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M1 Finance vs. TD Ameritrade – Which Online Stock Broker Is Best?

The clear and in some cases stark differences between M1 Finance and TD Ameritrade remind would-be investors that not all online stock brokers are alike. Far from it.

That’s not to say that one is clearly better than the other. Quite the opposite. Both M1 Finance and TD Ameritrade appeal to a wide range of investors, even if both know where their bread is buttered. And both have important similarities that shouldn’t be overlooked, such as commission-free trading, low-cost cash management accounts, and portfolio lines of credit with low interest rates.

However, it’s a safe bet that, depending on your needs and preferences as an investor, you’ll find either M1 Finance or TD Ameritrade more compelling than its competitor. Use this detailed head-to-head comparison to reach the decision that works best for you.

Key Features

M1 Finance and TD Ameritrade both feature low- or no-cost automated and self-directed investing platforms with associated cash management accounts and portfolio line of credit products. TD Ameritrade has a wider range of securities and platforms available, while M1 Finance offers higher yields on cash holdings and lower portfolio borrowing thresholds. Both brokerages also have enticing account opening bonuses too.

Account Opening Bonus

M1 Finance’s generous account opening bonus ranks among the best brokerage account promotions available right now. TD Ameritrade’s is quite generous as well.

M1 Finance’s Account Opening Bonus

Open a new M1 Finance account and initiate an account transfer within 60 days to earn up to $2,500 in bonus cash. M1 Finance distributes bonuses based on the following transfer thresholds:

  • $250 Bonus: Transfer an account worth $100,000 to $249,999.99.
  • $500 Bonus: Transfer an account worth $250,000 to $499,999.99.
  • $1,000 Bonus: Transfer an account worth $500,000 to $999,999.99.
  • $2,500 Bonus: Transfer an account worth $1,000,000 or more.

Your new M1 Finance account type must match your old account type to be eligible — for example, you must transfer from a taxable account into a taxable account. The offer isn’t valid on ACH deposits, wire transfers, or direct 401(k) rollovers. You should receive your bonus within 90 days once the transfer hits your account.

TD Ameritrade’s Account Opening Bonus

Open a TD Ameritrade brokerage or retirement account by Dec. 31, 2020, and make a qualifying deposit, for the opportunity to earn up to $2,500 bonus cash. The bonus thresholds are as follows:

  • $350 Bonus: Deposit $250,000 to $499,999.99 in cash or assets.
  • $700 Bonus: Deposit $500,000 to $999,999.99 in cash or assets.
  • $1,500 Bonus: Deposit $1,000,000 to $1,999,999.99 in cash or assets.
  • $2,500 Bonus: Deposit $2,000,000 or more in cash or assets.

To ensure bonus eligibility, maintain your account’s initial funding level — less trading losses, if any — for 12 months from the deposit date. This offer isn’t available on certain TD Ameritrade account types, including tax-exempt trusts, profit-sharing plans, 401(k) accounts, Keogh plans, money purchase plans, and certain managed portfolio accounts.


Available Account Types

Both M1 Finance and TD Ameritrade offer taxable brokerage accounts, tax-advantaged investing accounts, portfolio lines of credit that allow qualifying account holders to borrow against securities held in their accounts, and interest-bearing cash accounts. TD Ameritrade offers additional specialized accounts not available from M1 Finance, such as education savings accounts and trusts.

M1 Finance’s Available Account Types

M1 Finance has three core accounts: an investing account (M1 Invest), a cash account (M1 Spend), and a portfolio line of credit (M1 Borrow).

  • M1 Invest. M1 Invest offers self-directed and passive investing via taxable and tax-advantaged accounts including traditional IRAs, Roth IRAs, and SEP IRAs. The account is entirely free of commissions and management fees and does not impose minimum balance requirements. On the passive investing side, M1 Invest features more than 80 prebuilt template portfolios geared toward specific investing goals and risk tolerances. Passive investors can further customize and diversify their portfolios with sector- or industry-aligned “pie slices.” For more active investors, M1 Invest allows manual stock and fund selection, allowing for total customization — although, with a maximum of two trading windows per day, it’s not appropriate for day trading.
  • M1 Spend. M1 Spend is a cash management account with some checking account features, such as a Visa debit card accepted at millions of merchants worldwide. There’s no minimum balance required to open a M1 Spend account.
  • M1 Borrow. Account holders whose taxable investment portfolios’ market value exceeds $10,000 are eligible for M1 Borrow, a low-cost portfolio line of credit that allows users to borrow up to 35% of portfolio value. Draws on this line of credit can be used for most legitimate purposes, including debt consolidation, financing home improvements and other major project expenses, or simply increasing portfolio leverage — although this involves significant risk of principal loss. There’s no set schedule for repaying draws, but interest accrues as long an outstanding balance persists.

