How is it going today guys?
I hope you're having a fantastic day.
In this video here we're going
to be talking about the main differences
and investing with M1 Finance.
I've done a pretty in depth review
of both of these different platforms
and I'm going to link both of those up
down in the description below.
If you guys are not familiar with
these investing platforms just yet,
I would recommend taking a look
at those videos, because in this video
I'm pretty much just going to be pointing out
the main differences between these two platforms,
that way if you're on the fence about M1 Finance
or Robinhood, this should help you
to make a decision about which platform
you want to invest with.
I do have a link to sign up with M1 Finance
down in the description below.
It is an affiliate link and you do not have
to use it.
But if you do it helps me out
and helps support my channel here
and allows me to make more videos like this.
That link is down in the description below.
The first key difference between M1 Finance
and Robinhood comes down to dividends.
If you are somebody who is looking
to invest in stocks that pay dividends,
you are going to have better success
with M1 Finance because of the fact that M1 Finance
offers a dividend reinvestment plan.
It's going to be a little bit different
than a traditional DRIP because
with a traditional DRIP or dividend reinvestment program,
your dividend payments are going
to go back into the issuing stock directly
through fractional shares.
Most other brokerage accounts out there charge
a fee for this.
But as I'm sure you know, both M1 Finance
and Robinhood are completely free.
With Robinhood your dividends are just going
to be deposited into your account
and you are going to have to allocate
those dividends accordingly.
One of the main cons here with Robinhood
is that you can only buy whole shares of a stock.
If you buy a stock that's $50 a share
and they pay out a $5 dividend,
you're going to have to wait until you have
another $50 until you can buy another share of that stock.
With M1 Finance you're able to buy fractional shares
and your dividends can be automatically reinvested
back into your portfolio.
That's something you can set up on your own
whether or not you want to have your cash set aside
in your portfolio or you want your dividends reinvested.
But as far as dividends go, if you are
an income investor and you're looking
to earn compound interest and reinvest
those dividends, M1 Finance is a superior platform.
Another key difference which we talked
about kind of in that last one
is the fact that M1 Finance offers fractional shares.
Let's say you want to invest in a stock like Amazon
that's close to $2,000 if not more than $2,000
a share right now.
Or a stock like Google that's over $1,000 per share.
If you're buying those stocks through Robinhood,
your only option is to buy one whole share
of that stock.
Let's say you're a beginner who has maybe $500 to invest.
You won't be able to buy shares of Google
or buy shares of Amazon.
But with M1 Finance you can buy fractional shares,
as little as one ten thousandth of a share
and that allows you to buy shares of stocks
that trade at a very high share price
and it also allows you to have a better diversified
portfolio because you don't have
to really worry about that share price.
If you want to have 10% of your money in Google
and then 50% in Tesla and 40% somewhere else,
you can do exactly that with M1 Finance.
If you were doing that with Robinhood,
you would have to worry about that share price
and it would affect your diversification
and it would be hard to have
a more well-diversified portfolio using Robinhood
because you could only purchase whole shares of stock.
The third key difference between Robinhood
and M1 Finance comes down to the automation.
With M1 Finance and Robinhood
you can automate deposits from your bank account
but you cannot automate the actual investments
with Robinhood.
With M1 Finance you can automate
your whole portfolio where money
is being added to your portfolio
and that money is automatically invested
across your portfolio and it also rebalances
your portfolio as you go.
If you are under weight in a particular stock
and you need to add more shares,
it's going to automatically buy more of that stock.
With Robinhood you cannot automate your portfolio.
You can automate the deposits from your bank,
but you're going to have to go in there
and manually buy shares of stock
and manually rebalance your portfolio.
M1 Finance automates this entire process for you.
If you wanted to set up a 100% passive investing plan
where maybe $100 a week was going
into your portfolio automatically being invested
and automatically rebalancing your portfolio,
you can do exactly that with M1 Finance.
You would have to do this manually using Robinhood.
The fourth key difference is that M1 Finance
offers retirement accounts and Robinhood
does not offer retirement accounts.
The only account you can open with Robinhood
is your taxable account or also a margin account.
Both of those are taxable accounts.
For retirement investors or people
who are looking to cut down on their investment taxes,
this is a huge disadvantage.
Robinhood has stated they are looking
to offer retirement accounts in the near future.
At this point in time they do not offer retirement accounts.
If you are looking to invest through
a retirement account and shelter yourself
from taxes, M1 Finance is going
to be the superior choice.
The fifth key difference between M1 Finance
and Robinhood is the fact that M1 Finance
offers expert pies, which are their prebuilt portfolios.
If you want to have some guidance
when it comes to your investments,
and you want to invest in a professionally built portfolio,
you can do that through M1 Finance completely free.
It's basically a convenience service
they're offering to you.
As far as Robinhood goes, there are no prebuilt portfolios
or templates that you can follow.
If you want some level of guidance
when it comes to your investments
and you want to follow a plan that was professionally built,
you're going to want to use M1 Finance.
If you want to build your portfolio
from scratch, you can do that with both M1 Finance
and Robinhood, but the expert guidance
is only available through M1 Finance.
It is important to mention that
these portfolios are not specific
to any one person's needs.
They are very generalized portfolios.
If you guys want more guidance
on what you should do with your money,
you should look at a robo advisor like Betterment.
I have a review of them as well down below,
or possibly speak to a financial advisor
for some personalized advice as far
as what you should be doing with your money.
If you want a broad portfolio that's not specific
to your needs but it is professionally designed
and built, M1 Finance offers that completely free.
Another difference between these two accounts
is relatively insignificant.
But if you are interested in investing
with M1 Finance, you do you have to have $100
to get started or $500 to get started
with a retirement account.
Robinhood has a zero dollar minimum balance to get started.
Most people who are investing do have
at least $500 to $1,000 to get started.
That's not really a big deal.
Other than that, these platforms are pretty much
identical except for what we mentioned before.
What it comes down to is what you are doing
with your dividends.
Are you reinvesting them?
Are you looking to take your dividends as cash
and bring them out of your portfolio?
Do you want to automate the entire process
or do you want to go in and manually handle
your investments and your rebalancing?
Are you looking to invest through
a retirement account or through a taxable account?
Do you want any kind of guidance
when it comes to your investments?
Are you going to utilize those expert pies
offered by M1 Finance or do you want
to build your own portfolio from scratch?
Do you like the idea of having fractional shares
where you can be better diversified
or do you want to buy whole shares through Robinhood?
Those are the main differences between M1 Finance
and Robinhood.
The only other one that is worth mentioning here
is that if you are looking to invest
in options and cryptocurrencies, Robinhood
has added that to their platform.
In some states you can buy cryptocurrencies
and they also have a free options trading program.
I've never used it so I can't speak
to that as far as this review goes.
Those are the differences between M1 Finance and Robinhood.
Anyways guys that's going to wrap up this video.
I hope you enjoyed it.
If you want to see the whole review
of M1 Finance or of Robinhood or Betterment,
those are all down in the description below.
If you do want to sign up for M1 Finance,
I do have a link in the description below.
It is an affiliate link.
You do not have to use it.
But it does help me out and helps support my channel
and allows me to make more videos like this.
Thank you guys so much for watching this video
and I will see you in the next one.
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