So… Here’s the deal…
Building a portfolio of viable stocks investments and savings plans can be challenging, no matter how you slice it!
Many would-be investors are intimidated away from this income source due to the sheer volume of upkeep and attention needed to make it a lucrative venture.
But today, you won’t have to quit your day job to play the stock and bond markets, thanks in large part to the rise of app-based investment platforms like M1 Finance and Acorns.
In particular, these two apps have brought thousands of young investors into the marketplace by providing a convenient and streamlined interface for analyzing, investing, and maintaining their market-based assets.
Each platform also provides a variety of fiscal incentives to save and spend with their in-house debiting system, as well as opportunities to diversify their portfolio using the recommendations of capital market specialists.
In terms of cost, both M1 Finance and Acorns have massively lowered the barrier to entry by almost fully eliminating entry fees and commissions from their business models. As such, prospective investors can immediately engage these dynamic platforms within minutes of downloading their respective apps.
But the question remains: will you use M1 Finance or Acorns?
This guide will help you succinctly and effectively compare these two innovative investment platforms, allowing you to decide which app-based option provides you with the most desirable features that meet your needs.
After reading this guide, you’ll be ready to take your first step towards cutting yourself a slice of the lucrative investment market pie.
M1 Finance Overview
Within the emergent digital investment industry, M1 Finance is categorized as a so-called “robo-advisor” app. In essence, this label implies that M1 Finance is able to provide automated financial management and investment services by leveraging specialized algorithms to meet the user’s stated investment goals.
Compared to human-based brokerage services, “robo-advisor” apps like M1 Finance cost substantially less to use and are still optimally able to safely allocate, manage, and optimize a users’ assets. M1 Finance, in particular, requires some minimum account balance, but makes up for it by allowing users to maintain an account and trade on the platform without charging any fees or commissions – for free, in other words.
In today’s crowded robo-advisor app market, M1 Finance continues to standout based upon its desirable degree of automation. From the moment you become a M1 Finance user, you’ll be able to easily set up a diverse investment portfolio using the app’s innovative “Pie” visualization model.
After loading your account with the appropriate funds, M1 Finance can be set up to invest in, collect from, and rebalance your portfolio based upon your pre-set investment goals and strategies. When it’s time to collect your dividends, M1 Finance even automatically sells your shares based upon a formula that optimizes your tax-based savings.
Overall, M1 Finance is an excellent digital investment platform for prospective investors who want to take full advantage of this lucrative income source without applying every second of their day to the maintenance of a physical portfolio. With automated day-to-day in-app management, you can certainly count on M1 Finance to do the heavy lifting while you break into the marketplace and learn the craft.
As one of the newest players on the digital investment scene, Acorns was founded on the principle that, “from acorns mighty oaks do grow.” In other words, Acorns’ entire investment and savings structure is optimized to allow average folks to turn small, seemingly insignificant sums into a solid source of income. Acorns accomplishes this goal through a variety of diversified components, each of which work together through Acorns’ user-friendly, money-colored app.
First and foremost, when installed on your smart phone (or your computer, through their browser-based plug-in), Acorns automatically collects your digital “spare change” and collects it into a pool that you can use to make investments. Acorns accomplishes this by rounding all of your purchases to the nearest dollar and depositing the difference directly into your principle investment account.
Once you’ve collected some funds through this method (or direct deposit), you’ll be able to choose from a variety of portfolio options on the Acorns platform. These range from conservative to aggressive and allow prospective investors with differing degrees of market confidence to choose an investment scheme to fit their goals.
Acorns’ debiting system has also gained a fair deal of attention lately, likely due to its ability to streamline how the platform’s users spend their earnings and incentivize them to engage the investment platform further. Called Acorn Spend, this debit card doesn’t charge overdraft fees or require a minimum balance, both of which play into their retailer-based Found Money program.
All in all, Acorns provides a great arsenal of individual components that make it easy and financially-savvy to save money for use in your investment portfolio. Few, if any, other digital investment platforms can do so much with so little.
M1 Finance Fees
There’s an old adage about how the best price of all is “free.” Clearly, the developers of M1 Finance’s business model took this to heart because this app does not charge management fees or commissions on any transactions within its core services.
That means that you can download the app and begin investing on the same day without applying more financial resources than your investments are worth.
To make up for this low barrier to entry, M1 Finance does require its users to maintain higher-than-average minimum account balances. In order to remain active in M1 Finance’s interface, you’ll need to carry a concurrent $100 balance.
