M1 vs Robinhood vs Acorns – Best Free Investing Apps for Beginners | Stock Market for Beginners


Free investing apps! There are so many choices, how do you know
which is going to best grow your dough? Which no fee sites are legit and which should
you avoid? I’m reviewing the most popular investing
sites; Robinhood, Acorns and M1 Finance – detailing the pros and cons of each. I’ll then compare them in a head-to-head
to reveal the best app for different investors. We’re talking best free investing apps today
on Let’s Talk Money! Beat debt. Make money. Make your money work for you. Creating the financial future you deserve. Let’s Talk Money. Joseph Hogue with the Let’s Talk Money channel
here on YouTube. I want to send a special shout out to everyone
in the community, thank you for taking a little of your time to be here today. If you’re not part of the community yet,
just click that little red subscribe button. It’s free and you’ll never miss an episode. Fees are the #1 killer of wealth. Even at 1%, the average annual fee on a mutual
fund, you’re out over $105,000 on fees and the money you should be making on those fees. That’s over one hundred grand of your money,
lost to fees. Used to be, you didn’t have a choice. I remember being excited to open my first
online investing account in 2000. I was 23 and in the Marine Corps so my bills
were basically paid. I was ready to put my extra cash to work and
excited that Brown & Company was offering $5 a trade fees. That was about as good as it got back in the
day. Now you’ve almost got too many choices for
free investing apps and commission-free trading. From Robinhood to M1 Finance and Acorns offer
no fee investing, how do you decide which is the best to grow your dough? In this video, I’ll compare the three biggest
free investing apps; Robinhood, M1 Finance and Acorns. I’ll first review each app, detailing the
pros and cons, then we’ll look at a side-by-side comparison at the end of the video. Now I know a lot of you are hesitant to switch
to the no fee sites, it seems too good to be true, right? They’ve got to be making money somehow. The great part is, these investing sites really
are free for the most part. There are three ways these sites make money
and none of them really affect regular investors. First is most of the sites offer margin investing,
borrowing on your account value to invest more, so they make money on the interest charged. The apps also make interest on your uninvested
cash balance. Some have automatic investing but you usually
need at least $10 cash balance to trigger the auto-invest or you might just have a cash
cushion in your account waiting for stock prices to come down. That money is marked to your account but it’s
sitting in the investment apps overall account and earning interest. Finally, most of these apps lend your shares
out to short-sellers and collect the interest charged on that as well. When someone shorts a stock, they borrow the
shares to sell and pay an interest rate on the borrowed amount until they buy the shares
to close the trade. You won’t know that your shares are lent
to a short-seller, it doesn’t affect your account in any way, but the platform earns
that interest on the borrowing. So no need to worry that these apps are lying
about being free or making money at your expense in some way. They are free and can still make money at
no cost to you. Now let’s look at those three platforms;
M1 Finance, Robinhood and Acorns then we’ll compare them against each other. Our first app here is one I’ve used the
most and probably one of the newer sites, M1 Finance. M1 is completely free to use, there are no
monthly fees or a percentage charged on your account. When you open an account, you pick the stocks
and funds you want in your portfolio. The site then applies any money in your account
to those investments, in the percentages you choose. Another great part about M1 is that it’s
automated. You can set up for a monthly withdrawal from
your bank and the platform will automatically invest that cash commission-free into your
stocks. It will also reinvest dividends in your account
once they hit a certain level. I’m using M1 Finance for the 2019 stock
market challenge here on YouTube. I’ve created a portfolio of ten dividend
stocks and will be tracking it through the year against some of the biggest channels
on YouTube. The portfolio is already beating the stocks
in the S&P 500, I picked M1 Finance for our dividend portfolio because it allows retirement
accounts like the Roth and the traditional IRA. Putting my dividend paying stocks in these
tax-deferred accounts means I don’t pay taxes on them every year when collected, that
money stays in my account and I can reinvest it. You can add or remove stocks from your portfolio. If you want professional help, M1 also features
expert portfolios which it calls pies, that you can use for your investments. There are expert pies in about every theme
conceivable like dividend investing and tracking pros like Warren Buffett. M1 also allows fractional shares, meaning
you can invest any amount in a stock even if it’s not enough to buy a full share. This is a problem with some of the other apps
like Robinhood where you’d need the full amount to buy at least one share. For example, if you wanted to invest in Amazon,
you would need nearly two grand to buy a share on Robinhood or other apps. With M1 Finance, you can invest whatever you
want, say $500 and the platform would buy you a fraction of a share. The platform just launched a borrow feature
that allows you to borrow up to a third of your account value and the rates are pretty
low, just 4.25% right now. I wouldn’t always recommend trading on margin
or borrowing against your account but it’s a nice feature and the rate is way under the
comparable program on other platforms. One thing I don’t like about M1 is they
use a trading window, so you put in the stocks you want to buy or sell, then your trade is
entered once per day. This helps aggregate all the orders for the
platform and enables that fractional share investing but it also means you don’t get
that instant trading you get on other sites. This one isn’t for traders. I love the portfolio-view of investing though,
letting you invest instantly across all the stocks and funds in your portfolio and rebalancing
