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M1 Finance vs Vanguard 2020: Best Investing Platform?

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Written by Ryan Scribner
Updated on July 6, 2020

Online investing has drastically changed over the last decade. Now there are countless investing apps, roboadvisors, and traditional brokerage firms to choose from. In this article, we compare a titan of the brokerage industry in Vanguard against a new player to the game in M1 Finance.

Vanguard is the largest provider of mutual funds in the world, with over $5.3 trillion in assets under management.

M1 Finance is an up and coming brokerage offering online trading of stocks and ETFs to investors all commission-free and fee-free.

So the question is, which platform is better for investors?

Here's the differences between M1 Finance vs Vanguard.

Summary: M1 Finance vs Vanguard

  • M1 Finance offers commission-free stock and ETF trading.
  • In January 2020, Vanguard switched to commission-free trading for all stocks and ETFs.
  • M1 Finance has a $100 minimum while Vanguard has no account minimums.
  • Vanguard has a $0 minimum, however, fund minimums start at $1,000 (except for ETFs).
  • Vanguard charges an annual $20 account service fee, however, this is waived if you opt for electronic statement delivery.
  • M1 Finance has just one trading window per day unless you have M1 Plus which gives you two.
  • Vanguard has an open trading window.
  • M1 Finance offers approximately 30 expert portfolios that are 100% free to use. Choose from dividend pies to growth pies.
  • M1 Finance has useful features like fractional shares, automated rebalancing and tax minimization selling.
  • Vanguard gives you a great option for investing in low-cost funds. Vanguard offers over 3,100 no transaction fee mutual funds.
  • If you want to take advantage of fractional shares, automated rebalancing, expert pies, and other great features, M1 Finance may be a better option.
FeatureM1 FinanceVanguard
Minimum Balance$100 ($500 Retirement)$0
CommissionsNoneNone
FeesNone$20 Service Fee (Waived With Electronic Statement Delivery)
AssetsStocks, ETFsStocks, ETFs, Mutual Funds, Bonds, Options, CDs
Fractional SharesYesNo
Automated RebalancingYesOffered On High Value Accounts
Checking AccountYesNo
Tax MinimizationYesNo
Trading Window1 Per Day (2 With M1 Plus)Open
Best ForAutomation FeaturesBuying Stocks/ETFs As Well As Vanguard Funds

Sign up with M1 Finance Here!

Invest with Vanguard Here!

What Is M1 Finance?

M1 Finance is a relatively new investing platform that launched in 2016. This app is designed to be a brokerage/robo-advisor hybrid, offering a number of features that allow investors to automate their entire investment portfolio.

M1 Finance at a Glance

  • Commission-free trading of stocks and ETFs
  • Free expert built portfolios
  • Fractional shares of stocks and ETFs
  • Automatic rebalancing of deposits and dividends
  • Tax optimization

A few examples of these features are fractional shares, expert pies, automated rebalancing and more!

Vanguard charges trading commissions for stock trades. M1 Finance takes a different approach to making money. Instead of charging fees and commissions, they make money in a few different ways. Here's our article on how M1 Finance makes money!

M1 Finance offers a free online investing platform and mobile app for its users.

It is easy to open an account and you can begin investing with as little as $100. You start by creating your portfolio which M1 Finance calls a pie. You can customize your pie with a variety of stocks and ETFs offered on M1’s platform, including Vanguard ETFs. All trades are 100% commission free.

M1 Finance has a number of tools for passive investors including the expert pies.

M1 Finance Features

We are going to highlight some of the key features here. If you want to read about all of the features, check out our comprehensive M1 Finance review here!

Free Platform

M1 Finance is 100% free to use. As long as you meet the $100 account minimum ($500 for retirement accounts) you can start using M1 Finance for free.

There are no fees charged to use its platform. Only underlying fund fees which are paid to certain ETFs on its platform.

Fractional Shares

When you buy shares of stocks or ETFs with M1 Finance, you are buying fractional shares.

In fact, you can purchase as little as 1/10,000th of a share of any stock or ETF that trades on the platform.

This is very handy for stocks that trade at a high share price like Amazon. This stock is currently over $2,000 per share. Other brokerages would require you to purchase an entire share. With M1 Finance, you can buy as little as 1/10,000th of a share.

