M1 Finance vs TD Ameritrade

  • Makes investing simple
  • Operates a no-fee investment model
  • High-performance M1 Expert Pies
GET STARTED
  • All account types supported
  • No fees on stocks and ETFs
  • Huge range of investment options
GET STARTED

Online stoke brokers are a dime a dozen. New and veteran investors want to make sure they get the best deal, which doesn’t necessarily mean choosing traditional brokerages. M1 Finance is one such example of the next generation of online brokerages.

Robo-advisors have attracted thousands of investors across the world. Financial forecasts indicate robo-advisors will reach $16 trillion in assets-under-management. But how do robo-advisors like M1 investing stack up against traditional brokerages like TD Ameritrade?

Let’s compare M1 Finance vs TD Ameritrade to find out more.

M1 Finance Overview

M1 Finance is a modern robo-advisor and is now one of the top robo-advisors in the U.S. Thousands of investors put their trust in this platform. Led by CEO and founder Brian Barnes in Chicago, Illinois, M1 Finance has grown steadily since 2015.

The cornerstone of M1 Finance is its automated portfolios. Investors looking to gain broad exposure to solid and stable assets can choose from expert-recommended portfolios that align with their financial goals and values.

Unlike many robo-advisors, investing with M1 Finance enables you to take control of your investments. M1 Pies allow you to construct your portfolio from scratch. Choose from an unlimited number of pies and include pies that contain other pies.

This level of control has elevated M1 Finance and is why it has created ripples across the industry.

Learn more about how the platform works by looking at our comprehensive M1 Finance review.

It would be fair to say that M1 has changed the way people invest. They have thrown down the gauntlet to traditional brokerages and have partially forced them to alter the way they operate.

M1 Finance Details

Account Minimum$0
Management Fees$0-$125 per year
Account TypesIndividual and joint brokerage accounts; Roth IRA, SEP IRA, and traditional IRA; trust accounts; custodial accounts
Investment TypeStocks and exchange-traded funds (ETFs)

M1 Finance is ideal for beginners because it is easy to get started. Create your account, enter a few basic details, and make your first deposit. There are no long waiting periods, and there’s no minimum investment around.

M1 Finance uses a low-cost investment model to help Americans who wouldn’t otherwise have access to the markets. Remember, just 56% of Americans own stocks, and this number has remained stubbornly stable for almost 20 years.

When you create an account with M1 Finance, you pay no trading fees, no ongoing management fees, and zero commissions. Regardless of how much you have in your account, anyone can jump into the markets.

The desire to make investing as accessible as possible extends further to how many supported account types M1 offers. Take advantage of trust, custodial, and several types of IRA, alongside classic individual and joint brokerage accounts.

Newbies who join the platform will find tremendous value from M1 Expert Pies, which will help them learn how investing works.

M1 Finance Fees

M1 joins an exclusive group by offering zero fees on investing. That means you won’t pay any trading or management fees, as well as zero commissions. If you want to check out the platform and give it a test drive before committing your entire portfolio, you can. There are no deposit requirements to cover.

Rather than charging investors to build a portfolio on the platform, M1 chooses to generate an income through its additional products. M1 Spend and M1 Borrow are the secondary offerings that allow the platform to stay in business.

If you choose to sign up for the M1 Plus program, you will pay $125 per year. Some of the extra perks, such as a higher ceiling on daily ACH deposits, are beneficial. Still, most investors will get more than enough value from the vanilla M1 program.

M1 Finance Pros

  • Makes investing simple
  • Operates a no-fee investment model
  • High-performance M1 Expert Pies

M1 Finance Cons

  • No financial advisors
  • Limited investment classes
  • Tax-loss harvesting unavailable

Building a portfolio for the first time can be challenging, which is why M1 Finance is here to streamline your journey. Read our comprehensive review on M1 Finance to find out how to begin your investing career.

TD Ameritrade Overview

TD Ameritrade started life in 1971 as Ameritrade. Joining the ranks of the traditional brokers, TD Ameritrade chose to offer a low-cost investment option for regular middle-class Americans to take advantage of.

In accordance with its credentials as a more traditional brokerage, you can access most investment products via Ameritrade. Invest with Ameritrade, and you gain access to mutual funds, options, penny stocks, forex, and cryptocurrency.

While beginners should stick to the simplicity and stability of assets like stocks and bonds, it’s ideal for veteran investors who want to take on more risk.

