M1 Finance vs Fidelity: Best Online Stock Broker?

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M1 Finance vs. Fidelity

Disclaimer
    Investing Simple is affiliated with M1 Finance.

    M1 Finance and Fidelity are both popular investing platforms that are widely used today. However, although M1 Finance and Fidelity both offer easy-to-use investing platforms, there are several important differences between the two platforms. Here is a quick breakdown of the two platforms as well as an analysis of which is the better one to use.

    What Is M1 Finance?

    m1 finance

    M1 Finance is an investing platform which offers zero fees investing for both passive and active investors. Passive investors can take advantage of one of the dozens of expert built portfolios. Aggressive investors can develop their portfolio from scratch, consisting of whatever stocks or ETFs they want to hold.

    The automation features offered by M1 Finance are useful for both the passive and active investor. 

    M1 Finance has many excellent features which are very appealing to investors of all different experience levels. When M1 Finance was first created, it started out charging its customers a 0.25% annual fee. However, to make the platform more appealing, it got rid of these fees entirely. Now, it is 100% free to use!

    M1 Finance currently has over $500 million in assets under management.

    If you are looking for an investment platform which is very simple to use and does not require you to pay any fees or commissions, then it is an excellent option.

    M1 Finance Features

    Smart Rebalancing & Fractional Shares

    The M! Finance robo-advisor will make sure that every last penny is invested and is helping to earn you returns through the use of fractional shares. You can purchase as little as 1/10,000th of a share on the platform. The robo-advisor will also make sure that your portfolio is periodically rebalanced to make sure that needed adjustments are made depending on the performance of your investments.

    Margin Investing & 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. This is genuinely hassled free borrowing!

    Expert Portfolios (Pies)

    If you are a beginner investor and you don’t want to build your portfolio from scratch, M1 Finance has an array of expert portfolios or “pies” available. This includes 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! 

    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.

    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! 

    M1 Fees & Minimums

    There are zero fees on M1 Finance.

    The fact that it is entirely free to use is one of the main reasons why it has been attracting so many users in its few short years of operation. 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. The minimum account value to open an investing account on M1 Finance is $100. If you would like to open a retirement account on M1 Finance, you will have to open the account with $500 or more.

    M1 Finance Pros

    • Truly offering zero fees investing.
    • 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 tax loss harvesting.
    • No 401k guidance.
    • Not suitable for day traders.
    • No commodity or real estate investing on the platform.

    What Is Fidelity?

    Fidelity

    Fidelity is an investing platform that is exceptionally well known. The platform has a staggering $2.46 trillion worth of assets under management. Fidelity is similar to M1 Finance in that it aims to provide customers with extremely low-cost and easy to use investing. However, there are many essential differences between Fidelity and M1 Finance.

    For example, unlike M1 Finance, Fidelity does charge commissions on trades. It charges $4.95 per equity trade. However, if you open an account with over $100,000 in it, then you get 200 free trades. So, you will need to start with a substantial amount of money if you are going to do free trading with Fidelity.

    Fidelity is a prevalent trading platform that is used by institutional investors, retail investors, and day traders alike. It has an excellent reputation, and this is a large part of the reason why it has grown to be so large.

    Fidelity Features

    Human Advisors

    If you would like advice from an actual human being when you are carrying out your investments, then you can get it from Fidelity. For people who want this kind of assistance, Fidelity is an excellent platform for investment advice from advisors. However, this will come at a fee.

    Robo-Advisor

    In addition to excellent human advisors, Fidelity also offers robo-advisors which can manage your money based on algorithms. Fidelity’s robo-advisor is called Fidelity Go. There are no account minimums for Fidelity Go. However, it will cost 0.35% per year to use this robo-advisor.

    Integration with Other Fidelity Accounts

    If you have other Fidelity accounts, then you will be able to integrate your different investing account with them. This is extremely convenient for many people, and that’s why so many people choose to combine all of their Fidelity accounts. This allows you to see your entire financial landscape in one place.

    24-7 Customer Service

    Many investors have questions, and a lot of them are not able to call customer service during the day because they are busy working. So, being able to call customer support at any time is extremely beneficial. One area where these free platforms are lacking is in customer support. 

    Fidelity Fees & Minimums

    Fidelity Fees & Minimums

    There are no account minimums for Fidelity Accounts. However, you will have to pay $4.95 per trade to invest with Fidelity. That is of course unless you open an account with $100,000 or more, in which case you get 200 trades free.

    Fidelity Pros

    • Fidelity has an outstanding reputation.
    • The company has over $2 trillion in assets under management.
    • You can invest yourself, with a Robo-advisor or with the help of a human advisor.
    • You can get 200 free trades if you open an account with at least $100,000.
    • There are no account minimums.
    • There is outstanding 24-7 customer service.
    • You can invest in a wide range of assets.

    Fidelity Cons

    • You have to pay commissions on every single trade if your account size is less than $100,000.
    • The platform can be complex to use since it offers so many things.
    • It is not simple for beginners to use.

    M1 Finance vs. Fidelity: Summary

    m1 finance vs fidelity

    Both of these platforms are good to use for investing. However, Fidelity is significantly more expensive. If you plan on trading regularly, then you could rack up hundreds or even thousands of dollars in trading fees on Fidelity. Keep in mind; you will never be charged a single dollar to make investments on M1 Finance.

    You can take advantage of Robo-advisement with either platform, which is a significant benefit. However, if you would like to work with a human advisor, then Fidelity is the only platform of the two, which will allow you to do this. You will not be able to get a person on the phone to help you with investments at M1 Finance. 

    M1 Finance is better for people who are looking to minimize their trading costs, and who do not have an abundance of investing experience. If you fall into this category, then we recommend that you start with M1 Finance. However, if you are an advanced trader and are looking for a trading platform with advanced features and a long history of excellence, then Fidelity is the better option for you.

    You can automate investing with either platform. However, if you want to use Fidelity to automate your investing, then you will have to pay a 0.35% annual fee to Fidelity. So, M1 Finance’s robo-advisor is significantly cheaper, because it is free! 

    If you are a more advanced investor, then it is recommended to use Fidelity.

    Fidelity has many more trading options, they have custody options, they have better customer support, and they have proven the quality experience over many years.

    M1 Finance is very promising, but the company is still in its early years and still has a long way to go before it is anywhere near close to being on the same level of Fidelity.

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