Years ago, investing in the stock market was a complicated process. You had to open a brokerage account with thousands of dollars, call your broker on the phone to place trades, and pay high trading commissions.
There has never been a better time to invest than today. Not because the market conditions are perfect, the reason is because of the numerous free options available. These apps do not charge trading commissions. You can even sign up right from your phone or computer, meaning there is no complicated paperwork. Finally, the minimum opening balances range from $0 to just $100!
When it comes to picking the best brokerage, three core choices are Webull, Robinhood, and M1 Finance. We are going to help you decide which one best fits your investment strategy!
Webull is designed for active traders looking for the best data and research tools available from a free app.
M1 Finance is designed for a more passive, long-term investor who wants to build a portfolio.
Robinhood is meant to be the most beginner-friendly app out there.
|Minimum Balance||$0||$100 ($500 Retirement)||$0|
|Sign Up Incentive||1 Free Stock||None||1 Free Stock|
|Account Types||Taxable, Retirement||Taxable, Retirement, SEP, Checking||Taxable, Checking|
|Assets||Stocks, ETFs, Options, Short Selling||Stocks, ETFs||Stocks, ETFs, Options, Cryptocurrency|
|Stock Lending Income Program||Yes||No||No|
|Trading Window||Open||1 Only, 2 For M1 Plus Users||Open|
|Best For||Intermediate Active Traders||Long Term/Dividend Investors||Beginner Investors|
In April 2013, Robinhood launched and changed the game forever.
This was the first commission-free trading platform that took the industry by storm. Not only was it commission-free, but they were also able to offer this with no minimum account balance. Robinhood simply identified a number of inefficiencies with the way these big brokerages were operating their businesses.
They created an ultra-lean and paperless business model, allowing them to offer free trades.
M1 Finance followed suit a few years later. In December of 2017, they decided to ditch the traditional business model of charging an asset management fee. They made a bold prediction that the future of finance is free, and they were correct.
Finally, we have Webull. In May of 2018, they officially launched their trading app. Webull recognized the power of the business model that Robinhood operated, but they saw areas where they were falling short. They identified a demand for a more robust free trading platform.
These apps do make money, and if you are curious how, here's our articles on how Webull makes money and how M1 Finance makes money.
In late 2019, we saw another huge move in the brokerage industry. The titan Charles Schwab announced that they would be ditching commissions and following this commission-free brokerage model. Other large brokerages have followed suit.
Still, these big players are having a hard time competing with these lean and mean fintech start-ups, offering sleek apps and great user experience.
One of the most common questions we get from readers is whether or not these free trading apps are safe or legitimate.
Your parents probably told you that there is no such thing as a free lunch out there. Naturally, you are skeptical when you hear that you are getting anything for free.
The good news is these three apps are totally legitimate. They are all members of FINRA with SIPC insurance that protects you in the event of insolvency. In plain English, that means if they lose your shares or money, you are insured. You are not insured against losses from investments you make.
Now, it is essential to understand that these companies are not operating a charity either. Instead of charging customers fees or commissions, they have simply found creative ways to make money.
One area where many free trading platforms are lacking is customer service.
Remember how I said they identified inefficiencies with the old way of doing things? Well, one of the most expensive and time-consuming pieces for brokerages out there is customer service. As a result, many have cut back on the hours that they offer support and offer email or chat support instead. As a result, you cannot call some of these brokerages on the phone or place trades over the phone.
Another essential point to note is that all of these free platforms operate paperless businesses. Tax forms and statements are sent to your email, not your mailbox. This is not optional. Sending out paper statements and tax forms was another one of these inefficiencies they picked up on.
If you want paper statements, you should avoid these free investing platforms altogether.
Webull: Telephone, Email, Chat (Available 24/7)
M1 Finance: Telephone, Email Support Requests (Available M-F 9:30am to 4:00pm EST)
Robinhood: 24/7 phone support, Email, Extensive Help Center
Of these three apps, Webull is the winner when it comes to customer service. They offer 24/7 service, while M1 Finance only offer service during open market hours. While Robinhood does offer 24/7 phone support, it is through a callback request within the app.