There are three robo-advisor portfolios available for investors. They perform well enough, but they tend to lack the flexibility of M1 Finance’s offerings. The former is the clear winner when comparing M1 Finance vs. Ameritrade on robo-advisor portfolios.

TD Ameritrade does offer tax-loss harvesting. Unfortunately, the tax-loss harvesting feature is only available for certain assets within certain account types.

Take note, TD Ameritrade is currently in the process of being acquired by Charles Schwab, the world’s largest brokerage.

TD Ameritrade Details

Account Minimum$0
Management Fees$0
Account TypesAll account types supported
Investment TypeStocks, bonds, ETFs, mutual funds, options, penny stocks, forex, and cryptocurrency

TD Ameritrade does offer a greater range of investment options. They also provide every account type offered by M1 Finance and more. Some of the additional account types supported include the SIMPLE IRA and 401(k) accounts.

There are some areas where Ameritrade comes up short, however. One such area is fractional shares. Investors who don’t have significant amounts to invest may need to save for months to afford a full share of a company like Amazon or Disney.

Fractional share trading at M1 Finance ensures that every dollar in your portfolio is working at all times. Fractional trading guarantees maximum profit and no dollar going to waste.

Another area where TD Ameritrade comes up short is automatic rebalancing. Despite rebalancing being one of the most common features found within brokerages, it is inexplicably missing here. Automatic rebalancing enables you to maintain portfolio diversity, regardless of market movements.

Without rebalancing, investors cannot achieve a truly passive investment strategy. It is one of the reasons why passive investors should avoid TD Ameritrade entirely.

TD Ameritrade Fees

TD Ameritrade has adapted quickly to the low fee investing ecosystem people expect today. There are no deposit limits to open a basic brokerage account. Furthermore, you will never pay any management fees for holding your portfolio with the platform.

However, there are fees associated with some of the platform’s riskier assets, which include:

  • Options – $0.65 per contract
  • Penny Stocks – $6.95 per trade
  • Mutual Funds – $49.99 (unless held within the No Transaction Fee program)
  • Futures – $2.25 per contract

While these fees will not impact beginner investors, it is concerning that TD Ameritrade continues to charge high costs on many of its most famous assets.

TD Ameritrade Pros

  • All account types supported
  • No fees on stocks and ETFs
  • Huge range of investment options

TD Ameritrade Cons

  • High fees on riskier assets
  • No automatic portfolio rebalancing
  • Limited robo-advisor portfolios

TD Ameritrade is still finding its feet when it comes to portfolios built by robo-advisors. The platform’s problem is that even though it offers so many investment classes, basic features like automatic rebalancing are missing.

Browse some TD Ameritrade reviews to learn more about how the platform works.

M1 Finance vs. TD Ameritrade Comparison

FeatureM1 FinanceTD Ameritrade
Min. Investment$0$0
Management Fees$0$0
Avg. ETF Expense Ratio$0 (with some exceptions)0.50%
Account TypesIndividual and joint brokerage accounts, Roth IRA, SEP-IRA, and Traditional IRA, Trust accounts, and Custodial accountsAll
Tax-Loss HarvestingNoneLimited
Financial Advisor FeeUnavailableAvailable for a Fee
Best ForBeginnersExperienced Investors/Active Investors

M1 Finance vs. TD Ameritrade: Which One is Right for You?

The only way to answer this question is to determine what type of investor you are. Passive investors and beginners will love M1 Finance because it is easy to construct a portfolio and let it run on autopilot. Most investors will find M1 easier to use and get started with.

On the other hand, TD Ameritrade is perfect for active investors who want to keep their fingers on the pulse of the markets. With a wide range of supported account types and practically every investment class available, experienced investors who want to take on more risk will prefer Ameritrade.

Overall, its user-friendly approach makes M1 Invest the ideal platform for most Americans looking to build their financial futures.

Read the Modest Money M1 Finance review to find out why M1 is one of the leading low-cost investment programs available now.

Create Your M1 Investing account and start your portfolio with M1 Finance now.

Bob Haegele

About the Author:

Bob Haegele is a personal finance writer, entrepreneur, and dog walker. Bob has been writing about personal finance for three years and now manages several personal finance sites, including The Frugal Fellow, Modest Money, and Blooming Wealth. You can also find him contributing to popular websites such as Yahoo! Finance, MSN Money, and GOBankingRates. You can see more of his work on Muck Rack and Contently, or connect with him on LinkedIn.