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M1 Finance vs Charles Schwab 2023: Best Investment Platform?

M1 Finance and Charles Schwab are two brokerages that take a different approach to building an investment platform. In this article, we are comparing the two popular investing platforms, M1 Finance vs Charles Schwab. 

M1 Finance offers free investing if you meet the minimum balance of $100, Charles Schwab offers accounts with no minimum balance.

Charles Schwab also offers a more advanced user interface while M1 Finance has a beginner-friendly platform. Schwab offers managed accounts and financial planning for a fee, while M1 Finance offers a free robo-advisor feature

FeatureM1 FinanceCharles Schwab
Minimum Balance$100 ($500 Retirement Accounts)$0
Trading Commissions$0$0
AssetsStocks, ETFsStocks, ETFs, Mutual Funds, Options, Futures, Bonds
Mutual FundsNoOver 3,500 No Transaction Fee Funds
Fractional SharesYesYes
Rebalancing ToolsYesYes
Robo-AdvisorNoYes ($5,000 Minimum)
Physical BranchesNoYes
Best ForLong-Term Passive InvestorsHigh Net Worth Investors

M1 Finance vs Charles Schwab: At a Glance

  • M1 Finance offers free investing with a minimum account balance of $100 ($500 for retirement accounts) of stocks and ETFs
  • Charles Schwab offers free trading of U.S. stocks and Exchange Traded Funds (ETFs) with no account minimums
  • M1 Finance offers free prebuilt portfolios using stocks and ETFs. 
  • You can choose from a variety of prebuilt portfolios on M1 Finance and use them for free
  • Charles Schwab offers a better user interface for more advanced traders
  • M1 Finance caters to beginner investors or investors with buy and hold strategies
  • Charles Schwab allows trading stocks, ETFs, mutual funds, options, and futures
  • Schwab offers managed accounts and Financial Planning, but these services will come at a price

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What Is M1 Finance?

M1 Finance is a beginner-friendly investment platform that allows individuals to start investing in the stock market without extensive experience needed.

The focus of the platform is on building investment "pies" where you construct a portfolio of different stocks and ETFs and tell M1 Finance what percentage of your portfolio should be allocated to each. Then you deposit some cash and that's pretty much it. The platform will handle the rest from there.

Every time you make a deposit, it will be automatically allocated to the pie based on how you set it up. M1 Finance also provides automatic rebalancing of your portfolio to make sure you stay as close to your target allocations as possible. This feature ensures that you are automatically buying low and selling high.

If you're not interested in building your own investment pie, M1 Finance also offers a collection of investment pies for free that you can select and use yourself.

M1 Finance Features

Smart Automated Rebalancing

A key feature of M1 Finance is smart rebalancing. Using smart rebalancing, all deposits will be automatically invested in your portfolio without your manual input. When withdrawals are taken out of your account, it will automatically rebalance your portfolio so it has the correct weight of your holdings at all times.

Rebalancing is a crucial aspect of investing. Rebalancing ensures your portfolio has the correct ratio of holdings and makes sure you are not taking more or less risk than you originally planned.

For example, if you held a portfolio of 50% stocks and 50% bonds and the stock portion grew faster, your portfolio is now 60% stocks and 40% bonds. 

Your risk has increased by not rebalancing your account because you are more exposed to stocks. 

To tone back risk, you would sell off some of the stocks and buy bonds to get back to your 50% stock and 50% bond portfolio. M1 Finance does this automatically, for free.

M1 Finance Free Training Shortcode (#10)

M1 Finance Free Training

We put together a free 30 minute video training that walks you through the entire process, step by step. This training will help you get up and running in no time at all.


