I have loved and used Robinhood for a while now. That being said, I totally understand the increasing frustration with its performance. It began last March when volatile markets made Robinhood users unable to trade their stocks. This has continued, and was dramatically shown with the Gamestop debacle. Many traders who made a ton of money were unable to sell and cash it in. This lackluster reliability is coupled with the fact that there is no support line to call. These are very compelling reasons to switch brokerages.
Robinhood was the first to offer no commission stock trades. Since then, it has become the standard. Today, you have tons of free options that don’t break down when the market gets crazy. Let’s take a look at some of the best and what they offer.
I have loved M1 Finance for years. While Robinhood got all the attention, M1 also created an easy to use app with commission free trading. The best part of M1 is that they allow you to construct a portfolio. You pick what you’re interested in, set the percentages you want to divide your money between and the rest is on autopilot. Don’t know what you want to invest in? No worries, they have over 80 portfolio types built buy professional investors that you can use. And yes, you can still buy individual stocks or ETF’s.
Let’s say you wanted to stick to mostly index funds but liked tech stocks. You are interested in VTI (Vanguard Total Market), VGT (Vanguard Tech Index) and would also like to own some Alphabet and Roku stock because you think those are awesome companies. Here’s how you could set that up with M1.
You can also automate transfers every month. So if you transfer $500/ month it will automatically divvy it up into the various percentages. This is a big deal because unlike Robinhood you’re not trying to invest the money you save every month. You’re creating a plan (portfolio) of what you want to buy and automating the process. This keeps you from being tempted to use that $500 for the hot stock everyone’s talking about. Automation is discipline and is easily one of the best ways to build wealth. If you do need to change your portfolio allocations, you can do that anytime.
They also offer a super useful way to borrow money for cheap. You can borrow up to 35% of your stock account at between 2-3.5% interest. You can use this money for anything-not just buying more stock. If you have credit card or high interest debt, you could borrow from M1 at a low interest rate and pay it off. That’s an incredibly useful tool to have access too.
As an extension of this, they also offer a debit card and direct deposit so you can pretty much use M1 like a bank account and have all your money in one place (Robinhood offers a similar feature).
M1 will move your current stock over to their system at no charge. In fact, they will pay you to transfer. The whole process takes only a few minutes and your balance determines how much they will give you. These numbers change all the time so be sure to check. I have seen them offer bonus for accounts starting at $10K.
- $100,000-249,999: Bonus- $250
- $250,000-$499,999: Bonus- $500
- $500,000-$999,999: Bonus – $1000
The cash app is a super useful tool built by square. It essentially replaces a bank and allows you to keep your money and investments all in one place. Direct deposits are also supported and if you set up direct deposits, your paycheck will come two days earlier than usual.
The investing part is very similar to Robinhood, no commissions, fractional shares and no minimum balance.
The unique thing about the cash app is it’s integration of Bitcoin. You can use the app as a bank account but can convert your money to bitcoin instead of USD. This is actually a pretty wild concept because you can essentially be using BTC as your store of wealth and currency.
Cash app is an amazing tool, you can send people money like Venmo, use it as a bank account and invest all in one place. And for those who are bullish on Bitcoin, you can do all of that in Bitcoin. Basically, your bank account can be denominated in BTC instead of USD.
On this list, Vanguard is old school. That being said, they started low cost index fund investing. Almost every index fund is offered by them. Their brokerage is for investors who want to keep it simple. There is no commission for stock or etfs. You can also buy bonds and options with this brokerage. Options have a $1 commission and bonds have a $1/$1000 commission if you are buying them secondary from someone who already owns them.
What they don’t have is a super slick app that presents the information as well as M1, Cash App or Robinhood. This doesn’t make them less competitive from a price perspective and they still have an app but they are basically just a typical brokerage account. Once you’ve gotten used to an intuitive app like Robinhood, this can be a drawback. It will reduce your temptation to trade but that’s because the information is less readily apparent.
Vanguard is the golden standard of buy and hold investing. Before them, index funds investing was not a thing. If you are interested in buying stocks or index funds for the long run and aren’t interested in checking your investments frequently, this is the account for you.
Head to Head Comparison
|Features||Vanguard||Cash App||M1 Finance|
|Price per Stock/ETF trade||0||0||0|
|Price Per option trade||$1||Not Supported||Not Supported|
|Crypto Currency||Not Supported||Bitcoin||Not Supported|
|Debit Card for Cash Account||Not Supported||Yes||Yes with 1% cashback|
|Margin Interest Rate||8.50%||N/A||2-3.5%|
|Portfolio Based Investing||No||No||Yes|
|Direct Deposit to Cash Account||No||Yes||Yes|
Any of these brokerages will be excellent choices and will be more reliable than Robinhood. Which one you choose depends on how you use your Robinhood account.
- If you enjoy investing in stock and etfs and appreciate the easy to read format of Robinhood; M1 finance will give you that experience and is arguable better at it.
- If you like Robinhood because it was low cost, go with Vanguard. They’re industry leader at low cost investing and their reputation is second to none.
- If you enjoy Crypto currency then Cash App is for you. You can seamlessly integrate BTC into your personal finances.
- Bonus: Both M1 and Cash App will allow you to have your entire financial picture (bank account and investments) in one place.
- Low cost index investing
- Commission Free Stock/ETF Trading
- Margin/Bonds/Options Available
- Full Bitcoin Integration
- Commission Free Stock/ETF Trading
- All your money in one app
Portfolio Style Commission Free Stock and ETF Trading
Margin is low interest and can be used for anything
All your money in one app