- So in this video today we're going to be talking about
the two investing apps out there known as M1 Finance
and Acorns and kind of comparing these two different apps
out there to help you understand which one may be
a better fit for you in terms of your investing.
Now at the end of this video if you guys do decide
that you wanna open up an account with
either M1 Finance or Acorns, I am affiliated with both
and I do earn a small Commission if you decide
to use my link and that's at no additional cost to you,
so if you do feel like giving back to me
for putting this video together those links
are provided down in the description below
but it's totally optional if you guys do decide
that you want to give back to me,
if not no worries whatsoever.
But that being said, the biggest difference
between my finance and Acorns to address first is
that M1 Finance is 100% free.
They are making money there's a couple ways
they're making money on the backend
for example they make interest on the cash held
within the brokerage accounts and they also make money
by directing order flow.
Now that's pretty complicated and nothing you need
to worry about but Acorns actually does charge
a fee to people who use the platform.
Now they do waive the fee for college students
so if you are a college student you can use Acorns
for free but if you do want to use their investing platform
and you're not a college student it's gonna cost you
anywhere from one dollar to three dollar per month
based on the plan that you decide on.
So if you're somebody who is totally looking to save
as much money as possible and avoid fees well right off
the bat Acorns is gonna charge you fees M1 Finance is not.
The next key difference between these two accounts
is the minimum investment to get started.
So with M1 Finance your minimum to open an account is $100
and if you're looking to open up
a retirement account that is going to be a $500 minimum.
Acorns has really cornered this market here
by offering no account minimums so you could literally
get started with absolutely no money,
if you have like two dollars to get started
or whatever it may be, you can open up an account with them.
And another big difference between these apps
is your method for investing.
The reason why Acorns has become so popular
is because of that roundup style of investing.
So with M1 Finance you have to set money aside
and transfer it into your brokerage account,
you can automate this process and have it
take like fifty dollars per week for example
but there's still that human involvement when
it comes to that saving.
Acorns on the other hand, allows you to just round up
the spare change from your purchases
and then they will automatically invest that money
every time you reach a certain threshold dollar amount.
So that's why Acorns has become so popular
is because of that pain free approach to investing
where you're literally just rounding up your purchases
and that spare change is going towards
your investing account.
Now one more thing I wanna mention real quick
if you guys are looking to learn more about
the M1 Finance investing app it is my number one app
for beginners but it is pretty confusing,
I will admit that so to alleviate that a little bit
I put together a completely free 30 minute video tutorial
teaching you exactly how to get started
and how to use M1 Finance.
That's gonna be linked up in the description down below
a completely free 30 minute video guide
on how to use M1 Finance for beginners.
Now another key difference between M1 Finance and Acorns
is that M1 Finance allows a lot of flexibility
in terms of what you're actually investing in.
If you wanna build your own portfolio of stocks
and ETFs you are able to do that through
the custom Pie's functionality of M1 Finance.
Basically with M1 you're building these pies
which are essentially your portfolios
and you decide what percentage of your money is going
to go into each stock or each ETF.
So if you wanna build your own portfolio from scratch
and invest in individual stocks
you can do so through M1 Finance and also take advantage
of great features like fractional shares
and automated rebalancing.
We're go into a lot more detail about that
in that free M1 Finance training.
Now Acorns on the other hand one of the big differences here
is that you only have five portfolios you can invest
in with Acorns, you have five choices.
And while that may not be a bad thing for passive investors
if you're looking for more flexibility with your investments
well for having five options is not flexibility
and you cannot invest in individual stocks
on the Acorns investing platform.
M1 Finance offers over 30 expert built portfolios
that you can invest in for free and they allow you to do
your own selection of stocks and ETFs
if you wanna build your own portfolio from scratch.
So overall, those are the big differences here
and I would say if you're looking at M1 Finance
this is more so designed for the hands-on
or do-it-yourself type investor.
So if you want to select what ETFs to invest in
and what stocks to invest in you wanna
be more actively involved with that process
while M1 Finance is really good for that
but if you are looking for that more passive approach
they do offer over 30 different expert built portfolios
including target date retirement funds
or just basic stock in bond allocations
and those are completely free to invest in
and then you can automate the entire process
with their automation features.
So it's good for people who are looking to be stock pickers
for the long term, if you're looking to trade
in and out of stocks neither of these two platforms
are actually a good fit for that
and it's also good for passive portfolio based investing.
On the other hand, where I like Acorns is basically
for the lazy or forgetful investors
or free people who don't wanna be bothered
with setting up a portfolio
or going through these expert portfolios themselves
and learning the very basics of investing.
And it's also for people who are bad at saving money.
If you're notoriously bad at saving money
in your account and transferring funds
to your brokerage well, Acorns has automated that process
and made it pretty pain free by just using that roundup.
Now the one downside here that I have for Acorns
is that their fee structure can be high for small accounts
because no matter how much money you have invested with them
they have that monthly fee of one to three dollars
and okay a dollar a month may not sound like a lot of money
but if you only have like a hundred dollars invested
with them that means over the course of one year
you're paying twelve percent of
your total investment in fees.
So, you don't wanna ignore the fee even though
it seems small because if you have a a small amount invested
you're paying a lot in fees to Acorns.
But anyways guys those are the key differences,
hopefully this video helped you decide which one
is a better fit for you and of course I have links
to all those resources mentioned down
in the description below.
But thanks so much for watching this video
I hope you guys enjoyed it
and I will see you in the next one.