When comparing Acorns and M1 Finance, it’s essential to consider various factors such as investment options, fees, account types, technology, user experience, and overall suitability for your financial goals. Both platforms offer distinct approaches to investing, catering to different types of investors. In this comparison, we’ll explore the key features of each platform to help you make an informed decision.
Overview
Acorns is a micro-investing platform that enables users to invest their spare change from everyday purchases. It rounds up transactions to the nearest dollar and invests the difference into a diversified portfolio of ETFs (Exchange-Traded Funds). Acorns aims to make investing accessible to everyone, particularly those who may not have significant funds to invest upfront.
M1 Finance, on the other hand, is a hybrid brokerage and robo-advisor platform that offers automated investing with customizable portfolios. Users can create their portfolios, known as “pies,” by selecting from a wide range of individual stocks, ETFs, and funds. M1 Finance allows for both automated investing and manual trading, giving users flexibility and control over their investment strategies.
Investment Options
Acorns primarily offers a limited selection of ETF-based portfolios constructed to match various risk profiles, ranging from conservative to aggressive. These portfolios typically consist of a mix of stocks and bonds diversified across asset classes and sectors. Acorns’ approach is simple and hands-off, making it suitable for beginner investors or those looking for a passive investment strategy.
M1 Finance provides a broader range of investment options, including individual stocks, ETFs, and funds. Users have the flexibility to create their portfolios from scratch or choose from expertly crafted portfolios known as “expert pies.” M1 Finance’s customizable approach appeals to investors looking for more control over their investment decisions and the ability to tailor their portfolios to their specific preferences and objectives.
Fees
Acorns charges a monthly fee ranging from $1 to $5, depending on the tier of service chosen. The basic tier includes an investment account and a retirement account, while the higher tiers add features like an Acorns debit card, access to a checking account, and bonus investments for shopping with Acorns partners. In addition to the monthly fee, Acorns charges an annual management fee ranging from 0.25% to 0.50% of assets under management.
M1 Finance does not charge any trading commissions or management fees for its basic investment account. However, it offers a premium subscription service called M1 Plus, which provides additional features such as a higher interest rate on cash balances, cash back rewards, and a second trading window. The annual fee for M1 Plus is $125.
Account Types
Acorns offers individual taxable investment accounts, traditional and Roth IRAs (Individual Retirement Accounts), as well as custodial accounts for minors. Its inclusion of retirement accounts makes it suitable for long-term savings and retirement planning, in addition to taxable investment accounts for general investing goals.
M1 Finance offers individual taxable investment accounts, traditional and Roth IRAs, as well as joint accounts. Its account options cater to investors with diverse financial needs and objectives, whether they’re saving for retirement, building wealth, or pursuing other financial goals.
Technology and User Experience
Acorns’ mobile app and website are designed with simplicity and accessibility in mind, making it easy for users to sign up, set up their accounts, and start investing within minutes. Its round-up feature automatically invests spare change from everyday purchases, while additional features like Found Money partnerships and educational content enhance the user experience.
M1 Finance also offers a user-friendly mobile app and website with intuitive navigation and robust features. Its unique “pie” interface allows users to visualize and manage their portfolios easily. M1 Finance’s automation features, such as automatic rebalancing and dynamic portfolio allocation, streamline the investment process and help users stay on track with their financial goals.
Security
Both Acorns and M1 Finance prioritize the security of their users’ accounts and personal information. They employ industry-standard security measures, such as encryption, multi-factor authentication, and regular security audits, to protect against unauthorized access and data breaches. Additionally, both platforms offer FDIC insurance for cash balances held in their accounts and SIPC protection for securities held in brokerage accounts.
Customer Support
Acorns provides customer support via email and in-app messaging. While it lacks phone support, its online help center and educational resources aim to address common questions and concerns. Acorns also offers a referral program that rewards users for inviting friends to join the platform.
M1 Finance offers customer support via email and phone during business hours. Additionally, it provides extensive educational resources, including articles, videos, and tutorials, to help users learn about investing and navigate its platform effectively. M1 Finance’s customer support team aims to provide timely and personalized assistance to address users’ inquiries and help them achieve their investment goals.
Final Conclusion on Acorns vs M1 Finance: Which is Better?
In conclusion, both Acorns and M1 Finance offer distinct features and benefits, catering to different types of investors. Acorns is ideal for beginner investors or those looking for a simple, hands-off approach to investing, with its round-up feature and monthly subscription model making it easy to start investing with small amounts of money.
M1 Finance, on the other hand, appeals to investors seeking more control over their investment decisions and the ability to customize their portfolios. Its flexible “pie” system, combined with its commission-free trading and automated investing features, makes it suitable for investors looking to build and manage diversified portfolios tailored to their specific preferences and objectives.
Ultimately, the choice between Acorns and M1 Finance depends on your individual preferences, investment goals, and level of comfort with managing your investments. It’s essential to evaluate the features, fees, investment options, and user experience of each platform to determine which one best aligns with your financial needs and objectives.