In the same vein, users who maintain a retirement savings account through M1 Finance will need to maintain a $500 account balance minimum.
Though these aren’t “fees” in the traditional sense, they may still serve as expenses that dissuade prospective investors with minimal initial funding.
While completing investment transactions, M1 Finance users (like all other digital investment platform users) will be assessed standard SEC trading fees.
M1 Finance users will also have the opportunity to pay a further $100 to access their suite of power user features, including a low APR and high cashback debit card.
Acorns charges very slight fees in order to access their platform and use it for investing, spending, and saving. At the low end of the spectrum, prospective investors can pay just $1 per month and gain access to the “Acorns Core” compliment of features. This includes the access to Acorn’s automated investing and smart portfolios, as well as their proprietary “digital change” saving program.
From there, packages only increase to $2 and $3 per month, respectively. At these levels, prospective users gain further access to Acorns Later and Acorns Spend, which serve as the platform’s retirement savings and debiting components, respectively. This debit card, of note, does not charge ATM fees at thousands of terminals across the country and is able to refund fees from non-compliant locations.
Like M1 Finance, Acorns users are subject to appropriate SEC trading fees as they engage the capital market. But generally speaking, Acorns is a far more affordable platform when it comes to accessing high-end features for a minimal month-to-month investment.
M1 Finance Key Features
From the onset, it can be challenging to “visualize” your full investment portfolio, especially as their value and weight fluctuate with the market. M1 Finance has managed to make this process far easier by focusing their investment analysis components around their visual investment “pies.”
Though an interactive pie graph at their core, these tools make it easy to add and subtract “slices” until it meets your desired degree of investment risk.
New users create one of these “pies” as soon as they start on the platform, either from a pre-established model or through a questionnaire system.
Beyond this, users can visually adjust their “pie” at any time.
Users will even be able to watch as their “pie” automatically adjusts its prescribed value as the market fluctuates from day to day.
Great Rewards through M1 Plus Debit Card
Though it requires users to spend a further $100 to access it, M1 Finance power users will gain access to a specialized debiting system through M1 Plus.
This system’s Visa debit card comes with some excellent features that rival even some private credit cards.
This includes a 1.5% APY and 1% cash back program, both of which can ensure a card holder saves as much of their investment earnings as possible.
In addition, this card covers four free ATM transactions per month and provides the opportunity to procure a metallic card (made from tungsten).
This card, unlike M1 Finance’s primary investment program, does not require users to maintain any minimum balance, though.
Automation that Works for You
M1 Finances investment structure is almost entirely focused on users who want to set their portfolio and then focus on more pressing issues while they grow and mature.
For example, users need not worry about making manual trades on this platform. After establishing a portfolio, all necessary and requested trades occur each morning when the NYSE opens.
After trades take place, your M1 Finance portfolio is able to dynamically rebalance itself and prepare itself for the following day while using your investment goals as a waypoint.
Depending on your degree of engagement from day to day, you can also schedule the size and regularity of your transactions in order foster good financials habits.
Tax-Efficient Investing Protocols
Securities investments always come with tax-related drawbacks, most of which come apparent when it comes time to file your annual state and federal tax forms. While there is not a method to fully avoid these fees, M1 Finance does automate a process which sells off your shares in a tax-efficient method.
These protocols go into place when you make a withdrawal from your M1 Finance account. At that time, these protocols automatically decide which securities to sell in order from longest to shortest term gains.
Once this sale finalizes, the requested funds transfer to the user’s bank account along with a paper trail to optimize their eventual tax burden.
Modern Security and Insurance
M1 Finance’s insurance coverage also worth noting given their expansive nature.
First, M1 Finance is a SIPC members, so its securities are protected up to $500,000 (which does not cover losses related to lose of market value).
M1 Finance’s checking accounts are similarly insured at up to $250,000 by the FDIC.
When it comes to platform-based security, M1 Finance is also among the best.
Currently, their app protects all data transferred and stores on its platform using military-grade, 4096-bit encryption protocols. At the front end, this app also uses two-factor authentication to ensure that you and only you have access to your investment portfolio and dividends.
Acorns Key Features
Investing with Spare Change
At its core, Acorns operates based around premise of its namesake seed. In order to gather proverbial acorns for planting, this platform automatically (through its app and browser-based extension) rounds up all online purchase prices to the next dollar and deposits the resulting difference into the user’s investment asset account. These “acorns” can then be used for regular portfolio investments, making it easy to fund your burgeoning investment portfolio by “squirreling away” your digital loose change.