M1 Finance Expert Pie Portfolios

  1. General Investing: Choose from risk levels ranging from ultra-conservative to ultra-aggressive.
  2. Plan For Retirement: Invest for your target retirement date. Your portfolio allocation will adjust over time to become more conservative as you approach retirement.
  3. Responsible Investing: Socially conscious investing. This investment category invests in companies that are concerned about financial obligations as well as social and environmental obligations.
  4. Income Earners: Contains dividend and interest-paying securities.
  5. Hedge Fund Followers: Pies that track public funds such as Berkshire Hathaway and Icahn Enterprises.
  6. Industries & Sectors: Invest in one segment of the overall economy.
  7. Stocks & Bonds: Multiple options for diversified stock and bond exposure.
  8. Other Strategies: Other investment options like blue-chip stocks, domestic growth, domestic value, and more.
  9. Trinity Portfolios: Portfolios created by Cambria Investments.

Hybrid Brokerage Platform

M1 Finance is truly a hybrid platform because you can choose your investments or simply automatically invest in one of the prebuilt M1 portfolios. 

However, the platform only offers one trading window per day. So, it is not an ideal place to do day trading. It is mostly intended for long term investors who are looking to automate their investing.

Retirement Accounts

The M1 Finance platform offers free Individual Retirement Accounts. This feature is very valuable as most investing platforms charge annual fees for IRA accounts. Within M1 Finance you can open a Traditional or Roth IRA. 

M1 Finance retirement account minimums are $500.

If you would like to roll over your 401(K) to an M1 Finance IRA, M1 Finance offers a free rollover concierge to assist you with your rollover. They will guide you through the paperwork and help you make the transfer as easy as possible.

Margin Investing and Borrowing

With M1 Borrow, you can borrow up to 35% of the value of your portfolio. You can then use the money you borrow to make investments on margin. 

You will not have to speak to any loan officers, go through and credit checks, or even deal with loan denials when you borrow with M1 Finance. It is automatic!

M1 Borrow features an exceptionally low-interest rate of 5.0%. However, for M1 Plus members, the interest rate is 3.5%.

Expert Portfolios (Pies)

If you are a beginner investor you may not want to build your portfolio from scratch. This is what makes M1 Finance so attractive to new investors. M1 Finance has a variety of expert portfolios or “pies” available for free

Portfolios include underlying stock and bond allocations, hedge fund followers, and even target-date retirement funds. Most brokerages would charge a fee for these portfolios, however, M1 Finance does not.

These portfolios are built using Modern Portfolio Theory and are intended to serve as fully passive investments allowing you to "set it and forget it".

FDIC Insured Checking Account

Through M1 Spend, you can have your FDIC-insured checking account. These checking accounts are directly integrated into the M1 app, so they are incredibly convenient to use. 

You can even invest money without waiting for a three-day ACH bank transfer. Through M1 Plus, the premium debit card, you can also earn cashback and 1.3% APY. 

Another benefit of the M1 debit card is that you can receive your paycheck 2 days early with direct deposit.

M1 Credit Card

The M1 credit card, called the Owner's Rewards Card, is one of M1's latest features.

With this credit card, you have the opportunity to gain up to 10% cashback! When you make a purchase with a company you 'believe in,' you are awarded cashback. To 'believe in' a company means you own that company's stock. For example, if you make a purchase with Apple, and you own any portion of their stock, then you would get cashback rewards. This does not apply to index funds or ETFs.

There are currently over 70 participating companies that are separated into 3 tiers. The bottom tier provides 2.5% cashback. The second tier 5%. And the third tier, 10%. The card also offers 1.5% cashback on every other purchase.

A great feature of this credit card is that you can set your cashback to automatically invest in your pies.

All M1 members are able to apply for this credit card. However, for M1 Plus members, the $95 annual fee is waived.

M1 Plus

Investors can choose to upgrade their accounts to M1 Plus in order to take advantage of more advanced features on the platform.

These features include an additional trading window each day, access to a high-yield checking account, access to a cashback debit card, and lower interest rates for M1 Borrow.

The cost for M1 Plus is $125 per year. You can actually get the first 3 months free when you sign up!

