Robinhood vs Stash vs M1 Finance
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 or just want to set up retirement accounts, or you want to do something in between through robo-advisors or on your own, these three investing apps are worth considering.
About each brand
Robinhood
Robinhood is a commission-free stock trading app and investing platform that was started with the goal of giving 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. Prices rose astronomically, then fell again, and have since started rising again.
Robinhood added 3 million users in January 2021, partly from GameStop investors. Robinhood plans to become a stock itself that investors can buy, having chosen the Nasdaq as the exchange for its eventual initial public offering.
Stash
Stash is another investing app with the similar goal of making investing easy and affordable. Customers can invest in thousands of stocks and 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 and not day trades. All of its market transactions are executed during four trading windows each weekday as a way to discourage day trading.
As a way to make investing accessible to everyone, Stash allows users to buy fractional shares of stocks with $5 or less.
M1 Finance
M1 Finance is another mobile app designed to help average investors build their portfolio 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, and 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 one 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 they 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 free stock that’s chosen randomly from the program’s inventory. To get the free stock, new users must link their bank account during the sign-up process. The shares are worth $2.50 to $200, though Robinhood claims users can receive up to $500 in free stocks each year.
Free stock is also given in its referrals program. You can invite friends and if their application is approved, you’ll each receive a free stock.
Immediate access to funds after sale
Some brokerages and investing apps don’t give investors access to money they’ve made from a stock sale until a few days after the sale has been settled.
The two high-level accounts from Robinhood, called Robinhood Instant and Robinhood Gold, allow users instant access to deposits or settlements from stock sales. Its basic account, called Robinhood Cash, doesn’t allow instant access.
Cash management option
Robinhood offers an option called Cash Management that 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 0.30%, and can be used to fund a brokerage account at Robinhood.
This program also provides a digital and physical debit card. Free ATM withdrawals are allowed at more than 75,000 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, Gold, Dash, and Ripple.
Its Instant and Gold accounts offer option trading without fees to buy or sell options. Options investing doesn’t have a monthly fee.
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 share of stock, such as $560 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 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 19,000 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 Beginner and Growth programs, and double that in the Stash+ program.
The stock payment is available after spending on the debit card at such places as 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 own investment accounts. Only $1 is needed to open an account.
Stash+ members can also fund a traditional IRA or Roth IRA with as little as $1.
Stash Coach
Free professional help is available by phone and email from Stash on everything from budgeting to retirement.
M1 Finance features
Help building 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 full share of a stock can be bought through M1 Finance, allowing users to invest in bigger companies without having to buy a full share.
Automated rebalancing
M1 Finance uses a dynamic rebalancing feature that is enacted at predetermined intervals to rebalance a portfolio and bring investment back 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 2-3.5% interest.
The program is called M1 Borrow. A user with $10,000 or more in a taxable account with M1 Finance can borrow up to 35% of their account balance in a portfolio line of credit as a way to invest in other stocks.
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.
Summary of Robinhood, Stash, and M1 Finance
| Robinhood | Stash | M1 Finance | |
|---|---|---|---|
| Pricing | $0-$5/month | $1-$9/month | $0-$125/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. It does, however, charge fees for some trading services, and for an upgraded account.
Its basic account is called Robinhood Cash, which allows commission-free trades.
The next level is called Robinhood Instant. This allows up to $1,000 on instant deposits after you’ve sold a stock and made a profit. This gives you instant access to up to $1,000 of a stock sale immediately, instead of having to wait a few days to get your money.
Robinhood Gold for $5 per month
The highest account level is Robinhood Gold. It costs $5 per month to maintain. Instant deposit amounts start at $5,000 and then start at the level of your portfolio, up to $50,000 in instant deposits. For instance, if your portfolio value is more than $25,000, you get $25,000 in instant deposits.
Robinhood Gold also offers margin investing. This allows users to borrow money from Robinhood to buy stocks. It means taking on a bigger risk. At least $2,000 must be deposited to trade on margin.
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 $22.10 per $1 million of principal (sells only) and is rounded up 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
This fee is also charged by FINRA. For equity sells, it’s $0.000119 per share. For option sells, it’s $0.002 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 from $1 to $9 per month, depending on which level of service you choose. There are three levels.
Stash Beginner
For $1 per month, you get an investment account, bank account with a Stock-Back Card, $1,000 in life insurance from Avibra, and free investment and savings tools.
Stash Growth
For $3 per month, this plan gives you everything that the beginner plan does, plus access to retirement accounts, retirement advice, and tax benefits for retirement investing.
Stash+
For $9 per month you get everything in the Stash Growth program, along with an investment account for two children, double stock rewards, $9,000 more in life insurance, and a monthly market insights report.
M1 Finance
M1 Finance trades are commission-free, and a portfolio made up 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, called M1 Plus, requires paying a $125 annual fee. Members can open custodial accounts, set automated trading rules, and have an additional afternoon trading window.
They also earn rewards such as 1% APY on all M1 Spend checking accounts and 1% cash back on qualifying debit card purchases. A 1.5% reduction is given on the base rate on 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 easily try the app.
- 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, which is 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.
- $2,000 to open a margin account.
- 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 encouraged.
- Low monthly pricing of $1 for beginners.
- 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 which 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.
- Can create custom pies or use expert ones to set your investments.
- Fractional shares sold.
- Automated rebalancing in M1 Finance.
- Smart transfers of money allowed so users can 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 and podcast 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.
Each daily podcast is about 20 minutes long and focuses on a company you may want to invest in, along with other news. A recent podcast detailed how Amazon’s cashier-less stores work could lead to higher profit for Amazon if the company decides to license this technology.
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 with 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 can 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 sections called “Teach Me,” “Money News,” “Learning Center,” and simply “Stash,” where two-minute reads for kids are kept, or stashed.
There are enough news and interesting content on the site to keep you busy for an hour or more each day, though you may just want to start with a scan of the headlines in the various sections. 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 up 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. The 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 short terms. 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 to it. By “setting it and forgetting it,” you can go on with your life without worrying about changing your investment strategy based on the news of the day.
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 dip your toe in investing, 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 that you don’t mind losing.
The hope, of course, 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 with investing money that 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 can start picking stocks to buy on your smartphone in your favorite restaurant, park, or other places where future gazillionaires lounge.
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