Stock brokerage firms have been undergoing a quiet revolution over the past few years. In the early days of the stock market, you’d scour the papers, looking at the ticker prices, and call up your broker to make an order. The broker would execute the trade on your behalf and charge a hefty commission. Then E-Trade came along and stunned the world in 1996 with a commission of $14.95. To be able to trade stocks for that little money was unheard of previously. Of course, as time went on, commissions got lower and lower. Now, many firms charge $0 on trades. Two of the best $0 commission platforms, M1 Finance and Webull, are winning the hearts and minds of traders in the US. We decided to put them to the test and see who has the better platform if it’s M1 Finance vs Webull.
Why Use a $0 Trading Platform?
Before getting into M1 Finance vs Webull, it’s imperative to understand the benefits of using one of these $0 commission platforms. Being able to trade for free has a lot of benefits. Some of them are obvious (it saves money!), while others are slightly more subtle.
Imagine, for a moment, that you’re looking to buy and hold some stocks. You put $1,000 per month into your stock account. Previously, with trades that cost money, every set of shares you purchased would have come with a trading fee. So, if you invest your $1,000 in the S&P 500, that’s one $4.95 fee, which isn’t too bad. But, now, let’s say you don’t want to invest in the indexes. Tech is doing well, so you want to invest in Apple, Google, Microsoft, and Facebook.
Now, to buy $250 of each stock every month costs you $19.80 in fees. After one year, out of $12,000, only $11,762.40 goes to purchasing shares. The other $237.6 goes to commissions. If you want to diversify your portfolio more, you’ll spend that much more on commissions.
Then, if you’re looking to trade stocks frequently – like daily or even intraday trades – these commissions start to make it challenging to execute a winning strategy unless you have significant amounts of money invested.
Not paying a commission isn’t a matter of just avoiding a few dollars – it, quite literally, opens up a world of trading that the average person couldn’t do just a few years ago.
M1 Finance vs Webull: The Rise of App Trading
As mentioned earlier, two of the most popular online trading platforms are M1 Finance and Webull. Founded in 2015 and 2017, respectively, these platforms aim to modernize trading by making it much more app-focused. Gone are the days of clunky trade interfaces that only seasoned professionals know how to use. Both these apps are sleek, powerful, and permit trading all on your mobile device. Although these two apps aim to make trading more accessible to the public, they both take very different approaches. When looking at M1 Finance vs Webull, it’s essential to analyze the various aspects that might be important to traders. Here are the top six areas, including which app excels most in the area
Both of these online platforms offer free trading capabilities on stocks and ETFs. Webull beats M1 Finance’s offering, though, by providing commission-free trades on options as well. If you’re into options, that makes Webull one of the best platforms out there!
M1 Finance has trading windows. When you execute a trade with a conventional stock brokerage site, the brokerage routes the order to the appropriate network. As long as there is a willing buyer, the transaction executes instantaneously (assuming it’s a market order, not a limit one). However, with M1 Finance, the order will queue up and complete at a pre-defined time. At the base level, this time happens once per day. If you’re in the plus tier, you can have these orders execute at three designated times per day. Of course, the market can move significantly between the time you enter the trade to when it completes.
Webull operates like a conventional brokerage. Once you submit the order, it tries to fulfill it as soon as possible. This style is better than M1 Finance’s approach.
Advantage: Webull – there are just so many more choices. For example, the trading windows make it near impossible to day-trade with M1 Finance.
Both Webull and M1 Finance offer your standard individual taxable accounts using cash and margin. Webull also supports personal traditional, Roth, or rollover IRAs. M1 Finance supports those, as well.
M1 Finance supports quite a few more account types. For starters, they support joint taxable accounts. So, if you’re married, for example, and want to put your spouse’s name on the account, M1 Finance supports that. M1 Finance also supports SEP IRAs and trust accounts. So if you’re a small business that takes advantage of the excellent tax benefits that SEP plans offer, M1 Finance is the only platform that can do that.
Trust accounts are another benefit that M1 Finance has that Webull does not. So, if you want to invest some money for your child, Webull isn’t the best option.
Additionally, Webull only allows one IRA per person, and you must have an individual taxable account open as well. You can’t just have the IRA, and you can’t have multiple IRAs
Advantage: M1 Finance – they offer more account types. More importantly, they provide accounts, like SEP, that Webull does not. If you’re looking for one of those accounts, you cannot use Webull.
Both platforms have a sleek interface, so you won’t have strained eyesight using either of them. However, while they may both have a quality appearance, that doesn’t mean that they are functionally similar.
Webull‘s platform has tools to analyze stocks more in-depth. You can see share prices, lot sizes, analyze chart prices and volumes, and more, all from within their mobile and desktop apps. It’s quite remarkable how well-designed the interface is. It’s clean, intuitive, and powerful. There’s nothing else quite like it on the market.