Webull is the newest free investing app on the list, but they are gaining market share fast and with good reason. Robinhood really pioneered the commission-free trading movement, but there was still a void that Webull was able to fill.
That void is a robust, data-driven free trading platform. Robinhood offers a beginner, friendly trading app that literally anyone can use and understand. As a result, it is a bit lacking for intermediate to advanced traders or investors.
They picked up on this demand and created a genuinely excellent free trading app. Despite all of the data and tools built into the app, it still has a great user experience. It is definitely not a beginner-friendly platform, though! It is similar to taking a drink from a fire hose. The amount of data available at your fingertips can be very overwhelming.
Both Webull and Robinhood have a niche here.
Webull has created a great platform for intermediate to advanced traders and investors who are looking for more fundamental and technical data than most free trading apps offer. The trading simulator on board helps you to hone your skills too! Robinhood is the most beginner-friendly app for first-time investors.
Recently they added IRAs, a feature traders have been asking about for a long time. That being said, they do not offer dividend reinvestment or expert portfolios.
Use our sign up link below to grab your free stock today!
Webull has a host of features that appeal specifically to intermediate and advanced traders.
The main strength of this platform is the robust data available to traders and investors.
This includes over 22 different technical indicators. Fundamental investors will find all of the numbers they are looking for too, including key financial documents, earnings dates, and analyst recommendations.
Webull has packed all of the data you will likely ever need into a seamless app.
One of the best features, in my opinion, is the free trading simulator.
The general rule of thumb out there is that 90% of traders lose money. A key contributor to this is trading with real money when you do not know what you are doing. The trading simulator offered by Webull is a perfect way to practice with fake money to learn the basics of trading or investing.
It also allows you to familiarize yourself with the platform and order types before using your money. Every Webull user gets $1,000,000 of fake money to practice trading with.
Short selling allows investors to invest with the belief that the price of a stock will go down rather than up.
For those interested in short selling, Webull offers this commission-free.
One caveat is that this type of trade has to take place in a margin account, which has a minimum balance requirement of $2,000.
They offer extended trading hours, both pre-market and after-market.
Normally, you can only trade stocks from 9:30 am to 4:00 pm EST. With Webull extended trading hours, you can place trades before the market opens and after the market closes.
On Webull, you'll be able to buy and sell from 4:00 am to 8:00 pm EST. It's important to keep in mind that there's typically less activity going on outside of standard market hours so price fluctuations can be more dramatic.
One of the main complaints about Robinhood is the lack of order types. Webull offers a number of advanced order types that traders might be interested in. If you want to practice and familiarize yourself with these order types beforehand, you can do so with the trading simulator.
These order types and tools allow investors to follow more advanced investing strategies all without leaving the app.
Webull currently supports the trading of 21 cryptocurrencies. Additionally, members can monitor the movement of many more. The 21 cryptos include the most popular coins such as Bitcoin, Ethereum, Litecoin, and Dogecoin.
Check out our full review of Webull crypto.
Like Robinhood and M1 Finance, Webull also offers fractional shares. This means that investors do not need to have the full price of the stock available in order to trade. For instance, if an investor wants to invest in Apple, but cannot afford the full share price, they can purchase a fraction of the stock.
Purchasing fractional shares does not decrease your risk, however, it allows you to conserve capital meaning you can diversify across many different stocks and industries.
The newest feature from Webull is retirement accounts. You can now open a Traditional or Roth IRA retirement account with them. These accounts have no minimums and they are commission-free.
By taking advantage of a retirement account, investors can save on taxes and start securing their retirement while taking advantage of numerous benefits.
Remember how we said that Webull identified a market that was not being served well by Robinhood?
Well, M1 Finance did the exact same thing. When it comes to investing in the stock market, there are primarily two types of investors.
You have the traders, who are moving in and out of stocks on a regular basis.
Then you have the long-term investors who are holding stocks for years and likely reinvesting dividends.
Plain and straightforward, Robinhood was not an excellent platform for long-term investing. It was designed from the ground up for beginner active traders.
In a nutshell, M1 Finance has created the ideal free investing platform for long term investors.
