Robinhood vs Webull vs M1 Finance: Best Commission Free Stock Trading App?

Robinhood vs. Webull vs. M1 Finance

Robinhood vs Webull vs M1 Finance

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!

Summary

  •  M1 Finance has the best features for long term and dividend investors. 
  •  Robinhood has very limited features, but it is 100% beginner-friendly. 
  •  Webull has the best features for intermediate to advanced traders or investors. 
  • Both M1 Finance and Webull offer retirement accounts.
  • If you are looking for a trading simulator, you will only find that with Webull.
  • Webull and Robinhood have a $0 minimum balance, while M1 Finance has a $100 minimum balance.
  •  Investing Simple readers get 2 free stocks when signing up with Webull! You have to use this link or the one below to get them. 
  • You get 1 free stock if you sign up for Robinhood, and M1 Finance does not offer a sign up incentive.
  • M1 Finance is the only one that offers dividend reinvestment, fractional shares and expert built portfolios.
  • Robinhood announced they will be rolling out fractional shares in the near future.
  • All 3 of these apps are 100% free to use.
  • These brokerages are for US investors only (sorry!).
  • All are mobile and desktop friendly.

From Cheap To Free Trades

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 were 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 fin tech start ups, offering sleek apps and a great user experience.

Sign Up Incentives

First of all, lets talk about the freebies.

These brokerages are competing for new customers, so some of them incentivize sign ups by offering a free stock.

The free stock promotions are based on a lottery system, meaning you could get a low value stock or a high value stock.

Webull

 Investing Simple readers can two free stocks! 

  1. Open an account here for the first one.
  2. Fund the account with at least $100 for the second one.

You must use our link to get the free stocks. If you download Webull from the app store, you will not get the free stocks.

M1 Finance

No signup incentive. We do earn a small commission if you use our link!

Robinhood

If you use our link, you get 1 free stock valued between $2.50 and $200!

Open a Robinhood account here!

Are Free Trading Apps Safe/Legit?

Free trading apps

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. They have families to feed just like most of us do, so they need to make money. Instead of charging customers fees or commissions, they have simply found creative ways to make money.

How Free Trading Apps Make Money

  1. They earn interest on the uninvested cash held within your brokerage account.
  2. Margin trading allows them to earn margin interest.
  3. Some offer loans against securities held within the account, allowing them to earn interest.
  4. Loaning out shares to short-sellers.
  5. They earn fractions of pennies on each trade by directing order flow.
  6. Some offer paid or premium subscriptions.

Customer Service & Paperless Statements

One area where many free trading platforms are lacking in 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.

Customer Service Comparison

Webull: Telephone, Email, Chat (Available 24/7)

M1 Finance: Telephone, Email Support Requests (Available M-F 9:30am to 4:00pm EST)

Robinhood: Telephone, Email (Available M-F 9:30am to 4:oopm EST)

Of these three apps, Webull is the winner when it comes to customer service. They offer 24/7 service, while M1 Finance and Robinhood only offer service during open market hours.

What Is Webull?

Webull review investing simple

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 which is a feature traders have been asking about for a long time. That being said, they do not offer fractional shares, dividend reinvestment, crypto trading or expert portfolios.

Use our sign up link below to grab your 2 free stocks today!

Webull Features

Real-Time Market Data

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.

Trading Simulator

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.

Commission Free Short Selling

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.

Extended Trading Hours

They offer extended trading hours, both pre-market and after-market.

Normally, you can only trade stocks from 9:30am to 4:00pm EST. With Webull extended trading hours, you can place trades before the market opens and after the market closes.

Advanced Orders & Research Tools

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.

What Is M1 Finance?

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. They do not offer retirement accounts, dividend reinvestment, or fractional shares (yet). If you don’t know what these are, not to worry. We will be explaining them shortly.

M1 finance investing platform allows you to invest in individual stocks and ETFs for free. M1 charges no commissions or fees to invest. With a $100 minimum investment M1 gives investors access to their dynamic application.

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.

M1 Finance Features

Custom & Expert Pies

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.

Portfolio Level DRIP

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.

Fractional Shares

When you buy shares of stocks on Robinhood, Webull and most other 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.

Automatic Rebalancing

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!

Retirement Accounts

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 rollover an IRA or 401k to your M1 Finance account.

What Is Robinhood?

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.

Recently, they announced that they are adding fractional shares to the platform. This will allow you to invest as little as $1 in any of the stocks or ETFs that trade on their platform. However, there is a long waiting list and the release date for this feature is unknown.

Again, if you sign up with our link, you get 1 free stock worth $2.50 to $200!

Robinhood Features

Multiple Assets

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, the 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.

Robinhood Gold

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 buy stocks with 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.

The Verdict

All three of these platforms are offering a unique investing experience. They all offer commission-free trading with a small to no minimum account balances. What sets them apart from each other is 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. 

At the end of the day, all of them are free meaning you could try them all and see which one is the best fit for you. Webull has the best promotional offer for new accounts. If you sign up using our link, Investing Simple readers will get two free stocks. Robinhood offers one free stock upon signing up. 

Robinhood offers the most diverse selection of assets, ranging from stocks and ETFs to options and cryptos. However, they do not offer dividend reinvestment, retirement accounts or a trading simulator.

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, however there is no news on if and when they will be offering fractional shares or dividend reinvestment. Robinhood announced they will be adding fractional shares soon.

  • Jon says:

    Great comparison, thanks for putting this together.

    I’d be interested in an update to these comparisons. I believe Robinhood now offers fractional shares, but I am not certain if they are also allowing DRIP yet or if they plan to do so in the near future.

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