If you wanted to, you could invest $10 in Amazon stock with this platform. If you buy shares of Amazon through Vanguard, you will pay a commission for the trade and you will have to purchase whole shares.

Automated Rebalancing

When money is added to your portfolio, M1 Finance will automatically rebalance your portfolio.

They will accomplish this by buying more of what you are underweight in and less of what you are overweight in.

Your portfolio will always move away from the target allocations, and this is a phenomenon known as portfolio drift.

They will also rebalance as you sell. This is accomplished by selling more of what you are overweight in and less of what you are underweight in.

Most investors forget to rebalance their portfolios, or they do it very infrequently. This could result in your portfolio being too conservative or aggressive. M1 Finance does their best to keep you as close to your target allocations as possible.

Expert Portfolios or "Pies"

If you want to build your own portfolio from scratch, M1 Finance allows you to do that with the Custom Pies feature.

However, if you are looking for some help when it comes down to what to invest in, they offer over 30 different expert portfolios that are completely free to invest in.

This includes stock and bond portfolios, target date retirement funds and more. Most of the ETFs in these portfolios are offered by Vanguard, BlackRock or iShares. These are all reputable fund companies known for having low fees.

Free Retirement Accounts

This is one of the only brokerages we have come across that offers free retirement accounts.

The minimum to get started with a retirement account is just $500.

M1 Finance offers a variety of different types of funds investors can use within retirement accounts.

Click Here To Invest With M1 Finance!

Tax Minimization

M1 Finance offers a feature similar to tax loss harvesting which they call tax minimization. This feature prioritizes your capital gains and losses by first selling losses that offset future gains, then selling lots that result in long term gains, then selling lots that result in short term gains.

Dividend Reinvestment

If you use the auto-invest feature, you will be able to take full advantage of dividend reinvestment and earn compound interest.

When you earn dividends on M1 Finance, those dividends go towards your cash balance. If you have auto-invest turned on,  that money will be automatically invested across your entire portfolio once your balance exceeds $10.

This is considered to be a portfolio level DRIP or dividend reinvestment plan.

Click Here To Invest With M1 Finance!

M1 Finance Pros

  • Free platform
  • Low account minimum at $100 ($500 for retirement accounts)
  • Automatic rebalancing of your account
  • Free expert built portfolios
  • Tax minimization feature reduces overall tax consequences
  • Fractional Shares

M1 Finance Cons

  • Limited research
  • Focused on long term investing, rather than stock trading
  • Only offers stocks and ETFs

What Is Vanguard?

Vanguard is the largest mutual fund provider in the world and the second largest provider of ETFs.

They are a massive fund company with over $5.3 trillion in assets. They were founded by John Bogle.

Vanguard still holds true to their original mission statement, which is to take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. The goal of Vanguard has always been to make money for the clients.

As an investor, you can purchase Vanguard products in a number of different ways.

  • Mutual Funds - Choose from over 3,100 no transaction fee mutual funds on the Vanguard platform.
  • ETFs or exchange-traded funds all trade commission-free on the Vanguard platform.

Vanguard funds have some of the lowest fees in the industry.

Vanguard was the pioneer of low fee investing for the people.

Vanguard Features

Commission Free

All stocks and ETFs trade commission free. This is new as of January of 2020.

You are also able to trade individual stocks and ETFs at any time during the trading day since Vanguard has an open trading window.

Vanguard offers ver 3,100 no transaction fee mutual funds.

Securities Offered

  • Stocks
  • Options
  • Bonds
  • ETFs
  • Mutual Funds
  • CDs

No Minimum

There is a $0 minimum to open a Vanguard brokerage account. However, the minimum investment for most Vanguard funds is $1,000.

The minimum to invest in stocks or ETFs is the cost of a single share, since they do not offer fractional shares.

Research Tools

Vanguard does offer some basic research tools for stock and fund analysis, however a common complaint about this brokerage is the lack of research tools.

Account Types

  • Taxable
  • Joint
  • IRA
  • Roth IRA
  • SEP IRA
  • Simple IRA
  • Solo 401(K)
  • 529 Plans

Saving For College

Vanguard offers 529 College Savings plans that investors can use to prepare saving and investing for college. Most States within the U.S. provide college savings plans, Vanguard is one of the cheapest plans available.

