M1 Finance vs. Fidelity: Which Investment Platform Is Better for You in 2022?

M1 Finance and Fidelity are two of the most popular investment platforms today. Both offer commission-free trading for stocks and ETFs. Learn which broker can best meet your goals in the new year.

SustainFi   Updated December 17th, 2021

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At a glance

  • M1 Finance and Fidelity appeal to different types of investors. M1 Finance has a user-friendly app that helps you create diversified portfolios of stocks and ETFs. Fidelity is a long-standing brokerage with unparalleled access to mutual funds
  • Best for long-term investors: M1 Finance. M1 Finance is best for building portfolios of stocks and ETFs and watching your investments grow over time. The interface is great and the app is easy to use for beginners. The app will even rebalance your portfolio when you want
  • Best for margin loans: M1 Finance. If you need to borrow against the value of your investment portfolio for any reason, M1 Finance offers much better rates than Fidelity, and anyone with $5,000 in their account is automatically pre-approved
  • Best for active traders: Fidelity. Fidelity has been around for a long time, offering a lot of tradeable securities, retirement accounts, low-cost mutual funds, and investor education materials
  • Best for mutual funds: Fidelity. Fidelity is known for its selection of low-cost mutual funds, some of which have no expense ratios

Keep reading to learn more.

Minimum

 $0

Minimum

$100

Fees

$0 for stock and ETF trades

Up to 0.35% for Fidelity Go

Fees

$0 for stock and ETF trades

$125 / year for M1 Plus

Investments

Stocks, ETFs, options, fractional shares, mutual funds, bonds, CDs, precious metals

Investments

Stocks and ETFs, fractional shares

Margin loans

Yes (4.0%-8.325%)

Margin loans

Yes (2.0%-3.5%)

Account types

Investment accounts, retirement accounts, custodial accounts, trusts, small business accounts

Account types

Investment accounts, retirement accounts, custodial accounts, trusts

What is M1 Finance?

M1 Finance is more than just a brokerage account. The investment platform is a cross between an online broker and a robo-advisor. M1 Finance offers an easy-to-use app that lets you build customizable portfolios (called β€œpies.”) The pie portfolio model allows you to easily add a stock or an exchange-traded fund (ETF) as a piece of the pie. You choose what percentage to invest in each asset. And, if you want, you can have many pies.

If you don’t want to “bake” your own pies, M1 Finance comes with over 80 premade options, which are called “expert pies.” Two of them are socially responsible pies.

In addition, M1 Finance offers fractional shares (when you buy less than the entire share) and lets you borrow to invest.

Despite its flexibility, M1 Finance is a platform for investing, not for day trading. For example, you can only buy and sell during the daily trading window (two windows for M1 Plus members.)

Brian Barnes started Chicago-based M1 Finance in 2015. His startup has recently surpassed $4.5 billion in assets under management, raising over $300 million from investors like Softbank.

πŸ”” Read the full review of M1 Finance.

What is Fidelity?

Fidelity is a very established broker and mutual fund provider. With Fidelity, you can buy commission-free stocks and ETFs. Mutual funds, options, bonds, CDs, and precious metals are also supported, though fees may apply. And, unlike TD Ameritrade or E*TRADE, Fidelity lets you buy fractional shares.

Fidelity is perhaps best-known for its mutual funds: many of them are offered without a transaction fee, and some even have no expense ratio.

The Fidelity app provides research, news, and access to a learning center. You can trade the same things you can on the desktop, except for bonds. However, Fidelity doesn’t offer cryptos or futures.

Fidelity also has a robo-advisor, Fidelity Go, that will create a balanced portfolio of mutual funds for you for a fee.

M1 Finance vs. Fidelity: Account types

M1 Finance and Fidelity support the following account types:

  • Individual and joint taxable investment accounts
  • Retirement accounts, including traditional, SEP, Roth, and rollover IRAs
  • Custodial (UTMA/UGMA) accounts for kids (must be an M1 Plus member)
  • Trusts

In addition, Fidelity supports:

  • Inherited IRAs
  • Solo 401(k)
  • Health savings accounts
  • Accounts for small businesses

πŸ’° The winner: Fidelity.

M1 Finance vs. Fidelity: Minimum investment

You need $100 to open an account with M1 Finance ($500 for retirement accounts.)

Fidelity doesn’t have a minimum to open an account or invest with Fidelity Go.

πŸ’° The winner: Fidelity.

M1 Finance vs. Fidelity: Commissions and fees

Both M1 Finance and Fidelity offer free trading in stocks and ETFs, though there are nuances for additional services.

M1 Plus Membership. For $125 a year, you get perks like an extra trading window and discounted borrow rates. Plus accounts also let you set up Smart Transfers, a service that sweeps excess cash into your investing account. As a Plus member, you also earn interest and get cash back on your M1 Spend account.

Fidelity doesn’t charge for trading stocks or ETFs, but there is a $0.65 per contract fee for option contracts. Additional fees apply for broker-assisted trades, some mutual funds ($49.95), and bonds or CDs ($1 per bond or CD).

Fidelity Go. Fidelity’s robo-advisor will charge you management fees for building a portfolio for you. Balances between $10,000 and $50,000 incur a $3 monthly fee. The fee is 0.35% of your assets each year once your investments exceed $50,000. There is no fee for a portfolio under $10,000.