These rounded-up transfers occur daily and take into account all purchases made within that 24 hour period. As a result, it becomes increasingly easy for new and learning investors to see the difference that the proper application of discretionary financial assets can make on your overall ability to grow your profits.
Added Value in Top-Tier Package
Getting your start on Acorns need not cost much, at a minimum of $1 a month for the platform’s core investment and savings services. However, for just $3 a month, Acorn users gain access to all of the platform’s top-tier features, including its retirement savings and debiting system. This retirement system, called Acorns Later, allows to set up recurring contributions as low as $5 into a certified retirement plan, such as an IRA.
Meanwhile, Acorns Spend (their debiting program) provides far more than a weighty tungsten card (though that does come standard). This card allows for “Real Time Round-ups” through Acorns Core as well as the ability to make instant transfers through the all-digital banking interface. In addition, this card does not require a minimum balance, does not charge overdraft fees, and does provide unlimited free or fee-reimbursed ATM transactions nationwide.
Portfolio Options Across the Spectrum
Whether you’re new or experienced, hesitant or ambitious, Acorns has a portfolio option to meet your needs and goals. Acorns investors have access to over 7,000 stocks and bonds, as well as a wide variety of ETFs (short for exchange traded funds). This makes it easy to diversify your portfolio from day one.
Should you choose to, Acorns also provides pre-made portfolios and portfolio recommendations to fit your desired degree of diversification. For example, Acorns’ conservative portfolios place 80% of the user’s assets into government and corporate bonds. On the other hand, aggressive investors will have an opportunity to play their chances with allocation splits between large, small, and international company stocks.
Incentives to Shop and Reinvest
Acorns also provides one key incentive to encourage its users to shop with their favorite brands. Through their Found Money program, qualified purchases through partnered brands such as Lyft, Blue Apron, AirBnB, MeUndies, Stitch Fix, Nike and more result in so-called “reinvestments” from those companies. These funds then become available for reinvestment over a period of days (sometimes a month or more).
M1 Finance Pros & Cons
On the positive side, M1 Finance certainly provides the lowest overall barrier to entry through its no-fee usage business model. Moreover, this platform’s use of visually-appealing portfolio components and seamless automation make it a prime pick for folks who are looking to learn the investment game at their own pace or who simply want to invest their savings as a side hustle.
M1 Finance’s focus on optimizing your portfolio operations for tax efficiency also makes it a major asset to new and veteran investors alike. When used effectively, this feature alone can help users hold onto a greater volume of their dividends from year to year, making it easier in turn to grow their investments in the long run.
On the adverse side, M1 Finance’s $100 account minimum might act as a barrier to prospective investors who lack a lot of spare financial resources on day one. Even those that can overcome this hurdle may be disappointed to know that M1 Finance’s investment options (in terms of stocks, ETFs, etc.) are lacking compared to their competitors.
Acorns Pros & Cons
Acorns provides the best overall method for accumulating and allocating funds for use in your investment portfolio through its round-up program. When used responsibly, this feature alone can help offset the cost of access to Acorns in just a few days, with membership options starting at only $1. At the highest tier – an affordable $3 per month – users also gain access to one of the most multifaceted and useful debit cards on the market today.
On the reverse side, though, Acorns is still rather unproven when it comes to security and reliability in terms of long-term investments and savings. That’s not to say that it isn’t capable in both domains, but given its recent rise to prominence, prospective users should remain vigilant to changes in the platform’s capabilities and business structure in the near future.
Which Investing Platform is Best?
If you’ve been looking for the opportunity to begin investing or move your existing investment scheme to a digital platform, the time has never been more ideal.
Between M1 Finance and Acorns, you have a broad swath of fully capable investment platforms, each with a variety of special features to supplement your ability to save and grow your portfolio.
In the end, the decision between these two prime digital platforms comes down to preferences regarding how much day-to-day management and extra incentive you’d like to receive from your investment app.
Finance M1 excels in streamlining your investment management, while Acorns debit card and asset allocation scheme is unbeatable.
Whichever option you choose, prepare yourself for the ups and downs that come with investing in capital markets.
While risk is inherent to all forms of investment, these two app-based investment platforms hold a great deal of potential when it comes to growing and maturing your portfolio in the immediate future.