M1 Finance also has a sleek interface, but it’s not as in-depth as Webull. M1 Finance is more about the bigger financial picture than just trading. The way the app looks reflects this focus. M1 Finance’s app looks more like a credit score app than a trading app.
That’s not to say that M1’s platform is terrible – far from it – just that if you want the in-depth trading information that would be valuable to day-traders, for example, you won’t find it in M1!
Advantage: Webull – they have more data and a cleaner interface. Their app works on practically every platform, from desktop computers (Windows, Mac, and Linux) to mobile devices (iPhone and Android). No matter what you use, Webull supports it!
Part of investing involves creating, managing, and periodically rebalancing your portfolio. This area is where M1 Finance shines. They have over 100 expert portfolios from which you can choose. Instead of picking the companies yourself that you want to invest in, you can select a “tech” or “clean energy” portfolio that an expert built. Hence, it is in the sector you want but still represents a diverse set of underlying assets.
Of course, if you don’t like any of the expert portfolios, you can build your own as well. M1 Finance makes it easy to pick from over 6,000 stocks to build your portfolio. Plus, the fact that it supports fractional shares means that you can say “invest $1,000 in Apple,” and it will buy the precise number of shares necessary to hit that dollar value. For example, let’s say that Apple stock was $300 at the time of purchase. The system would buy three full shares and $100/$300 = 0.3333 fractional shares of Apple.
M1 Finance offers dividend reinvestment and portfolio rebalancing tools. For people looking to buy-and-hold for the long term, these tools are invaluable to ensure that the investor gets the most out of every dollar.
By contrast, Webull is all about picking stocks. They do not offer automatic dividend reinvestment or picking your portfolio. They also don’t provide portfolio rebalancing tools. What you get with Webull is a fantastic stock trading experience, but they don’t offer the extras that some traders like to have. Even though you can open a retirement account with Webull, M1’s comprehensive buy-and-hold tooling makes it an ideal place for an IRA.
Advantage: M1 Finance has a better approach to portfolio management. If you’re looking to buy-and-hold for the long-term, M1 Finance has the ideal tooling for that!
Data is the backbone of any stock trading strategy. For day traders, having access to top-quality, in-depth information is of the utmost importance. Without comprehensive, error-free data, any stock trading strategy will almost always fail.
The information you get when signing up for a Webull account is significant. You’ll see the actual costs, the lot sizes, and more, all from a very intuitive dashboard. Plus, you’ll get this data across a wider variety of asset types, including options.
By contrast, the information someone who registers with M1 Finance will get is minimal compared with what Webull offers.
Advantage: Webull – they have significantly better and more in-depth data than M1 Finance. If you’re looking to buy a few shares here and there, M1’s data is sufficient. But, if you’re looking to trade frequently, you’ll appreciate the depth of data that Webull provides.
The margin rates for both platforms are excellent. For M1 Finance, investors with at least $10,000 invested can access a 3.5% (2% at the plus level) line of credit. That credit line uses your brokerage assets as collateral.
By contrast, Webull offers a more standard margin account with tiered rates. At the lowest end ($0-$25,000), the interest rate is 6.99% at this writing time. However, at the highest end (above $3 million), rates drop to 3.99%.
Advantage M1 Finance has a better margin/credit strategy. While Webull’s offerings are competitive, they don’t quite match what M1 Finance is doing in this space.
M1 Finance vs Webull: The Verdict
After analyzing each of these two platforms’ aspects, it’s impossible to say which one is definitively better. The reason is that, even though they are both $0 commission platforms, they’re targeting two very different audiences.
M1 Finance is not looking to be a platform for day traders. It’s looking to be the best platform for investors – people with families and jobs who want to put aside some money for their kid’s college fund. The developers have expertly tailored every aspect of the investing experience for this type of person. Low margin rates, a checking account, low-cost borrowing, and, most importantly, a diverse set of pre-made portfolios all make M1 Finance perfect for the buy-and-hold, set-it-and-forget-it types.
For this type of investor, M1 Finance’s shortcomings seem mostly irrelevant. Can’t see the lot size and depth? It doesn’t matter if you’re planning on investing for 5-10 years! Can you only buy shares once or twice a day? Again, if you’re holding these stocks, the variation in pricing should be minimal relative to what will happen over a decade.
On the other hand, if you’re looking to trade more frequently, want to buy or sell options or other financial securities, or you want to trade with play money to test a strategy, Webull is the broker for you. They have numerous advanced tools that will get you up and running with $0 commissions in no time.
Final Verdict: Neither platform is better because they both target very different audiences. M1 Finance targets the buy-and-hold types, whereas Webull’s target market contains the more active traders. Both platforms, though, are amongst the very best of the best when it comes to quality, dependability, and design.
Therefore, decide the type of trades you’ll be doing in this account. If you envision yourself being an active trader, consider creating a Webull account. However, if you think you’ll be more passive and want a “set-it-and-forget-it” type of account, please consider making an M1 Finance for your new investment account.