in order to enable certain features could take as long as 5 days for business.
- One-stop shop for anyone who wants to invest in crypto or stocks.
- Simple onboarding process requires minimal effort from the users
- A fully regulated financial institution is located within the United States
- The support is available to BTC, ETH, LTC, BCH, DOGE, ETC BSV, DOGE, BCH, ETC, BCH, DOGE and BSV
Robinhood Pros & Cons
- It comes with a no-cost automated portfolio designed for beginners
- Can you borrow against your account , unlike M1 Finance
- Trading stocks with zero commission is an added benefit
- Access to fractional shares instantly
- The spread of cryptocurrency trades tends to be greater
- A small number of supported coins
- Accessible to U.S residents
M1 Finance is not only an intuitive platform , it comes with plenty of tools for beginners to make use of. Beginning investors can use prebuilt portfolios which they can utilize to replicate or create their own investment plans, while observing certain levels of risk.
On the other hand Robinhood’s layout is targeted more towards intermediate traders via easy-to-use features like tutorials and “How to guides’ that are readily available.
A lot of Robinhood critiques focus on the user-friendly nature of the website. For beginners, the platform offers built portfolios, but they are not able to create their own, similar to M1 Finance.
On both platforms, establishing an account is straightforward and is a simple onboarding procedure that is available to everyone.
Trust And Security
In terms of security and reliability In terms of security and trustworthiness, both Robinhood is a top choice. Both Robinhood and M1 Finance feature high-quality levels of security.
Being a part of the SPIC (Securities Investors Protection Corporation) Robinhood protects its user’s funds by providing an insurance protection that can reach $500,000.
Robinhood also safeguards its platform by using standard encryption methods, and also supports two-factor authentication for all accounts.
M1 Finance is also a extremely secure platform, which promises not to store customer sensitive information in its server. That means all personal data is protected by the security of a bank and SSL encryption.
M1 Finance is a licensed financial broker located in the US, M1 Finance is registered with the SEC (securities and exchange commission) as well as FINRA (Financial regulatory authority for the industry).
Like Robinhood, M1 Finance is an active participant in SPIC and has its client’s funds insured to the value of $500,000.
It is possible to trade cryptocurrency through Robinhood. But, Robinhood only offers a small selection of coins to choose from, including Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, Litecoin, Ethereum Classic, and Bitcoin SV. Although this does give Robinhood an edge when in comparison to M1 Finance, the number of coins that are supported is only a tiny fraction when compared to the variety that are available on trading platforms like Coinbase.
Customers of both M1 Finance and Robinhood will enjoy trading with no commissions. The spread for crypto-related trades tends to be greater with Robinhood over other platforms that provide cryptocurrency trading, such as Coinbase and Binance.
Instead of fees for trading the two platforms earn revenue through charging an order flow charge for market orders that are executed by third-party.
If you’re a skilled trader using margin, you’ll be charged an annual 2.5 percent annual interest on margins that exceed $1000. M1 Finance allows traders to credit up to 35 percent of their portfolio’s value at a 2% rate of interest rate.
If you are a trader seeking a user-friendly platform that has access to various tools for managing their portfolios, M1 Finance is the most obvious choice thanks to its large selection of tools for novice users.
Investors can not only invest in ETFs and stocks, but can also open various retirement and tax-deductible accounts. M1 Finance’s expert portfolios are also a great feature particularly for those who are new to ways to invest with less risk.
But, investors seeking to gain exposure to the crypto market , on top of ETFs and trading stocks will find plenty to like with Robinhood. Robinhood platform.
While the Robinhood crypto offerings are limited to just seven coins however, its ability to list prominent coins like Dogecoin can be a benefit.
Conclusion: Robinhood Better For Crypto
After all is done and dusted after all, each of Robinhoods along with M1 finance are great options for investors seeking for a way to broaden their portfolios by having access to a variety of investment vehicles.
Based on the available investments, interest rates and general user-friendliness, M1 Finance is a more suitable option for traders seeking for a way to exchange traditional investments.
Robinhood offers high margin rates and also offers a handful of crypto currencies to trade, however traders who want to use cryptocurrencies get better alternatives.