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Written by Matthew Cerminaro on December 27, 2020
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TD Ameritrade vs M1 Finance 2021: Best Trading App?

In a financially digital world, investing for everyday people is becoming easier than ever.

Most new investors look to online brokers to start trading, but with so many to choose from, it can be hard to narrow down to the broker that will be best for you. At Investing Simple, we're committed to helping you find the broker that suits you best.

In this article, we will be taking a deep dive into two of the hottest online brokers on the market now: TD Ameritrade vs M1 Finance. Whether you are concerned with the features, fees, pros, or cons of TD Ameritrade or M1 Finance, we have you covered. Let's get started! 

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TD Ameritrade Review 2021: Best Brokerage Platform?

  • ThinkorSwim
  • Stock Research
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  • Assets
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M1 Finance Review 2021: Best Free Investing Platform?

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Summary: TD Ameritrade vs M1 Finance

  • TD Ameritrade offers an online trading platform that is perfect for the advanced trader 
  • Both services offer no commissions on stocks and ETFs 
  • TD Ameritrade offers options contracts where M1 Finance does not 
  • M1 Finance is more for the beginner investor and someone who is looking for automation 
  • TD Ameritrade has an income calculator for those interested in tracking monthly dividend income 
  • Both offer high-quality customer service 
  • M1 Finance offers fractional shares so you can buy portions of companies instead of full stocks/ETFs
  • Limited fee structure for both brokers 
  • TD Ameritrade offers industry-leading equity research from accredited firms such as Credit Suisse and Morningstar 

What Is TD Ameritrade? 

TD Ameritrade Logo

TD Ameritrade is a popular online broker that offers fantastic trading services at extremely competitive prices. Whether you are interested in stocks, ETFs, options, and more, TD Ameritrade has your back! 

The broker has been around since 1975 and has a much longer track record than many of the newer investing apps. However, this also means that they tend to be slower to adopt newer features and trends.

TD Ameritrade Mission 

TD Ameritrade's mission is to help everyone get into the financial markets, no matter how deep their pockets are. They are able to do this by offering competitively priced services to their users. Helping you find financial stability is very important to TD Ameritrade, and they provide tons of features to help you accomplish this. Speaking of features, let's take a look at some now. 

td thinkorswim

TD Ameritrade Features 

TD Ameritrade's features are what makes the online broker shine. From the top of the industry trading platforms to high-quality research to a mobile app that helps with the trading process, TD Ameritrade truly offers it all.

Mobile Apps 

TD Ameritrade offers two mobile apps on the IOS and Google Play stores that make the investing process that much easier. On the original TD Ameritrade App, you can:

  • Check your account balance
  • Make trades
  • Look at equity research reports
  • Make deposits
  • Look at the price history of your account value, and so much more.

This is just the start of TD Ameritrade's app strengths. The ThinkorSwim (TOS) application is another choice for TD Ameritrade users. The TOS platform  can either be downloaded from a computer or accessed through your mobile device. TOS lets you create charts and execute on your highly anticipated trades, all the click of a button. 

In general, the mobile app will suffice for simple orders and basic research. However, if you are serious about trading you're going to want to use ThinkorSwin on your computer.

Zero Commissions 

TD Ameritrade charges no commission on stock and ETF trading. With some other brokers, placing a trade does not just cost the price of the stock you are buying. There are sometimes other fees that are looped into the execution of trades, but not with TD Ameritrade.

This is a fantastic feature if you are someone who is looking to keep your trading costs low and attempting to maximize profits. For newer investors, it is essential to use a broker that is not charging commissions for trading.

Income Calculator 

If you are a fan of dividends, you will be a fan of TD Ameritrade's income calculator. This tool is on TD Ameritrade's website, and allows you to automatically calculate your annual dividend income from your portfolio of stocks. For those of you wondering how much you'll need to invest to live off of the dividends, that is exactly what this tool is for.

There is also a chart that shows the monthly income you will receive from your stock positions. For the income investor, this tool is crucial to mapping out dividend returns and staying up-to-date on your monthly income. 

Equity Research 

Among the most notable features of TD Ameritrade's services is its industry-leading equity research, free of charge. Given my personal experience with TD Ameritrade as my online broker, I have read tons of helpful research reports on companies I am considering.

Of the many research firms that cover stocks offered on TD Ameritrade, Credit Suisse is one of the most well-regarded. Credit Suisse covers many of the stocks that are offered on TD Ameritrade, and you can check out all of their price targets and equity research reports free of charge. 

These help investors do more of their research and evaluations within their trading platform and saves them from needing to navigate between multiple platforms just to plan a single trade.

td mobile trading

TD Ameritrade Fees 

Although TD Ameritrade's goal is to keep costs low for its users, it is still important to be informed of some broker fees before deciding to open an account. 

Stock Trading Fees 

Sure, there is no commission for stock trade execution through the ThinkorSwim trading platform or the official TD Ameritrade website. However, if you are looking to have a broker-assisted trade there will be a fee of $25. This fee may seem steep for those with a small account, but if you are placing a large trade and want a broker's advice/assistance, the fee may be worth it. 

Options Trading Fees 

In terms of options, TD Ameritrade charges a $0.65 options trading fee per contract. And, if you are looking for a broker-assisted options trade, you will be looking at $25+$0.65 per contract. 

