- So in this video today we are going to be comparing
the differences between the Vanguard Brokerage Account
and the M1 Finance investing platform.
Now if you guys do at the end of this video decide
you want to sign up for M1 Finance,
I am affiliate with them
and I have provided a link down below.
So if you do use that link,
I earn a small commission in the process.
So if you wanna use that link
and give back to me for putting this video together,
that is very much appreciated but never required.
And one other thing I want to mention as well,
I just wrapped up a completely free 30-minute training video
teaching you how to use M1 Finance
as a complete beginner step-by-step
through the entire process.
But what we're gonna focus on in this video
are the differences between investing
in the Vanguard Brokerage Account versus through M1 Finance.
And I do have to go ahead and make a quick note here
because I did have an earlier version of this video
and I was not aware that Vanguard actually
had a brokerage account.
I thought the only option to invest with them
was through the Vanguard index mutual funds,
so I'm revising that video with this one here,
which is going to discuss the Vanguard Brokerage Account.
So I apologize if you guys saw that past video
and there was any confusion surrounding that.
So that being said, what are the key differences?
Well first of all with M1 Finance,
there is a $100 minimum to open a brokerage account
with them or a $500 minimum for a retirement account
where Vanguard does have the advantage
of having $0 million minimums to open an account
with this brokerage.
Now that being said, what are the commissions like?
Well, M1 Finance is 100% commission-free
and fee-free you don't pay any fees
or commissions to M1 Finance
and you are able to trade publicly traded stocks
that are on the major exchanges and ETFs.
Now as far as Vanguard goes,
there are some commissions
that you should be aware of as an investor.
All Vanguard ETFs are 100%
commission-free on the platform
regardless of how much you are investing with them,
and they also offer over 1800 ETFs
from over a hundred different fund companies
that are also completely commission free.
So if you're solely looking at this from
an ETF investing perspective, it's a pretty good deal here.
You can trade any Vanguard ETFs
and over 1800 other ETFs completely free,
unlimited trades on the platform.
Where you begin to run into a little bit of trouble
is when we look at the trading fees
for trading stocks on the Vanguard platform.
It's completely free to trade stocks in ETFs on M1 Finance,
regardless of how many you trade,
what stocks are trading,
there are no commissions whatsoever.
However, with Vanguard,
if you are trading stocks on the platform,
it's at a cost of $7 per trade for the first 25 trades
and every trade thereafter is going to be $20 per trade,
and this is for accounts that are $50,000 or less.
So it's actually pretty high in commissions
and we're seeing a lot of these brokerages moving towards
this commission-free structure.
So maybe in the future Vanguard will follow suit,
but for the time being, that's a pretty high commission,
especially when you're at $20 per trade
for individual stocks.
So I like this platform for ETF trading,
but I don't like it for stock trading
because you are paying those commissions
and that's money that could be going
into your investments and not going to your brokerage.
Now you do get 25 free stock trades per year
if you have an account with them of $1 million or more.
But let's be honest, guys, that is not most of us.
If it is, I'm proud of you and congratulations,
but I certainly know I don't have $1 million
to invest to get 25 free stock trades per year.
So thankfully we do have commission-free options
like M1 that allow you to trade stocks commission free.
Another thing you should be aware of
is that Vanguard does charge
a $20 per year account service fee
if your account is $50,000 or less.
Now is that a lot of money?
No, it's not, but it is a fee nonetheless
and it's a fee that you would not be paying
with comparable brokerages like M1 Finance
that are fee-free and commission free.
Another thing we should be aware of here
is that the minimums to invest
in the Vanguard mutual funds are actually quite high.
Now you can invest in the ETFs on the platform
for the price of a single share,
but if you're investing in the mutual funds,
they do have high minimums.
For the target date funds,
it is a $1,000 minimum or a $3,000 minimum
for most of the other funds.
So for those who are not familiar,
you basically have two options to buy Vanguard index funds.
Number one is ETFs or exchange traded funds.
Number two is the index mutual funds.
You can buy both on the Vanguard platform,
but through outside brokerages
you can only purchase the ETFs.
Those Vanguard mutual funds have that high minimum
to get started and they actually
have slightly higher fees in most cases.
So for comparison sake,
we'll look at the Vanguard 500 Index Fund.
So if you buy as an ETF,
it's gonna be an expense ratio of 0.03%
whereas if you buy it as an index mutual fund,
not only is it a $3,000 minimum
to begin investing in that fund,
it has an expense ratio of 0.04% meaning it is higher fee.
So M1 Finance on the other hand,
here's what you have to know.
One big difference is they only offer
one trading window per day.
So M1 to cut down on fees,
trades all stocks and ETFs at one point in the day.
So they process all the buy orders and all the sell orders,
whereas with Vanguard you have that open trading window
of when you wanna place your trades.
M1 Finance allows you to buy fractional shares
so you don't have to worry about the share price for ETFs
or stocks like Amazon that are over $1,000 per share,
you can buy a fraction of one share meaning
you don't have to worry about that share price at all.
They offer automated rebalancing across
all of their portfolios as a feature.
And they also have over 30 different expert-built portfolios
that are completely free to invest in,
most of which have Vanguard index funds
as a component of them.
So that being said,
if we're looking at Vanguard versus M1 Finance,
if we're solely looking at it
from an ETF investing standpoint,
they are both fee-free and commission free,
assuming you're using Vanguard ETFs
or one of the 1800 other ETFs that are commission free.
But once we begin looking at stock trading as well,
M1 Finance is superior because they're commission free
and Vanguard does charge commissions
and it gets even higher after the first 25 trades.
So if you're looking at passive investing
and if you have a high account
where you could take advantage of the free stock trades,
Vanguard is a great platform,
but most of us don't have $1 million to invest.
And so M1 Finance is good for those who are fee-sensitive,
who are looking to trade stocks.
And it's also good for smaller investors
and you also have the added benefit with M1 Finance
of being able to invest in those 30 plus expert portfolios
if you don't wanna build a portfolio from scratch.
But anyways guys, those are the key differences
here between M1 Finance and Vanguard.
I hope this helps you to make a decision.
Like I said, all those resources are linked up down
in the description below.
Thanks so much for watching
and I hope to see you in the next video.