The concept of Robo-Advisors has grown significantly since their inception in 2008. As a result, today there are numerous companies, who utilize this technology in order to provide investment management services to retail investors. Some of the larger Robo-Advisors include M1 finance, Wealthfront… These companies have successfully gathered assets that total more than $100 billion dollars.
M1 Finance is a new type of investment platform that allows you to invest in ETFs that hold whole loans and other securities. The company has been operating since 2015 and is based out of Chicago, Illinois. With its latest funding round, the company is looking to grow its reach into the financial investing space.
(Account types: Individual and joint brokerage accounts, Roth IRA, SEP-IRA, and Traditional IRA, plus trust accounts and custodial accounts)
Getting started with M1 Finance is quick and easy. After creating an account, you’ll have access to the following features:
- M1 Portfolio: With M1 Portfolio, you can view your account balance in a variety of currencies, as well as the current price per share of whatever stocks you’re holding. This section also displays your holdings’ percentage change from the previous day’s closing price. You can easily add funds to your portfolio by using a bank transfer or linking a debit or credit card.
- M1 Trade: In this area, you can purchase new stocks and initiate sell orders. You’ll need to provide account information for any financial institutions you have linked before initiating any trades. Once you confirm this information, your order will be processed automatically. You can cancel trades within five minutes of placing them if they haven’t yet been filled.
- M1 Invest: The M1 Invest section is where you get to actually buy stocks. The process is simple — just pick a company or fund that interests you, then pick how much of your money you want to invest in it (up to $5,000).
M1 Finance offers two types of accounts. There is a free M1 account and a premium M1 Plus account. The free account offers limited trading capabilities and has no fees associated with it. The M1 Plus account costs $3 per month to maintain and has some additional features that the free account does not offer. These features include:
- Tipping: Tipping allows you to send money to others’ portfolios on the platform.
- M1 Q&A: M1 Q&A allows you to ask questions and receive answers directly from M1’s experts.
- M1 Bill Pay: This feature allows you to pay your bills through your portfolio on the platform.
- Loan Payment Planner: This tool helps users set up loan payment plans with their portfolios, allowing them to make regular payments toward loans they have taken out through the platform.
- Personalized Portfolio Analysis: This is a tool that analyzes your portfolio in more detail and offers you suggestions for where improvements can be made.
TIP: Try M1 Finance risk-free by using this link to open an account: HERE
Wealthfront is an online financial advisory service. It was founded in 2008 by Andy Rachleff, Dan Carroll, and Adam Nash under the name “KaChing” as a robo-advisor service for financial planning and portfolio management. In November 2011, the company changed its name to Wealthfront.
(Account types: Traditional IRA, Roth IRA, SEP IRA, Brokerage, Trust, Savings Account, Checking, 529 plans)
Wealthfront has all the bells and whistles you’ll ever need to manage your investments, including:
- Tax Loss Harvesting: Wealthfront integrates with your brokerage account to determine securities that have experienced a capital loss in the past. Wealthfront then sells the security for a loss in order to offset gains you may have had in other positions.
- Tailored Asset Allocation: Based on your unique circumstances and goals, we’ll craft an asset allocation strategy that’s right for you.
- Diversification: A mix of stocks, bonds, and alternative investments are blended together based on your unique risk tolerance.
- Automatic rebalancing: Diversification is one thing, but keeping it is another. Wealthfront automatically rebalances your portfolio when necessary to keep it as close to your target allocation as possible.
- Personalized advice. Personalized advice comes from our licensed financial advisors who can help you make smart investing decisions at every step of the process.
Wealthfront has two fee structures — the Wealthfront Standard and Wealthfront Black Tie.
- Wealthfront Standard has a 0.25% annual fee, which covers all of the automated investing services that Wealthfront provides, including rebalancing, tax-loss harvesting, and financial planning tools like retirement income projections, tax-planning tools, cash flow projections, and so on.
- Wealthfront Black Tie has a 0.5% annual fee, which also includes tax-loss harvesting but adds some additional investment advisory services like financial planning and dedicated portfolio management by our team of financial advisors.
M1 Finance or Wealthfront?
M1 Finance and Wealthfront are two automated investing services that appeal to those who want to build a portfolio without the help of a human financial advisor. M1 Finance and Wealthfront’s approaches to investing are similar in some ways but different in others.
Which is the right choice for you?
M1 Finance and Wealthfront are both good options for people who want to invest their savings over time. M1 Finance has no minimum balance and no annual fees, while Wealthfront has a $500 minimum balance and charges a 0.25% annual fee. For investors with smaller amounts to invest, M1 Finance is a better choice because of its low fees. For those with larger amounts to invest, Wealthfront’s advice-based approach might be a better option than M1’s more automated service. Either way, both services offer easy ways to save and invest your money
So, if you’re looking to invest and want an introduction to some of the best robo-advisors on the market, Wealthfront and M1 Finance should be at the top of your list. They offer a lot of the same features as more well-known financial advisors without charging a wealth management fee. If you have several thousand dollars to invest and are looking for a hands-off investment strategy (that’s still not quite passive), either one is a good place to start!
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