πŸ’° The winner: M1 Finance. Neither Fidelity nor M1 Finance charges to trade stocks and ETFs, but we like that building M1 Finance pies is also free, while Fidelity Go is not.

M1 Finance vs. Fidelity: User interface

Although both Fidelity and M1 Finance apps have very high user ratings, Fidelity’s interface can be more intimidating for beginners. In fact, Fidelity has two platforms, Fidelity.com and Active Trader Pro, created for more advanced investors. Fidelity.com desktop experience still appears very out of date, however.

πŸ’° The winner: Tie. Beginner investors will prefer M1 Finance, but experienced investors will benefit from Active Trader Pro’s customization options.

M1 Finance vs. Fidelity: Available investments

M1 Finance lets you buy over 6,200 stocks and ETFs, including fractional shares. Fractional shares allow you to buy a piece of a share if buying the entire thing is more than you would like to spend.

Fidelity has more securities you can invest in, such as:

  • Stocks and ETFs (including fractional shares and international stocks)
  • Over 10,000 mutual funds from Fidelity and other companies, including many funds with a zero expense ratio
  • Options
  • Bonds and CDs
  • Precious metals like gold and silver

However, Fidelity doesn’t support futures, forex, or crypto. If you want to invest in crypto, you can try Public or SoFi.

πŸ’° The winner: Fidelity (because it has a wider investment selection.) If you want to trade anything beyond stocks and ETFs, M1 Finance is not the best choice for you.

M1 Finance vs. Fidelity: Margin lending

M1 Finance gives margin loans to customers with over $5,000 in their investment account. Anyone with a $5,000 account balance is automatically pre-approved. The platform charges 3.5% interest (2% for M1 Plus members), and you can borrow up to 35% of the value of your account.

πŸ”” Read the review of M1 Borrow.

With Fidelity, you need to apply for a margin loan if you want one. And Fidelity’s interest rates are much higher, especially if you don’t borrow a lot. Here are the rates:

  • > $1 million: 4.0%
  • $500,000–$999,999: 4.25%
  • $250,000–$499,999: 6.575%
  • $100,000–$249,999: 6.825%
  • $50,000–$99,999: 6.875%
  • $25,000–$49,999: 7.825%
  • < $25,000: 8.325%

πŸ’° The winner: M1 Finance, which offers lower borrow rates.

M1 Finance vs. Fidelity: Robo-Advisor

M1 Finance offers robo-advisor- like features. They let you build your own portfolios and rebalance them if one piece of the pie outperforms. If you don’t know where to begin, they have a “pre-baked” selection of over 80 expert pies. M1 Finance won’t charge you for portfolio construction.

Although Fidelity doesn’t target investors who need a lot of hand-holding, they have Fidelity Go, a robo-advisor that will pick mutual funds for you. Although there is no fee for balances under $10,000, there is a $3/month fee for investments between $10,000 and $49,999, and a 0.35% annual management fee for portfolios over $50,000.

πŸ’° The winner: M1 Finance. Although M1 Finance doesn’t tell you which pie to go with, it is free and offers a wider portfolio selection. On the other hand, Fidelity’s robo-advisor will charge you if you invest over $9,999.

M1 Finance vs. Fidelity: Trading windows

M1 Finance limits you to one trading window per day (two if you are an M1 Plus customer. ) This is done to encourage long-term investing and discourage day trading.

Fidelity doesn’t have any windows – you can invest when the market is open (9.30 am-4 pm EST.)

πŸ’° The winner: It depends. M1 Finance doesn’t target day traders, so you should not be opening an account there to day trade.

M1 Finance vs. Fidelity: Checking accounts

M1 Spend. M1 Spend is a free bank account that comes with a Visa debit card. M1 Plus members get 1% APY on their money and 1% cash back on qualifying purchases. The account is FDIC-insured for up to $250,000. M1 Plus members get reimbursed for up to four ATM transactions each month.

Available to M1 Plus members only, the Owner’s Rewards card lets you earn 2.5% – 10% cash back when you shop with some of the big brands in your portfolio, including Apple, Amazon, and Starbucks. You can reinvest your rewards in your portfolio.

Fidelity Cash Management Account. This FDIC-insured account comes with no monthly fees and no minimum balances. You get a debit card with all U.S. ATM fees reimbursed. But, Fidelity only pays a 0.01% APY on your cash.

πŸ’° The winner: Tie. We like that M1 Finance pays a real APY on your uninvested cash, though you need to be an M1 Plus member to benefit. However, Fidelity will reimburse all of your ATM fees, whereas M1 Finance caps ATM fee reimbursements at four per month even for M1 Plus members.

πŸ’° The Overall Winner

  • There is no clear winner: the two platforms have different end goals in mind
  • Best for long-term investors and margin loans: M1 Finance. M1 Finance targets investors who want to see their wealth growth over time, not day traders. You can add stocks or funds to a portfolio and rebalance that portfolio if needed. With one or two daily trading windows, M1 Finance wants to discourage short-term speculation. Besides, M1 Finance offers cheap margin loans
  • Best for active traders, mutual fund investors: Fidelity. Fidelity is an established brokerage that lets you trade more things than M1 Finance (for example, precious metals and mutual funds), when the market is open. However, the user interface can intimidate some beginners

πŸ”” Want to compare more options? Check out this list of the top 10 investing apps.

Compare:

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