with the click of a button. It really lets you create a diversified portfolio
covering lots of stocks and bonds, across funds and individual names and then invest
evenly across all of them without paying a fee to buy each one. M1 regularly runs signup bonus offers so check
the link in the video description to take advantage of that. Next is probably the most popular free investing
app, especially here on YouTube, the Robinhood app. Robinhood started as just a mobile app but
has since added a website as well. When I opened my account, it felt a little
weird not having that website option and doing everything on my phone. Then again I’m an old timer so smartphones
are still a little weird to me. Like M1 Finance, Robinhood is completely free
to use. You’ll never pay a fee to buy or sell stocks. The app is probably one of the easiest I’ve
used with everything laid out so even us tech newbies can use it. It literally took me less than two minutes
to open an account. Besides free investing, Robinhood is best
known for its free stock program. When you open an account, you get a free share
of stock which you pick at random so it’s kind of like a game. You also get a free share of stock whenever
you refer a friend that opens an account and they get a free share as well. The free stock program assigns you a share
at random but it’s from a list of stocks between $3 to $150 with the average around
$10 for free shares. I love the twist on the referral program idea
though I’m not so sure I like getting my stocks at random. For example, I got a share of Groupon recently
which…yeah, really excited about that. There are some nice features on Robinhood
you don’t find on other free sites. You can place limit and stop orders, so it’s
much better suited for traders. There’s no account minimum and you can even
invest in cryptocurrencies like Bitcoin and Ethereum. There are a few downsides to Robinhood. You can’t buy fractional shares so you’ll
need the full amount for each share you buy and they don’t yet have retirement account
options. There’s also no auto-invest or reinvestment
option so you have to reinvest all your dividends manually. Besides those few downsides, Robinhood is
a solid app that’s easy to use and actually a lot of fun with the free share program. If you want to learn more about Robinhood,
I’ve included my referral link in the description. Open an account and we’ll both get a free
share of stock…so yay us! We’ve got one more investing app to review
and then will compare the three in a heads-up but if you’re likin’ the video and the
info, do me a favor and tap that thumbs up button below. The Acorns app isn’t technically free but
it’s so low-cost that it’s basically free and I really like some of the features here. Acorns isn’t technically free but the cost
is so low that it’s basically free. I wanted to include this one because it’s
a different type of app and could be better for a certain type of investor. After creating an Acorns account, you’ll
link up your debit and credit cards. Then every time you make a purchase using
a linked card, Acorns will round up the amount to the nearest dollar and invest the difference
in your portfolio. For example, if your grocery bill comes to
$47.23 then Acorns would round that up to $48 and put the difference of $0.77 into your
investment account. It’s a great way to save and invest without
having to do anything. Acorns adds another benefit here though in
that it’s a robo-advisor. So after answering a few questions about your
age and retirement goals, it’s going to suggest one of five professionally-managed
ETF portfolios. These are all combinations of Vanguard and
iShares funds so the expense ratio is ridiculously low, around 0.1% on average. The funds invest across all the major asset
classes including stocks, bonds and real estate including international exposure. Acorns keeps all your money invested. It automatically invests any new money and
reinvests dividends and all this is completely free. You never pay a commission to invest money. The only fee is a $1 per month on accounts
under $5,000 or 0.25% on accounts over five grand. That’s pretty common for robo-advisors so
I feel like Acorns is a free investing app with the fee on the robo-service. Taxable and retirement accounts are available
and students with a .edu email qualify for up to four years of the service for free. Another benefit is that Acorns has partnered
with over 300 retailers like Nike, Walmart and Apple to give you extra cash back whenever
you shop with a linked card. Just use your debit or credit card at one
of these partners and they’ll put a percentage cash back into your investing account. Acorns is a solid option for anyone that wants
a set-it and forget-it strategy and not have to worry about picking stocks themselves. The app also regularly offers signup and refer-a-friend
bonus cash so check the link in the description for that. Comparing the three investing platforms, you
really get a sense that it’s not so much one is better than the rest but which is best
for you as an investor. M1 and Robinhood are both completely free
which is always nice but you get a completely hands-off strategy for just $1 with Acorns. You get more order options with Robinhood
but automated investing and retirement accounts with M1 Finance. I feel like M1 Finance is best for investors
that want a portfolio-wide approach, that want to create one portfolio of stocks and
ETFs and then reinvest in it as easily as possible. The rebalancing tool and model portfolios
make this super easy to do. With Robinhood, I feel like it’s more of
that individual stock-picker’s app with the multiple order types available and that
free stock program that makes it a really fun app. Acorns then is best for those that want an
easy, hands-off strategy and that savings tool built in. With everything automated and the robo-advisor
service, this is truly a set-it-and-forget-it investing strategy. If you want to see which seven dividend stocks
I’m buying right now for monthly cash flow, check out the video on the right. I’m starting this portfolio with some of
the best dividend payers available and with a yield twice the market. Don’t forget to join the Let’s Talk Money
community by subscribing so you never miss an episode.

