M1 Finance vs Acorns
Investing and saving go hand in hand. With the high investment requirements from traditional brokers and the difficulties associated with understanding the market, it can be difficult for ordinary investors to get into the market.
The rise of robo-advisors and alternative investing platforms like M1 Finance and Acorns has spurred a new generation of investors. According to a Charles Schwab survey, 15% of investors started in 2020.
If you’re looking to join them, let’s compare M1 Finance vs Acorns to give you an idea of where you should put your money.
M1 Finance Overview
M1 Finance is one of the most exciting new investment platforms. Available since 2015, CEO Brian Barnes has held more than $3 billion assets under management from M1’s HQ in Chicago, Illinois. Its automated portfolios allow you to put your investments on autopilot.
You don’t need to go through the hassle of researching individual stocks because M1 offers premade portfolios constructed with a combination of human investment experts and artificial intelligence. Whether you choose to invest with M1 Expert Pies or build your own using the pie investing system, you control your destiny.
Our M1 Finance review believes that this is one of the best no-cost investment platforms in the world today. Its revolutionary pie investing model lets you quickly build and visualize your portfolio.
We love M1’s user-friendly experience available for investors to take advantage of. M1 has changed the game and finally provided an alternative to traditional brokerage platforms.
M1 Finance Details
|Management Fees||$0-$125 per year|
|Account Types||Individual and joint brokerage accounts, Roth IRA, SEP-IRA, and Traditional IRA, trust accounts, and custodial accounts|
|Investment Type||Stocks and Exchange-Traded Funds (ETFs)|
Ready to get started with M1? Just make a deposit and start putting your portfolio together. There’s no account minimum to get started, and you’re not required to maintain a minimum amount of capital to keep your account active.
Departing from the traditional investing method, you’ll never pay any trading fees, commissions, or management charges. Instead, M1 investing offers various other products, such as M1 Borrow and M1 Spend, to generate an income.
This means that you can enter the market without starting at a loss. Plus, every single dollar works for you. M1 enables you to buy fractional shares, so you don’t need to wait until you can afford a full share.
One difference between M1 and other robo-advisors is the number of account types supported. Not only can you sign up with a classic individual or joint brokerage account, but you can also connect a custodial or trust account.
M1 has disrupted the entire industry with its approach to investing, and that’s why reviews on M1 Finance are so excited about what this means for retail investors across the world.
M1 Finance Fees
Some robo-advisors offer a low-cost investing model. M1 Finance is one of the only robo-advisors operating a no-cost investment model.
You’ll never pay any setup fees, hidden charges, annual investment management charges, commissions, or trading fees. You only need to worry about which stocks and ETFs you invest your money into.
M1 Finance offers a premium subscription model known as M1 Plus. Create an M1 Plus account, and for $125 per year, you gain several perks, such as higher ACH limits and the Owners’ Reward Card. The card provides advantages like 1% cashback on eligible purchases.
Truthfully, we don’t think M1 Plus is required for most investors. Unless you’re looking to bundle more of our finances with M1, you can settle with an ordinary M1 account and have everything you need.
M1 Finance Pros
- User-friendly investing
- No-cost model
- Revolutionary pie investing system
M1 Finance Cons
- No financial advisors
- No tax-loss harvesting
- Narrow investment options
Start your investing journey with one of the world’s most advanced investment platforms. Find out more about M1 with our in-depth review on M1 Finance today.
Acorns offers a different investment proposition. Unlike M1 Finance, Acorns is not a pure roboadvisor. It’s a savings app at heart. You link your credit or debit card with the app, and it will round up every purchase you make.
Invest the difference into a portfolio of low-cost ETFs chosen by its own robo-advisor. For individuals and families struggling to put money aside, it makes sense. After all, 51% of Americans have less than three months’ worth of emergency savings.
With three membership tiers offering the roundup feature and access to specific savings and custodial accounts, you can bundle your finances all in one app.
Investors looking for a start may want to consider starting with Acorns to kickstart their investing journeys.
|Management Fees||$1, $3, or $9 per month|
|Account Types||Individual taxable accounts, Traditional IRA, Roth IRA, Sep IRA, UTMA, and UGMA accounts|
|Investment Type||Exchange-Traded Funds (ETFs)|
When comparing M1 Finance vs. Acorns, you must understand that these are different products. While both utilize robo-advisor technology to determine the right investments for you, Acorns is a saving app at heart, whereas M1 investing is purely for investing.
After linking your card, let the app do the work. Every purchase you make will be rounded up, and the difference added to your investment account. From there, you’ll be able to select investments based on risk tolerance, income, and goals. Change these parameters via your account settings.
All investments are low-cost ETFs, with no option to choose your investments. These are generic investments with no specific focus on different sectors or socially responsible investments. If you want more control over your investments, M1 has a better proposition.
Acorn Invest makes it simple if you need a little extra help with saving. Control everything from the innovative mobile app and carry your portfolio with you on the go.
You also have the option of adding a multiplier to your savings. For example, if you want to adopt a more aggressive savings approach, add a savings multiplier of 2x, 3x, or 10x.
There’s also the whole dollar roundup for occasional purchases. Set these in 25-cent increments, based on how much you need to save.
The downside of this platform is that adding pennies and cents to your portfolio is simply not enough to leave you with a hefty portfolio. It’s a start and nothing more, so it’s strongly recommended that you also have a dedicated investing platform by your side, such as M1 Finance.
To get started with Acorns, you don’t need any money available to open your account. You do, however, need a minimum of $5 to start investing. Note that all new members can take advantage of the Acorns promo, which gives you a free $5 to begin investing.
The basic account, known as Acorns Lite, costs $1 per month. While there are other membership levels for $3 and $9 per month, these are only useful if you want to add a checking, IRA, or custodial account.
Most investors won’t benefit from the higher membership levels. Acorns Lite is more than enough for most investors.
Finally, ETF expense ratios range from 0.03% to 0.18%, which is reasonable for the industry.
- Great for saving
- Simple to invest with
- No trading fees
- No tax-loss harvesting
- Upper membership tiers lack value
- Investing your change is not a long-term strategy
M1 Finance vs. Acorns Comparison
|Min. Investment||$0||$1, $3, or $9 per month|
|Avg. ETF Expense Ratio||$0 (with some exceptions)||0.03%-0.18%|
|Account Types||Individual and joint brokerage accounts, Roth IRA, SEP-IRA, and Traditional IRA, Trust accounts, and Custodial accounts||Individual taxable accounts, Traditional IRA, Roth IRA, Sep-IRA, UTMA, and UGMA accounts|
|Financial Advisor Fee||Unavailable||Unavailable|
M1 Finance vs. Acorns: Which One is Right for You?
The fact is that M1 Finance is the best app for investing if you want to put your portfolio on autopilot while retaining control over what you invest in. Acorns is an effective savings app, but it’s a start rather than a solution.
Acorns’ small number of ETFs are acceptable for creating a simplistic core portfolio but rounding up your day-to-day purchases is far from enough to construct a viable portfolio for the future.
Instead, M1 Finance does it all with its pie investing system. It has all the benefits of using a traditional brokerage without the fees. We can’t say enough about M1 investing at Modest Money for the world’s first genuinely no-fee investing system.
On balance, Acorns is good if you’re struggling to put some money away to build an emergency fund or start investing, but we wouldn’t rely on it for more than a few months. There are better savings apps and better investing apps.