Dividend investors should be particularly interested, as they offer a portfolio level dividend reinvestment. They are also one of the only free investing platforms that offer retirement accounts. The automated portfolio rebalancing is great for long term investors, and the expert pies that are available 100% free are a hit with the passive investors.
That being said, M1 Finance does not offer options trading or crypto trading. They also do not offer a trading simulator. M1 Finance has a minimum opening balance of $100, or $500 for retirement accounts. Webull and Robinhood do not have any account minimums.
With M1 Finance, you are creating a portfolio or pie. You have the option of creating your own from scratch or investing in one of the prebuilt expert pies they offer.
They do not charge any fees to invest in these expert pies. This gives them an edge over the robo-advisors that charge an annual asset management fee for their portfolios.
Within each pie, you can hold stocks or ETFs. Each pie can hold up to 100 stocks or ETFs, and you can have multiple pies within the platform!
For example, you could have a growth pie and an income pie to compare the returns from each. Or, you could invest in your custom pie and an expert pie to see if you can beat the experts! This pie based investment strategy is geared towards long term investors.
Dividend investors, fasten your seatbelts!
One of the key complaints about these free investing apps is that they did not offer a dividend reinvestment option. M1 Finance has come up with a unique solution to this.
When a stock within your pie earns a dividend, that dividend is reinvested across your entire portfolio if it pushes your cash balance above $10. This is a little different than a stock level DRIP, where 100% of the dividend goes back into the issuing stock. Still, this is an entirely free way to reinvest dividends and earn compound interest.
When you buy shares of stocks on most investing apps, you have to buy whole shares.
This can become a problem when you look at companies like Amazon. This stock currently trades at over $2,000 a share. If you do not have enough to purchase a whole share, you can’t buy one through these other apps.
M1 Finance offers fractional shares on its platform. This means that you can invest in as little as 1/10,000th of a share of any stock or ETF that trades on the NYSE or NASDAQ. If you wanted to, you could invest as little as $10 in Amazon through fractional shares.
They take a unique approach when it comes to rebalancing. For those who are not familiar, rebalancing is something that you must do to keep your portfolio at your target allocations. Not all assets within your portfolio will move the same way.
You might start out with 50/50 allocations between two stocks and a month later find it is 40/60.
As you add more money to your account or earn dividends, M1 Finance will invest in whatever assets you are underweight in within your portfolio to bring you back to your target allocation. If you are looking to take money out of your account, they will sell whatever you are overweight in.
This means that M1 Finance is automatically buying low and selling high on your behalf. Warren Buffet would approve of this strategy!
Finally, a free investing app that offers retirement accounts!
Through M1 Finance, you can open a variety of different IRA’s including the Roth IRA and Traditional IRA. To open a taxable account with them, you just need a minimum balance of $100. To open a retirement account with them, you need a minimum balance of $500.
You can also roll over an IRA or 401k to your M1 Finance account.
M1 Finance is the self-proclaimed "finance super app" and has added a cash management offering to their arsenal in order to serve their users further. The service is offered through M1 Spend. This includes a checking account and debit card integrated with your existing M1 Finance account.
While all M1 users can take advantage of this account, the perks for M1 Plus users are much more advantageous. M1 Plus users will recieve 1% cash back on all purchases made on their M1 debit card along with one of the highest APYs avaliable on the funds in their cash management account.
If you are not an M1 Plus user, you'll miss out on these perks. However, there are no fees or minimums on this FDIC insured account so it could still be a good option for users in search of a free checking account.
In addition to a debit card, they also offer a credit card, called the M1 Owner's Rewards Credit Card. This card enables members to earn up to 10% cashback!
The card provides 1.5% cashback on all purchases. But when you make a purchase with one of 70 participating companies that you own stock with, then you qualify for up to 10%!
All M1 members are able to apply for the card but with the M1 Plus membership, there is an annual fee of $95 per year.
Through M1 Borrow, members gain access to a personal loan up to 35% of the value of their investment. This loan has no strings attached, no application, and long process. The loan does have a 5.0% interest rate, though M1 Plus members experience 3.5% interest.
Robinhood has created the most beginner-friendly free trading app, period.