42 Replies to “M1 vs Robinhood vs Acorns – Best Free Investing Apps for Beginners | Stock Market for Beginners

  1. Now that you know WHERE to invest, check out my five favorite stocks to buy for the next 30 years! 😲 https://youtu.be/wiB43XMo_UM

  2. I use Robinhood and I love that it is so easy, but it's not for swing trading or penny stock trading. I use it for just buy and hold forever. I'm just a dividend investor. Slow boring way 😉

  3. I think M1 Finance is the best out of the three in my opinion. Only thing I wish it had was Acorn's round-up feature, and Robinhood's ability to buy and sell multiple times a day compared to just one

  4. Robinhood does not have a beneficiary nomination and I can't buy mutual funds on my Robinhood app but I still love it. On Robinhood I put all my spare change into FELP, a coal mind in southern Illinois but need more info about this company to make a long term decision.

  5. Thanks for a thorough & comprehensible overview of the pros & cons of these apps. I like the order types available on RH, but the lack of tax-advantaged accounts means taxable events with each sell. If account balance >$20k, Merrill Edge might be a good option as free trades become available above that level.

  6. I have reviewed all of these. Acorns is very useful but the best investing app I have found is by far is Webull. If you're a true beginner I guess Robin Hood is more of that speed but again once you get the basics Webull all the way.

  7. I like M1 Finance the best and Robinhood in a close second. Acorns, to me, is just lazy investing and its fees are too high in comparison to most index ETFs. Best way to invest in to avoid fees all together is just invest in value stocks with no fees or .03% ETFs from vanguard.

  8. Any opinion on apps/sites open to Europe? I'm using degiro. It's basically free. They charge .55 / trade

  9. One thing you didn't mention is that Robinhood has the ability to trade options, commission free of course. Also, Robinhood gives you clearing margin for free, so you are not restricted by a lack of settled funds – very important for trader-types.

  10. Robinhood if you want to trade (buy and sell). M1 Finance if you want to invest long-term (interested in dividend investing). Acorns if you are an Ashton Kutcher fan.

  11. I like M1 finance because they got the IRA going for them and it is great for beginning traders but it is almost too simple. Robinhood is great because I like to buy/sell shares all the time here and there plus I do not prefer fractional shares personally.

  12. M1 is great for someone with not much money and wants to diversify a lot and Robinhood is great for bare bones simple investing! Both are great options!

  13. Hello Joseph … I know this might be hard for foreign investors since there are more taxes on dividends but that makes it more important to reduce fees. can you give me your recommendation for a good platform for a small accounts (less than 5k $)

  14. I live in Austria , m1 and acorns are not available in Austria I don't know why .. what do you think about eToro I need to know your opinion about them because I don't trust this app

  15. You give great advice. I was wondering if you might have any thoughts on what I should do with my traditional IRA. I have about $43K in a credit union making squat. Didn't know what I was doing a long time ago when I set that up and have been reluctant to correct this. I'm 55 and have a Roth IRA and a Roth 401K, so when I finally pulled my head out of ass, I started making better investments. Still, I have this chunk of cash and I want to do something with it, but don't want to screw this up again. What would you do with it? Converting it to a Roth at this point might be brutal with taxes. I'm thinking about going with an S&P or Total Market index fund with Vanguard, or do you think that a balanced, target date, or a mixture of funds would be better?

  16. Doesn’t M1 finance charge .35% of your assets yearly as maintenance fee since it’s an automated system? 🤔

  17. M1 for me. The others don’t have enough features other than being free. I would rather just pay Schwab $5 a trade and get all the extras.

  18. Nice rundown Joseph. I like Robinhood’s ease of use and simplicity. Firstrade, which by the way also features free trades, is like a cross between Robinhood and TD Ameritrade. Plus, their mobile app is pretty slick. I found M1 a bit confusing to set up, but it’s ok. Never used Acorns.

  19. I know a lot of people love Webull it is free and they have quick trade times for people who like to swing or day trade.they have options. they have better tools than Robinhood.charts, scanner exct…. right now all my stuff's in TD Ameritrade,i intend to open up M1 Finance for a Roth ira account.. I'm currently 31 my house has been paid off since the age of 29 . I've finished with most of the major remodeling… recently realized I am behind on saving for retirement…after sacrificing so much to get a house and have it paid off early ,I'm afraid I went nuts on spending after I paid It Off…..😑

  20. Your videos are very informative. I use Acorns and M1. Both over 6 percent gain. So much easier than 10 yrs ago. I saw some complaints about acorns. I feel it works better starting with 1000 dollars and for long term investing. Thanks for sharing your knowledge.

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