The clear — and, in some cases, stark — differences between M1 Finance vs. TD Ameritrade remind would-be investors that not all online stock brokers are alike.
That’s not to say one is clearly better than the other. Quite the opposite.
Both M1 Finance and TD Ameritrade appeal to a wide range of investors, and both have important similarities that shouldn’t be overlooked, such as commission-free trading, 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.
M1 Finance vs. TD Ameritrade: Overview
M1 Finance and TD Ameritrade both feature low- or no-cost automated and self-directed investing platforms with associated deposit 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.
M1 Finance vs. TD Ameritrade: Bonus Offers
M1 Finance’s generous account opening bonus ranks among the best brokerage account promotions available right now.
M1 Finance’s Account Opening Bonus
Open a new M1 Finance account and initiate an account transfer within 60 days to earn up to $15,000 in bonus cash. M1 Finance distributes bonuses based on the following transfer thresholds:
- $250 bonus: $100,000 – $249,999.99
- $1,000 bonus: $250,000 – $499,999.99
- $2,000 bonus: $500,000 – $999,999.99
- $4,000 bonus: $1,000,000 – $1,999,999.99
- $10,000 bonus: $2,000,000 – $4,999,999.99
- $15,000 bonus: $5,000,000
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.
M1 Finance vs. TD Ameritrade: Account Types
Both M1 Finance and TD Ameritrade offer 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 savings account (M1 Save), and a portfolio line of credit (M1 Borrow).
M1 Invest
M1 Invest offers self-directed 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 more 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.” In this way, M1 Finance improves upon the semi-customized portfolio options offered by robo-advisors.
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. Fractional shares are available as well.
M1 Save
M1 Save is the platform’s high-yield savings account that offers 5.00% APY to Plus members, and 1.50% to standard accountholders. The account is FDIC-insured through B2 Bank.
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 a 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 individual stocks, exchange-traded funds (ETFs), mutual funds, bonds and other fixed-income instruments, forex, cryptocurrencies, and futures.
Managed Portfolios
TD Ameritrade offers Personalized Portfolios, which 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.
M1 Finance vs. TD Ameritrade: 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 analogs 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 individual 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.
M1 Finance vs. TD Ameritrade: 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 elements include:
- Up to 10% cash back on spending with an Owner’s Reward card
- 3.5% base interest rate on M1 Borrow draws
- All open M1 Invest trade orders are executed within a single morning trading window
M1 Plus’s value-added benefits include:
- 5.00% yield on M1 savings balance.
- 2% base interest rate on M1 Borrow draws
- M1 Invest transactions are executed in one of two daily trading windows
- Crypto and custodial account access
- Increased cashback rewards on credit card purchases
M1 Finance vs. TD Ameritrade: 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 or TD?
You Should Invest With M1 Finance If:
M1 Finance is a better choice if:
- You Want to Trade Fractional Shares. M1 Finance is among a growing number of brokerages that offer fractional share trading. That’s a big advantage for low-dollar investors.
- 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 choices 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 thousands for new clients able to make qualifying deposits or asset transfers.