Vanguard Pros

  • Low-cost management fees compared to other fund companies
  • Commission-free trading for stocks, options, and ETFs
  • Large fund selection
  • Phone support
  • Good choice for saving for college via 529 Plans

Vanguard Cons

  • $20 annual fee per account (waived if you use online statements)
  • Data and research is poor
  • Most funds have a $1,000 minimum investment

M1 Finance vs Vanguard

Commission Free Trading

Vanguard offers commission-free trading for stocks, options, and ETFs.

M1 Finance offers commission-free trading for stocks and ETFs.

Account Minimums

On the other hand, the minimum to get started with Vanguard is $0 while M1 Finance has a $100 minimum for taxable accounts and a $500 minimum for retirement accounts.

That being said, you do need to purchase whole shares on Vanguard. M1 Finance offers fractional shares, meaning you can buy as little as 1/10,000th of a share.

If you decide to purchase the Vanguard Index Mutual Funds through the site, pay attention to the fees. In most cases, the fees are actually higher for this product. It is also significantly more required as an upfront investment. For most Target Date Funds there is a $1,000 minimum and for most of the other funds it is a $3,000 minimum.

Hidden Fees

M1 Finance is very transparent about how they make money. They do not make money by charging customers hidden fees.

If you do end up going with Vanguard, make sure you opt for electronic delivery of statements. If you do not, you will end up paying a $20 annual account service fee.

Customer Service

M1 Finance offers a number of different options for customer service. The service team is available during the open market hours, which are typically Monday to Friday from 9:30am to 4:00pm EST. They offer phone support during set hours and email support.

Vanguard offers similar options, offering both phone support and email support. However, their phone support hours are Monday to Friday from 8:30am to 9:00pm EST. This is a greater time window.

Both M1 Finance and Vanguard are designed for long term passive investors. If you are an active trader, neither platform is going to be a good fit for you. For that, we recommend the free trading app Webull. M1 just isn't going to cut it with the 1 trading window per day, and Vanguard is severely lacking when it comes to research tools.

Why Choose M1 Finance?

M1 Finance is known to offer a number of features that long term, passive investors have found to be very helpful. Most of the expert pies that are offered on M1 Finance actually hold Vanguard ETFs in the portfolios since the fees are so low on these funds.

M1 Finance offers a variety of features that appeal to investors such as...

  • Automatic portfolio rebalancing within your account. All deposits greater than $10 will be allocated across your investment portfolio.
  • Dividend reinvestment within M1 is a bonus as well. Any time your dividends exceed $10, your cash will be reinvested across your portfolio.
  • Tax minimization strategies reduce tax liability within your regular brokerage account.
  • Expert built portfolios or "Pies" are also offered on the M1 platform and are completely free to use.

Click Here To Invest With M1 Finance!

Why Choose Vanguard?

If you are just strictly looking to trade stocks and ETFs commission free, as well as invest in Vanguard funds directly on their site, the Vanguard brokerage account may be better for you. This is largely due to the open trading window. Those who have larger amounts to invest (over $3,000) may also find the Vanguard platform more accessible due to certain fund minimums.

  • Investing in Vanguard branded funds
  • Commission free stock, option, and ETF trading with an open trading window
  • 529 Plans provided by Vanguard assist investors who are trying to save for college.
  • Options trading is available on Vanguard

Sign up with Vanguard Here!

M1 finance vs vanguard
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  • Hi, Can I use vanguard for retirement plan and, M1 for individual stocks as well as purchase some vanguard portfolio?
    Also, do you offer personal financial advice and how much do you charge?

  • Hi Ryan, I agree that Vanguard is lacking in features as a platform these days. But there are a couple of big omissions in your review. A big advantage of Vanguard and most brokers over M1 Finance is that you have control over when and at what price you transact. Inconsequential for long-term investors, yes, but still a major difference.

    Also, Vanguard no longer charges fees for stock trades, as well as for non-Vanguard ETFs. This is as of the beginning of 2020, I believe.

  • Hey - did you take down your M1 Finance google slide? My account finally activated today and was going to review it! 🙁

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