TD Ameritrade’s Available Account Types

TD Ameritrade has a wider range of investment account options than M1 Finance. These include:

  • Taxable brokerage accounts
  • Cash accounts tied to brokerage accounts, both for managing funds earmarked for investments and funds for day-to-day spending and expense management
  • Traditional IRAs
  • Roth IRAs
  • Rollover IRAs
  • 529 plans
  • Coverdell education savings accounts
  • Gift accounts for minors, including UTMAs and UGMAs
  • Specialty accounts like individual trusts, annuities, pension accounts, and business accounts

For investors specifically, TD Ameritrade has three distinct account configurations worth understanding in greater detail:

  • Self-Directed Trading Accounts. TD Ameritrade’s self-directed trading accounts feature commission-free trading for most common types of securities and low commissions and fees for others. Available securities include stocks, exchange-traded funds (ETFs), mutual funds, bonds and other fixed-income instruments, forex, cryptocurrencies, and futures.
  • Managed Portfolios. TD Ameritrade has three managed portfolio offerings for passive investors, each with its own minimum investment threshold and fee structure. The lowest tier, Essential Portfolios, presents five prebuilt portfolio options at an account opening minimum of $5,000 and ongoing management fees of 0.30% of assets under management. Selective Portfolios, the more-customizable middle tier, requires at least $25,000 in investable assets and levies variable management fees depending on portfolio value and composition. The highest tier, Personalized Portfolios, requires at least $250,000 in investable assets and has variable management fees. Participants enjoy fully customized portfolios overseen by dedicated financial consultants.
  • Portfolio Line of Credit. TD Ameritrade’s portfolio lines of credit allow eligible customers to borrow up to 70% of their portfolio value via low-interest draws. The catch is the relatively high portfolio value minimum of $150,000 required for eligibility.

Platform Options

TD Ameritrade’s trading infrastructure is far more robust than M1 Finance’s, which is decidedly not appropriate for day trading (or frequent trading of any kind). For this reason, it’s worth drilling down on TD Ameritrade’s four free platform options, none of which have analogues at M1 Finance:

  • Web Platform. TD Ameritrade’s main desktop trading platform is built for low-frequency self-directed traders — those who either invest for the long term or make no more than a handful of short-term trades per day. It should look familiar to anyone with online stock trading experience. Standard-issue features include multi-variable stock screeners, event calendars, watchlists, and tax reporting. It also has some not-so-standard features, such as a “social signals” tool that uses a Twitter interface to track real-time changes in social sentiment around specific stocks.
  • Thinkorswim. Thinkorswim is designed for sophisticated, high-frequency traders, including those who make a living playing the market. See TD Ameritrade’s overview of Thinkorswim for more information.
  • TD Ameritrade Mobile. TD Ameritrade’s main mobile trading platform is a stripped-down, mobile-friendly version of the Web platform. It has everything you need to make uncomplicated trades on the go.
  • TD Ameritrade Mobile Trader. Although not as feature-rich as Thinkorswim, Mobile Trader packs a much stronger punch for frequent traders than the main mobile platform. On the go, it’s a suitable replacement for Thinkorswim.

Plans and Pricing

Whereas TD Ameritrade’s pricing model can be described as “pay for what you use,” the M1 Finance offerings available to a given user depend on that user’s choice of plan. Specifically, M1 Finance has two plans with substantially different capabilities:

  • M1 Standard, a free configuration known as the “Basic Account”
  • M1 Plus, a premium account available for $125 per year

M1 Standard does not charge fees directly, although funds held in M1 Invest accounts may incur third-party fees and M1 Borrow credit lines do carry unavoidable interest charges. M1 Standard’s basic contours include:

  • No yield on M1 Spend cash balances or cash back on M1 Spend purchases
  • One monthly ATM fee reimbursement
  • $10,000 daily ACH transfer limit for M1 Spend
  • 3.5% base interest rate on M1 Borrow draws
  • All open M1 Invest trade orders execute within a single morning trading window

M1 Plus’s value-added benefits include:

  • 1% yield on M1 Spend cash balances and 1% cash back on M1 Spend purchases
  • Four monthly ATM fee reimbursements
  • $50,000 daily ACH transfer limit for M1 Spend
  • 2% base interest rate on M1 Borrow draws
  • M1 Invest transactions execute in one of two daily trading windows

Education and Research Resources

M1 Finance is very much a DIY investment platform. While it’s certainly user-friendly, it doesn’t offer much in the way of education or support for investors eager to learn the tricks of the trade.

