Robinhood vs Stash vs M1 Finance
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Like just about everything else in life, there are apps for investing. You can manage your investment portfolio while on the go without having to be an expert in the financial markets, all from your phone.
Whether you’re a day trader, just want to set up retirement accounts, or do something in between through robo-advisors or on your own, these three investing apps are worth considering.
In this article
About each brand
Robinhood
Robinhood is a commission-free stock trading app and investing platform that was started to give people easy access to the financial markets. It’s meant for anyone to use, from beginners to experts.
You may have heard a lot about Robinhood in January 2021 when its members drove up the price of GameStop and other stocks that they thought were undervalued.
Robinhood added 3 million users in January 2021, partly from GameStop investors. Today, it has nearly 23 million users.
- Commission free stock trading.
- No account minimum.
- Trade stocks, options, ETFs, and more.
- First stock free.
Stash
Stash is another investing app with a similar goal: making investing easy and affordable. Customers can invest in thousands of stocks, exchange-traded funds, or ETFs, with $5 or less.
Stash supports a philosophy called The Stash Way. Its approach to investing is friendly to beginners and stresses the importance of investing for the long term, not day trades. All of its market transactions are executed during four trading windows each weekday as a way to discourage day trading.
To make investing accessible to everyone, Stash allows users to buy fractional shares of stocks for $5 or less.
M1 Finance
M1 Finance is another mobile app designed to help average investors build their portfolios without paying the high fees that a traditional brokerage can charge. It’s a robo-advisor that aims to serve long-term investors instead of day traders.
However, it’s worth knowing that M1 Finance is best for more experienced investors. It doesn’t offer the chance to consult with a financial advisor. It may not be best for new investors who aren’t comfortable setting their own financial goals or managing their portfolios.
Key features
Robinhood features
No fees to open an account
We’ll get into the fees of using Robinhood in the next section, but this fact may sway you to try Robinhood: No fees. It doesn’t charge anything to open or maintain an account. It charges fees to make trades, which we’ll detail later, but it shouldn’t make trading prohibitive.
Opening a new account starts with a Robinhood Instant account, which lets you make trades after funding it through your bank account. The account doesn’t require paying a maintenance fee.
An upgraded account, called Robinhood Gold, costs $5 per month. It allows margin investing and other benefits, such as more detailed reporting and research.
Free stock
New users are given the free stock chosen randomly from the program’s inventory. To get the free stock, new users must link their bank account during sign-up. The shares are worth $5 to $200, though a vast majority of new users will receive a reward having a value from $5 to $10.
Free stock is also given in its referrals program. You can invite friends and receive a free stock if their application is approved.
Cash management option
Robinhood offers Cash Management, which lets users spend and earn interest on swept cash. This is uninvested cash in the brokerage account. It’s moved to where it can earn interest at 1.50% (starting August 11, 2022) and can be used to fund a brokerage account at Robinhood. However, it is no longer accepting new customers at this time.
This program also provides a digital and physical debit card. Free ATM withdrawals are allowed at more than 90,000 ATMs. The account is insured for up to $1.25 million in deposits by the FDIC.
Cryptocurrency and options trading
Robinhood has commission-free crypto investing in most states. It has real-time market data for cryptocurrencies such as bitcoin.
Its Instant and Gold accounts offer options trading without fees to buy or sell options. Options investing doesn’t have a monthly fee.
- Commission free stock trading.
- No account minimum.
- Trade stocks, options, ETFs, and more.
- First stock free.
Stash features
Fractional shares
One way Stash makes it easier to trade stocks is by selling fractional shares. Instead of paying a high price for one stock, such as $230 for one share of Tesla, your money is pooled with other Stash members to buy a share. You receive a fractional percentage of the returns.
Earnings are automatically reinvested, known as a dividend reinvestment program, or DRIP.
Stash isn’t a robo-advisor, so it won’t direct you to stocks. Instead, it will suggest an investment portfolio of individual stocks and ETFs, of which it has more than 1,800, that should coincide with your investment goals. Risk levels in Stash are conservative, moderate, and aggressive.
Stock-back debit card
Stash offers what it calls a Stock-Back card. It’s a debit card that can be used for free at more than 55,000 ATMs through Green Dot Bank. It doesn’t require a minimum balance, and no overdraft fees are charged.
Instead of earning cash back on money you spend with the card, as some other debit cards do, this card pays you in stock in the retailers where you shop. It pays 0.125% in stock in the Growth and Stash+ payment tiers.
The stock payment is available after spending on debit cards at places like McDonald’s, Walmart, CVS, Amazon, Costco, and Hulu.
Other accounts
The Stash+ account gives users custodial accounts for up to two children so the children can set up their investment accounts. Stash+ members can also fund a traditional IRA or Roth IRA.