Tax Minimization

Using a simplified method of tax-loss harvesting, M1 Finance offers options to sell positions in the most tax-favored way. This gives investors the advantage of keeping more of their dollars to themselves rather than paying more to the government. 

The tax minimization strategy offered by M1 Finance helps potentially boost returns in your portfolio, by paying less in taxes. 

M1 will sell securities in order of:

  1. Losses that offset future gains 
  2. Lots that result in long term gains 
  3. Lots that result in short-term gains. 

This strategy gives investors the advantage of selling positions in a tax-favored manner. Most other advisors do not offer tax-favored investing and many times will make this a manual rather than an automated process. 

However, there are alternative robo advisors that offer more effective tax-loss harvesting strategies. If you are interested in this feature, we recommend checking out Betterment, the most popular robo advisor.

M1 Finance Fees & Account Minimums

There are zero fees on M1 Finance.

Many people, especially those who are just getting started with investing, love the free aspect of M1 Finance. The lack of fees makes it very easy to get started on the platform.

M1 Finance does have account minimums, however. You must have a minimum account value of $100 to open an investing account on M1 Finance. If you would like to open a retirement account on M1 Finance, you will have to open the account with $500 or more.

M1 Plus costs $125 per year.

M1 Finance Pros

  • Truly offering zero fee investing.
  • Free expert built portfolios 
  • The platform is beginner-friendly and easy to use.
  • Reasonable account minimums of $100 and $500 for retirement accounts.
  • Hassle-free borrowing through M1 Borrow.
  • Great features like smart rebalancing and fractional shares
  • Taxable Accounts, Joint Accounts, Roth IRAs, Traditional IRAs, Rollover IRAs, SEP IRAs and Trusts are all available.

M1 Finance Cons

  • No full-scale tax-loss harvesting.
  • No guidance from human advisors
  • Not suitable for day traders.
  • No options, mutual funds, or cryptocurrency trading

What is Charles Schwab?

Charles Schwab is one of the most well known traditional online brokerages on the market. 

The firm currently has over $3.3 trillion in assets under management making it the 14th largest banking institution in the United States.

With features ranging from full-service investment management from local advisors to do it yourself investing platforms, Schwab has services available to many different types of investors. 

Schwab offers a variety of very useful features and can be the ideal platform for the do-it-yourself investor.

Charles Schwab Features

Schwab Securities

Investors can choose to invest in multiple types of securities such as:

  • Stocks
  • Bonds
  • ETFs
  • Mutual Funds
  • Options
  • Futures

Account Minimums 

There is no account minimum to open a Schwab account. The exception is a Charitable Trust which must have a $5,000 minimum to open with Schwab. Also, certain Schwab managed accounts hold account minimums. 

Commission-Free Trading 

Schwab recently released a new fee structure allowing investors to buy and sell both stocks and ETFs for free. There are no longer commissions for each buy and sell of a stock or ETF. 

Schwab Trading Fees

Stock and ETFs: FREE

Mutual Funds: $49.95 to purchase, $0 to sell

Fixed Income: $1

Options: $0.65

Futures: $1.50

These are fees for online trading, investors who use the Schwab automated phone service to place trades will pay a $5 charge. Placing trades with a live Schwab rep will cost $25 per trade

Schwab Technology

As a much larger company, Charles Schwab can offer technology beyond M1's abilities.

This includes an Alexa skill, an Apple Watch app, and a dedicated iPad app for trading. Many of these offerings are not make-or-breaks for either platform, but with a much larger budget Schwab can afford to offer a wider array of options.

Account Types

  • Taxable Account
  • Traditional IRA
  • Roth IRA
  • Simple IRA
  • Solo 401(k)
  • Trust
  • Custodial UGMA
  • 529 Education Accounts

Schwab Managed Portfolios

The Schwab platform offers a variety of managed accounts. This feature has a minimum investment of $25,000 and gives you ongoing access to a variety of model portfolios. Investors will pay a fee for this service.