They know what market they are going after and they stay in their lane. They offer basic order types, line charts, and some fundamental data. One of the strengths of Robinhood is that they are by far the easiest app out there to understand. They also allow you to trade stocks, ETFs, cryptocurrencies, and options commission-free.
They focus on one thing, and that is simplicity. As a result, it can leave much to be desired for more experienced traders or investors. They only offer basic order types, very limited data, no trading simulator, no dividend reinvestment. It is a la carte of the brokerage industry.
Again, if you sign up with our link, you get 1 free stock worth $2.50 to $200!
Robinhood offers multiple assets on the platform with zero trading commissions.
This includes stocks, ETFs, cryptocurrencies, and options. If you are interested in these assets, this may be a good fit for you. Another option is to strictly trade options and cryptos with Robinhood and do your stock and ETF investing elsewhere.
One word of caution regarding Robinhood Crypto, it is NOT insured under SIPC. They do carry crime insurance in case the crypto is stolen. Also, they claim that the majority of the cryptocurrency is stored offline in hardware wallets. However, you CANNOT transfer your crypto out of Robinhood. You have to sell it first. However, they did recently launch their new crypto wallets, which alleviates this problem.
This is a paid subscription offered by Robinhood, which is one of the ways they are able to make money. This allows you to have easy access to margin.
They extend you a loan to use to buy stocks based on your account balance and how much you are paying them. It is important to understand that trading on margin is high-risk, and it is not recommended for beginners.
You need to have $2,000 with Robinhood to open a margin account.
Robinhood Gold also offers members access to larger instant deposits.
Robinhood allows investors to purchase fractional shares of stocks and ETFs. This means you are able to buy shares of stocks in $1 increments, making it easier for beginner investors to invest in more expensive stocks without needing to invest thousands of dollars.
Fractional shares also make it easier for smaller investors to effectively diversify their portfolio and achieve the specific portfolio composition that aligns with their investing philosophies.
Robinhood followed M1 Finance's lead and now offers a dividend reinvestment program. However, instead of the portfolio-level DRIP offered by M1 Finance, Robinhood offers a stock-level DRIP.
This means that whenever a stock pays a dividend, you can choose to reinvest the dividend back into fractional shares of that company's stock. There is no dollar threshold you need to cross before dividends are reinvested and they will only be reinvested in the company that paid the dividend.
Robinhood has made it clear that they don't want to be just another investing app. The company is creating an entire financial ecosystem for millennials and Gen Z to conduct all of their personal finances.
Currently, this ecosystem includes Robinhood's Cash Management. Cash Management is a high-yield savings account that comes with a debit card that allows you to spend cash directly from your Robinhood account. Now, instead of just letting your uninvested cash sit idle, you can ensure that it is still earning you some interest while being FDIC insured.
Recurring investments is a recently-added feature that is unique to Robinhood. For investors looking to follow a dollar-cost-averaging investing strategy, this feature will be quite appealing.
Robinhood now allows investors to set up automatic periodic investments into particular stocks or ETFs. For example, if you wanted to invest $500 in Apple every month, you could set this up on Robinhood such that on the 1st of every month $500 would go from your checking account to Robinhood and would immediately purchase $500 of Apple.
Periodically investing the same amount into the same company is called dollar-cost-averaging and is a strategy promoted by legendary investors such as Warren Buffet. When you follow this strategy, you ensure that you aren't buying at the top of the market and over time you buy when the stock is high, low, and in the middle.
All three of these platforms are offering a unique investing experience. They all offer commission-free trading with small-to-no minimum account balances. What sets them apart from each other are the features of each app.
M1 Finance has the best features for long term and dividend investors.
Webull has the best features for intermediate to advanced traders and investors.
Robinhood has limited features, but it is the most beginner friendly platform.
Robinhood offers the most diverse selection of assets, ranging from stocks and ETFs to options and cryptos.
M1 Finance offers the best features for long term and dividend investors, since they offer portfolio level DRIP, expert pies, retirement accounts and automated rebalancing. However, they do not offer any kind of sign up incentive for our readers.
Webull offers the best research tools as well as a free trading simulator and fractional shares. However there is no news on if and when they will be offering dividend reinvestment.