M1 Finance features
Help build a portfolio
Users can choose from ETFs, mutual funds, and individual stocks to create their portfolio, or they can build it through the help of M1 Finance’s “pie investing” assistance. This breaks down your portfolio into a pie chart so you can quickly see where your assets and holdings are.
It offers a series of expert pies that are professionally curated portfolios based on different investment strategies and risk tolerance levels.
After customizing your portfolio, you choose the type of investment account you want. It can be a retirement account, an individual or joint investment account, or a trust account.
Fractional shares
Less than one whole share of a stock can be bought through M1 Finance, allowing users to invest in more prominent companies without purchasing a full share.
Automated rebalancing
M1 Finance uses a dynamic rebalancing feature enacted at predetermined intervals to rebalance a portfolio and return investment to its original targets. This helps maintain the risk level you originally set so that your investments are too heavy in one area.
Portfolio line of credit
A flexible portfolio line of credit is offered so users can borrow against their investments at 7.25% to 8.75%. The program is called M1 Borrow, and it lets a user with $10,000 or more in a taxable account with M1 Finance borrow up to 40% of their account balance in a portfolio line of credit to invest in other stocks. To take advantage of this feature, you must open a margin account through M1 Finance.
Checking account
A program called M1 Spend is an FDIC-insured checking account with a debit card that can be used with the M1 Finance mobile app. Users can deposit a paycheck, pay bills, and use the M1 Finance Visa debit card.
- Commission free stock trading.
- No account minimum.
- Trade stocks, options, ETFs, and more.
- First stock free.
Summary of Robinhood, Stash, and M1 Finance
Pricing | $0-$5/month | $3-$9/month | $0-$36/year |
Minimum investment | $0 | $1 | $100 |
Investment options | Stocks, ETFs, options, cryptocurrency | Stocks, ETFs | Stocks, ETFs, mutual funds |
Debit card? | Yes | Yes | Yes |
Costs and fees
Robinhood
Robinhood doesn’t charge a monthly maintenance fee or a fee to open an account. However, it charges fees for some trading services and an upgraded account.
Robinhood Gold for $5 per month
In this account, Instant deposit amounts start at $50,000. For instance, if your portfolio is more than $25,000, you don't have to wait five business days for your funds to settle.
Robinhood Gold also offers margin investing. This allows users to borrow money from Robinhood to buy stocks. It means taking on a bigger risk.
This account also provides more detailed reporting and research, such as in-depth stock research reports from Morningstar.
Regulatory transaction fee
A regulatory transaction fee is passed down from the Financial Industry Regulatory Authority, or FINRA, to its members. Robinhood and others usually pass this fee on to customers. The fee is meant to cover costs incurred by the government for regulating securities markets, and it’s ultimately paid to the Securities and Exchange Commission (SEC).
Robinhood says the SEC fee is $8 per $1 million of principal (sells only) and is rounded to the nearest penny. It says it doesn’t pass on the fee to customers with a notional value of $500 or less.
Trading activity fee
FINRA also charges this fee. For equity sales, it’s $0.000145 per share. For option sales, it’s $0.00244 per share. No trading activity fee is charged for purchases of 50 shares or less.
American depositary receipt fees
The ADR fee is charged when foreign stocks are bought. It ranges from $0.01-$0.03 per share.
Stash
Using Stash costs $3 to $9 monthly, depending on your service level. There are three levels.
Stash Growth
For $3 per month, this plan gives you access to retirement and investment accounts and the Stock-Back card.
Stash+
For $9 per month, you get everything in the Stash Growth program: an investment account for two children, double stock rewards with the Stock-Back card, $10,000 in life insurance, and a monthly market insights report.
M1 Finance
M1 Finance trades are commission-free, and a portfolio made entirely of stock won’t be charged a management fee. M1 Finance has a minimum balance requirement of $100 for taxable accounts and $500 for retirement accounts.
A $20 fee is charged when selling mutual funds. It also has an account termination fee and a maintenance fee on accounts that have been inactive for more than 90 days.
M1 Plus
An upgraded program, M1 Plus, requires a $36 annual fee. Members can open custodial accounts, set automated trading rules, and have an additional afternoon trading window.
They also earn rewards such as 5.00% APY on all M1 Spend checking accounts and 1.5% cash back on qualifying debit card purchases. A 1.5% reduction is given on the base rate on a line of credit opened through M1 Borrow.
Pros and cons
Robinhood pros and cons
Pros
- No monthly fees or account minimum balances, allowing new customers to try the app easily.
- Ability to invest in cryptocurrencies in most states.
- Free stock for opening an account.
- Instant deposits on some accounts after selling stocks.