Schwab Intelligent Portfolios Premium

Minimum of $25,000 to start. Initial planning fee of $300 and a monthly fee of $30 per month for ongoing planning. Investors will have access to a CERTIFIED FINANCIAL PLANNER™. 

Schwab Customized Investment Management

Depending on the magnitude of assets in your account you may be eligible to receive customized investment management by Schwab professionals. 

Customized portfolios at Schwab begin with an account minimum of $100,000 for equity accounts. $250,000 minimum for fixed income accounts. 

Schwab private client has a $500,000 minimum and charges a management fee of 0.80% per year. This will give you a team of investment professionals to help you create and adjust your financial plan.

StreetSmart Edge®

Schwab offers online trading, as well proprietary trading software called StreetSmart Edge.® This platform will give investors real-time quotes and live streaming of market data as well as robust trading and charting tools. This platform is free to use.

This offering makes the platform more appealing to active traders as you are able to create a customized dashboard and execute trades rapidly. Long-term investors likely won't have any use for this software.

Customer Service and Resources

Schwab offers live 24/7 support via phone or online chat. 

This is a feature that has largely gone away with many of the newer investing apps and online brokerages. However, if you decide to stick with one of the "old school" brokers like Schwab, you'll still have access to robust customer support.

The platform also offers a variety of resources to investors. Clients receive earnings news from well-known resources such as Reuters and Schwab also provides market commentary from Morningstar, Credit Suisse, and more.

Schwab Pros

  • Offers many types of securities - stocks, bonds, ETFs, options, and futures on the platform.
  • Get access to a human financial advisor
  • Stocks and ETFs are commission-free
  • Live trading platform
  • News from reliable sources such as Reuters and Morningstar
  • Time-tested platform with trillions of dollars under management
  • Increased educational materials on retirement and investing

Schwab Cons

  • The trading platform not as robust as TD Ameritrade's Think or Swim
  • Schwab requires larger deposits to use the automated investing feature. $5,000 to begin using pre-built portfolios.
  • Mutual funds have expensive fees, $49.95 to purchase
  • Mobile interface is not as sleek or intuitive
  • Fractional shares are limited to S&P 500 companies

M1 Finance vs Charles Schwab: Summary

Both M1 Finance and Charles Schwab offer excellent platforms for investors. We find there are a few areas where they differ and features investors should be aware of.

Why Choose Schwab?

Schwab is a good platform for more advanced traders or investors. If you have a more complex financial situation and need to work with a Financial Planner, then Schwab may be the better platform for you.

Schwab also offers more types of securities, if you are trying to trade options then Schwab will be a better platform.

Charles Schwab also offers college savings accounts using 529 Plans. If you are an investor looking to save for college either for yourself or your children, then Schwab has better options available.

Finally, StreetSmart Edge® makes Schwab a viable platform for active traders who need real-time access to market data and need to execute transactions rapidly.

Why Choose M1 Finance?

M1 Finance is a good option for those investors looking to create portfolios of stocks and ETFs themselves or choose from a variety of prebuilt portfolios.

M1 Finance offers free expert-built portfolios called "Pies". Investors can choose from multiple different prebuilt portfolios for free.

The M1 Finance platform also caters to those investors with a smaller account minimum of $100 ($500 for retirement accounts) and offers a simple and easy-to-use interface.

Additionally, M1 is designed for passive investors. So if you're looking to automate your investing as much as possible, this platform will make it easy for you to set things up once and never worry about them again.

If you are looking to make a few trades in your account, and are relatively new to investing then M1 Finance may be the better platform for you.

Article written by Ed Canty, CFP®
Ed is a CERTIFIED FINANCIAL PLANNER™. At his day job, Ed helps clients plan for retirement, manage their investments, and navigate their tax situation. In his free time, Ed enjoys golfing, traveling, fishing, and wrenching on his old car.

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