TD Ameritrade Pros 

  • ThinkorSwim trading platform is top of the industry and helps you chart out trades 
  • Two mobile apps let you access all of TD Ameritrade's features from your fingertips 
  • Income calculator lets you track out monthly dividend income from your portfolio 
  • Equity research is offered from top research firms on Wall Street, including Credit Suisse 
  • No commissions on stock and ETF trades 
  • 24/7 customer service 

TD Ameritrade Cons 

  • Options contract fees of $0.65 
  • Broker-assisted trades are pricy compared to other brokers, coming in at $25 per trade  
  • Technical issues on the ThinkorSwim platform may result in sub-optimal trade execution prices 
  • No access to bonds or CDs on TD Ameritrade 

What Is M1 Finance?  

Regarded as the "Finance Super App," M1 Finance is an online broker that lets you borrow, invest, and spend with optimal benefits and low costs. The app has picked up lots of steam in the last year, and for good reason. Let's take a look at the company's mission to really find out what the creators of M1 are really striving for on this "Super App."

M1 Finance Mission 

M1 Finance is committed to empowering its users. Empowering them to make the right financial choices and being a helping hand through the entire process. M1 Finance focuses on automation and competitive pricing to help you manage your finances in the most convenient and optimal way possible.

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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.
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M1 Finance Features 

Features are the meat and potatoes of any online broker, and M1 Finance has its fair share. Let's take a look at some of the most important ones now, starting with its most important: intelligent automation. 

M1 Finance Intelligent Automation 

M1 Finance's automation tools let you select a risk-tolerance, time horizon, answer some questions, and create a portfolio for you to invest. These are comprised of ETFs, some of the most diversified financial products in the world, used to make the investing process seamless and effective. And as a new investor, who wouldn't want that?

Many other platforms will charge a management fee for helping you design a portfolio that meets your needs. However, M1 Finance makes money through other means that don't involve charging commissions or management fees.

Zero Commission 

Similar to TD Ameritrade, M1 Finance charges no commissions on the stocks and ETFs that it offers. You can track your portfolio on a line chart and see how your portfolio is constructed through a pie chart offered by M1. 

The M1 Finance pie is a signature piece of the platform and is what you will use to structure your portfolio. Instead of purchasing individual shares of stocks and ETFs, you'll design your pie with the allocations to different investments and then as you add money to your M1 account, it will automatically be allocated according to your pie.

Fractional Shares 

Fractional shares are one of M1 Finance's more unique features. This lets you buy portions of companies instead of being forced to buy full-priced stocks or ETFs. For example, instead of spending $3,000 on a share of Amazon, you can buy 10% of a share for only $300. This is a fantastic feature for those who have smaller accounts but want to diversify. 

This allows your pie to be fully invested because you don't have to wait until you can afford a full share to make a purchase.

m1financephone

M1 Finance Fees 

M1 Finance's fees are embedded in its account structures. There are two types of accounts that are associated with M1: M1 Plus and M1 Basic. While M1 Basic is free of charge, the more advanced M1 Plus does have an annual fee. 

M1 Plus

The M1 Plus account comes with an annual fee of $125. This fee may seem steep for smaller accounts, but the M1 Plus account does come with added benefits such as:

  • 1% cashback on all purchases
  • $50,000 daily ACH limit
  • Base rate of 2% opposed to 3.5% on margin
  • Two daily trade windows open instead of M1 Basic's one trade window.

Most M1 users won't feel the need to upgrade to M1 Plus, but your choice will come down to what you find to be important in an online broker. In general, you'll see the most benefit from the upgrade if you plan to take advantage of M1 Borrow or M1 Spend.

M1 Finance Pros 

  • No commissions on stocks and ETFs offered on the platform 
  • Intelligent automation is great for new investors who are looking for an automated and diversified portfolio to invest with 
  • Portfolio construction pie chart shows what exactly you are investing in the % makeup of your portfolio 
  • Fractional shares let you buy portions of companies instead of having to pay upfront for entire company's stocks 

M1 Finance Cons 

  • M1 Finance does not offer many research capabilities, unlike TD Ameritrade which offers many 
  • The yearly fee for M1 Plus may be steep for some coming in at $125 
  • Only two trading windows per day for M1 Plus and one trading window for M1 Basic 
  • No options offered through M1 Finance 

The Final Verdict: TD Ameritrade vs M1 Finance

At the end of the day, TD Ameritrade and M1 Finance each have their own unique features.

If you are interested in stock trading and seeking out a highly technical trading platform for technical analysis, TD Ameritrade may be a great choice given its TOS trading system. If instead, you are looking for a highly automated investing experience with limited fees, M1 Finance may be a great option.

Beginner investors will likely find an easier experience getting set up with M1 Finance, but those looking to do any day trading will need to opt for TD Ameritrade. 

Either way, both of these brokers are well-regarded by their users and very beginner-friendly. Each has its own pros and cons, but both are top-notch and very high quality. It all comes down to your interest level, financial goals and the time you have to devote to trading.

In the end, both platforms are free to use so you are able to sign up for both and try them out to see which one you prefer.

You can check out more articles like this on our website!

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Article written by Matthew Cerminaro
Matt is currently attending Union College pursuing a Bachelor of Arts in Economics. He participates in the student investment fund and is a member of the Union College football team. Matt runs his own personal finance Instagram page and market-related blog where he writes about economics and general wealth accumulation tips.

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