- Margin investing in the Robinhood Gold account.
- Interest earned on swept cash, uninvested cash in the brokerage account.
- Free stock for referring a new member.
Cons
- Not as many investment products as competitors.
- No goal-based strategy.
- No customer service phone number.
- Doesn’t sell bonds or mutual funds.
- No retirement accounts.
Stash pros and cons
Pros
- Easy to use for beginning investors.
- Earn fractional shares of company stocks when you use the Stock-Back rewards debit card at qualifying retailers.
- Long-term investing and diversification are encouraged.
- Access to retirement accounts for $3 per month.
- Can buy fractional shares of stocks.
- Customers choose risk levels of conservative, moderate or aggressive.
- Custodial accounts for top-tier programs.
Cons
- Not a robo-advisor and won’t direct you to stocks to purchase.
- Could pay more with Stash’s flat-free structure in a year than you might with other companies that charge a percentage fee based on earnings.
- Experienced investors may want to invest elsewhere and buy full shares of stocks.
M1 Finance pros and cons
Pros
- Geared toward self-directed investors.
- Easy to use with a pie investing feature that makes it easy to understand where your assets are.
- You can create custom pies or use expert ones to set your investments.
- Fractional shares sold.
- Automated rebalancing in M1 Finance.
- Smart money transfers allow users to set threshold-based rules to move money between M1 accounts and pies.
Cons
- No financial advisors to talk to.
- Not many investment options.
- Only one trading window, though M1 Plus can get more.
- Not best to use for day trading.
- New investors may want to go elsewhere because M1 Finance doesn’t offer much help setting investment goals or researching investments.
- Doesn’t offer cryptocurrency purchases.
FAQs
How does Robinhood try to educate investors?
The trading platform Robinhood offers a fun newsletter to anyone, even if they’re not customers. Called Robinhood Snacks, the newsletter is meant to be read within three minutes and offers a fun take on the financial news each day.
Do I really want fractional shares?
All three companies we reviewed sell fractional shares. They’re an easy way to diversify your portfolio if you don’t have a lot of money to invest and want to get in on the big action that big stocks often allow. Buying 100 shares of Apple, Tesla or Costco may be a little difficult, but you can buy part of one share for as little as $1. That buck won’t get you much, of course, but it’s a start and could encourage you to invest more later and help you learn about a company.
How does Stash help investors learn?
Like many companies, Stash has a blog. The blog is pretty comprehensive, with enough news and interesting content on the site to keep you busy for an hour or more each day. Either way, it has lots of useful and interesting information about money.
Can Stash automate my investments?
Purchases on your Stash debit card can be rounded to the nearest dollar. Once those round-ups hit $5, it sends the money to your investment account. You can also use Stash’s dividend reinvestment account, or DRIP, to automatically invest any dividends paid out by your investments. It’s automated, and you won’t have to think about it. DRIP is available for all of the Stash investment accounts.
Should I use M1 Finance as a day trader?
Probably not. While the app offers investment, retirement, and trust accounts that can work for most people, active traders may want to look elsewhere. M1 Finance makes all trades in a single trading window in the morning. That’s usually not so good for day traders who want to hold stocks for a short period of time. You can get a second afternoon trading time by signing up for M1 Plus, which requires a $125 annual fee.
Can I “set it and forget it” with M1 Finance?
To help you avoid making bad decisions, M1 Finance lets you set up your ideal portfolio and then automate contributions. By “setting it and forgetting it,” you can go on with your life without worrying about changing your investment strategy based on the day's news.
Portfolios should be reviewed at least once a year, but setting up your ideal, diversified portfolio from the beginning can help you stay on the path you want. Along with automated investing, M1 Finance automates rebalancing by selling assets that don’t meet your goals and buying ones that do. By contributing regularly and automatically to your brokerage account, M1 Finance automatically buys the most underweight asset and automatically sells the most overweight one when you sell.
The bottom line
If you’re looking for a way to invest, any of the three apps we reviewed can help you get started. Find the one that fits your needs the most, and invest a small amount of money you don’t mind losing.
The hope is that you won’t lose any of your money and that you’ll be on the road to becoming a gazillionaire. But just in case that doesn’t happen, you should start investing money you’re prepared to lose.
Each app we reviewed is easy to use. You should be able to open an account quickly and easily and start picking stocks to buy on your smartphone in your favorite restaurant, park, or other places where future gazillionaires lounge.
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Writer
Aaron Crowe is a freelance journalist who specializes in personal finance writing and editing. He has worked at newspapers, where he won a Pulitzer Prize, and has written for numerous online publications. These include AOL, US News & World Report, WiseBread, Bankrate, AARP, and many websites focusing on housing, credit and insurance. He lives in California with his wife and daughter.
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