By contrast, TD Ameritrade has a far more robust investor education infrastructure than the typical discount brokerage. Its education vertical includes extensive research and content resources, such as:

  • Trading courses led by market experts
  • Instructional videos, articles, and tutorials for DIYers
  • Access to dozens of investing publications, although some charge subscription fees for premium content
  • “Talking Green” podcast, a TD-sponsored investing show
  • TD Ameritrade Network, a stripped-down, lower-budget version of Bloomberg TV
  • Education modules built around specific life goals, such as retirement or college education
  • Market Edge, a compendium of top-shelf market research from reputable external sources
  • Social sentiment insights pulled from Twitter
  • An exclusive list of recommended equities curated by Morningstar experts
  • A morning newsletter featuring overnight news, data, and analysis from overseas markets

The Verdict: Should You Invest With M1 Finance or TD Ameritrade?

You Should Invest With M1 Finance If…

M1 Finance is a better choice if:

  • You Need a Liquid Cash Account. M1 Spend is among the best checking accounts on the market. For M1 Plus customers, it’s one of the best high-yield checking accounts to boot.
  • You Want to Avoid Asset Management Fees. Although M1 Invest account holders are still liable for third-party fees and expenses charged by funds held in their portfolios, the platform itself doesn’t charge asset management fees. This could increase returns by reducing fee-related losses in the long run, although that depends on a constellation of other factors.
  • You Want to Borrow Against the Value of Your Portfolio. Although TD Ameritrade does offer portfolio lines of credit, its high portfolio value minimum ($150,000) is problematic for smaller-dollar investors. At just $10,000 in market value, M1 Finance’s eligibility threshold is comparatively accessible.

You Should Invest With TD Ameritrade If…

TD Ameritrade is a better fit if:

  • You Want Powerful Self-Directed Trading Platforms and Tools. When it comes to self-directed trading capabilities, there’s no comparison between M1 Finance and TD Ameritrade — the latter is the clear winner. That’s doubly true for high-frequency traders, whose craft is impossible with M1 Finance.
  • You Want to Do Market Research Where You Trade. TD Ameritrade also has an impressive lineup of market research and trader education resources. While these features and content aren’t unique to TD Ameritrade and largely exist in free or low-cost market research newsletters and open-source portals like Yahoo Finance, there’s something to be said for housing them within the trading interface.
  • You Want Access to Alternative Investments. TD Ameritrade provides access to nontraditional investment options like forex, futures, and cryptocurrencies. While these instruments aren’t appropriate for all investors, it’s nice for advanced traders to have the option.

Both Are Great If…

Both TD Ameritrade and M1 Finance are great if:

  • You Prefer Passive Investing. Both TD Ameritrade and M1 Finance cater to passive investors — the former with its various managed portfolio options and the latter with its 80-odd template portfolios and dozens more semicustomized “pie slices.”
  • You Want to Open a Tax-Advantaged Retirement Account. Both platforms offer various tax-advantaged investment accounts (IRAs) for investors looking ahead to retirement. TD Ameritrade offers solo 401(k)s and other specialized tax-advantaged instruments as well.
  • You Seek a Generous Account Opening Bonus. Although they’re always subject to change, both platforms currently have account opening bonuses worth up to $2,500 for new clients able to make qualifying deposits or asset transfers.

Final Word

It should be clear by now that some fundamental differences set M1 Finance and TD Ameritrade apart.

M1 Finance is a wonderful choice for investors who don’t care about timing the market or using cutting-edge trading and research tools to gain an edge on the competition — which, these days, includes high-frequency trading algorithms whose motivations and behaviors can be downright mystifying. TD Ameritrade, by contrast, is appropriate for such traders, although it’s also a fine choice for passive investors.

Which should you choose? As always, that depends on what you hope to get out of your online brokerage.

Do you invest with M1 Finance or TD Ameritrade? Or do you prefer another online brokerage entirely?

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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