M1 Finance vs Betterment | Best Robo Advisor For 2020? #Best Education Page #Online Earning

 So in this video today we are going to be comparing

the two robo-investing platforms out there

known as Betterment, and M1 Finance.

And at the end of this video, if you guys do decide

that you want to sign up for an account

with either Betterment or M1 Finance,

I am affiliated with both of them,

which means if you do decide to use my links

in the description, at no additional cost to you,

I earn a small commission in the process.

It is certainly not required,

but it is very much appreciated

as it's a way to give back to me

for putting a video like this together.

And the one other thing I wanna mention,

M1 Finance is my number one pick here for beginners

in terms of a free investing platform,

but it is a little bit confusing to get started with it.

So I ended up putting together

a completely free 30-minute video tutorial,

teaching you how to use the M1 Finance investing app,

that is also linked up down in the description below

if you do decide that you want to pursue that

and learn more about this platform.

But that being said, right off the bat,

one of the biggest differences

between Betterment and M1 Finance is the fact

that Betterment does charge a small fee for the service

while M1 Finance is 100% free.

Now M1 Finance does make money, they're not a charity.

And there's a couple ways they're making money

on the back end.

For example, they have their M1 Finance checking account

and debit card that has an annual fee.

They also make money

from the cash held within brokerage accounts

as far as interest goes,

and they also make money from directing order flow.

So those things are kind of confusing,

not something we're gonna get into in this video,

but just understand they are making money

but just in some slightly different ways.

Betterment, the primary way they're making money

is charging a small annual asset management fee

to customers, which is 0.25% for most people,

for the Betterment digital account.

Or if you are a higher net worth investor

and you have over $100,000 with them,

they offer Betterment Premium

which gives you access to a team of financial advisors,

basically, at any point in time you can reach out to them

and that has an annual asset management fee of 0.4%.

Now, when you compare that

to a traditional financial advisor

who usually charges a 1% fee,

Betterment is still very inexpensive

for that type of money management.

Another key difference here

is the minimum amount of money to get started.

So with Betterment, it is a $0 minimum,

you could literally open up an account

with 20 bucks if you wanted to.

Whereas with M1 Finance, they have a $100 minimum

for your traditional brokerage account,

and a $500 minimum for their retirement account.

You can do retirement accounts

with both Betterment and M1 Finance.

You may find a greater selection

of account types with Betterment.

For example, like trust accounts,

I think that Betterment offers those,

you don't find those with M1 Finance.

Another key difference here is that with Betterment,

they are building you a custom portfolio

based on your investing needs.

So when you go on to betterment website

and you start investing,

you're gonna fill out a questionnaire

where you talk about where you are at in your life.

How much money do you have, what are your investing goals,

and based on all of that,

Betterment is going to build a custom tailored portfolio

for you, consisting of stocks and bonds

and ETFs, exchange traded funds.

There's no individual stocks with Betterment,

it's only going to be passive ETF investing,

and they're gonna build that portfolio for you.

With M1 Finance, you can follow a do it yourself approach

or a portfolio based approach.

They give both of those options there.

If you wanna pick your stocks,

and you wanna pick the ETFs you're investing in,

you can do that through the platform

and build your own portfolio from scratch.

Or if you wanna let them do all that hard work for you,

they offer over 30 different expert built portfolios

which again are going to be completely free,

that means M1 Finance is not charging you for that.

The only difference being

those are more one-size-fits-all portfolios,

and they're not gonna be built

specifically for your investing needs.

Another big difference here

is that Betterment offers a feature

called tax loss harvesting.

Now that in and of itself is a pretty confusing subject,

I'm not gonna go crazy into detail.

But essentially what they're able to do

is they're able to sell an investment

and buy almost the identical type of investment

to recognize like an artificial tax loss

to cut down on your tax bill at the end of the year

by recognizing a capital loss.

And that is actually a way that betterment has been able

to justify that fee that they're charging customers

'cause they're actually saving you money on taxes

through this feature called tax loss harvesting.

And that's not something that is offered by M1 Finance.

So that becomes more important

as you're investing more and more money.

So if you are somebody who's looking to put let's say 10,000

or 20 grand into an account like this,

you really wanna read up on this tax loss harvesting feature

and kind of begin to understand

how much money is that really saving you

and is that making Betterment a more cost-effective choice.

Another difference here is that,

again, you can buy individual stocks on M1 Finance,

you will not find that with Betterment,

you will only find ETFs.

So Betterment is a 100% passive approach,

you don't do anything.

You don't tell them what you wanna invest in,

you don't pick ETFs,

you literally just fill out this questionnaire,

and then you give them your initial deposit,

and then you continue to deposit money on a regular basis.

And other than that, you don't do anything,

they're gonna reallocate

and rebalance that portfolio for you

and handle everything else.

With M1 Finance, you can follow a passive

or active approach.

If you wanna passively invest

in some of their Expert Pies or portfolios, you can do so.

Or if you wanna be more active with your selection

and pick your stocks and your ETFs, you can do that

with the Custom Pies option with this brokerage.

Another difference here

is that Betterment offers a option for your cash reserve.

So Betterment has something called

Betterment Everyday cash reserve.

And that is specifically meant for the cash

that you're not looking to invest.

Now, the APY of this account changes with the market rate.

I believe, as of making this video, it's 2.04% APY,

which is actually significantly higher

than some of the competitors like Ally Bank, for example.

So it's actually a very good online savings account.

And the good news is, you don't need to use

Betterment for your investments

in order to put your savings with them.

So you can keep your cash with Betterment

in this online savings account

without being an investor with them if you wanna do that.

Unfortunately, at this time, M1 Finance

does not have any type of product for your cash savings.

So that is one area where Betterment is stronger.

But again, you could have your cash with Betterment

and your investments with M1 Finance

if you wanted to do that.

So overall, this is what I would say

about Betterment and M1 Finance.

If you're looking for a 100% hands-off approach,

where you literally don't have to do anything,

you don't have to look at portfolios,

you don't have to rebalance

or worry about anything like that.

That is exactly what Betterment is for, it's 100% hands-off,

they do all of the guidance,

and it's completely beginner friendly.

It is the simplest platform out there in my opinion

to begin investing with.

Now on the other hand,

if you know a little bit more than the average Joe,

or you wanna learn a little bit,

and again, my free training on M1 Finance

shows you basically everything you need to know

to get started, then this is going to be a good platform

for somebody who wants to be a little bit more involved,

where they're okay with selecting a portfolio to invest in

or they wanna follow that do it yourself approach

and pick the stocks and ETFs to invest in.

It's also good for people who are looking

for individual stock exposure,

but it's not good for trading stocks.

So if you're looking to trade in and out of stocks

on a weekly or daily basis,

it is not a platform for active traders,

it is a better platform

for people who are long-term investors.

So overall, Betterment is more beginner friendly,

100% hands off approach.

And M1 Finance is good

for a more beginner to intermediate investor

who wants to be a little bit more hands-on.

But anyways guys that's gonna wrap up this video.

That's the differences between Betterment and M1 Finance.

If you guys are looking to sign up for either one of them,

all those resources are down in the description below.

I certainly do appreciate your use of those links.

And I also have that free 30-minute video training

walking you through step-by-step how to use M1 Finance.

But thanks so much for watching this video.

I hope you enjoyed it, and I will see you in the next one.

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