M1 Finance vs. Betterment: Which One is Right For You?

Both M1 Finance and Betterment are leaders in the growing low-cost investing space. Each platform allows investors to grow their wealth without massive fees.

If that is the case, the question becomes: which one is best?

It can seem like a complex decision. However, a few basic questions can help you decide.

M1 Finance and Betterment are both excellent, but which one you should use depends upon your needs.

Each specializes in a different type of investing:

In this post, we’ll cover how each tool is better for specific types of investing. This should help you understand how they differ and which one is better for your needs.

M1 Finance Overview: DIY Investing

M1 Finance is a flexible investing platform that allows you to build your own portfolio – or choose from a long list of pre-built portfolios. Its pie-based approach makes it easy to build your portfolio and even easier to rebalance.

There are no trade commissions, no minimum balance, and no monthly fee. A basic account is also free to use, though M1 Plus has a $125/year fee.

M1 Finance does have an initial minimum deposit of $100, but there are no minimums after that.

M1 allows users to add stocks, bonds, or even ETFs to their investment pie. All of the usual stocks, bonds, and ETFs are available on the platform.

M1 Finance At-a-Glance:


Free or $125/year (M1 Plus)

Minimum Balance


Account Types

IRA, Rollover IRA, Brokerage

Best For

DIY Investors

While M1 Finance allows users to create customizable portfolios, it is best for buy-and-hold investors.

That is because a basic account only has one trade window (M1 Plus has two). That means that if you put in any kind of order, whether buy or sell, it won’t go through until the next trade window.

M1 Finance is best for buy-and-hold investors who prefer to build their own portfolio from scratch.

M1 Finance Pros

  • Pie-based investing: This investment style makes it easy to build custom portfolios and keep each investment in line with its target. You can add or remove slices in the fly, then quickly balance your portfolio with a few clicks.
  • Low fees: There are no platform fees at all for a basic account. If you opt for M1 Plus, there is a $125/year fee.
  • Easy rebalancing: M1 has one-click rebalancing for its portfolios. In addition, it uses fractional shares to evenly distribute money deposited.

M1 Finance Cons

  • No tax-loss harvesting: One of Betterment’s flagship features, tax-loss harvesting, helps avoid capital gains by selling securities at a loss. However, this strategy isn’t very noticeable when you’re first starting out.
  • No financial advisors available: Although M1 is best-suited to intermediate and advanced investors who don’t need a lot of hand-holding, it can be nice to have that option if you need it. Unfortunately, M1 doesn’t offer access to advisors.

Betterment Overview: Passive Investing

Betterment was the first robo-advisor on the market and remains one of the best.

Betterment launched in 2008 and was officially available to the public starting in 2010. Since then, it has changed the investment landscape.


What is a Robo-Advisor?

A robo-advisor is an tool that mostly or entirely manages investments using an algorithm.

Before robo-advisors, some passive DIY investors would put all their money in a total-market index fund and call it a day.

The problem? That leaves out several segments, including growth funds, bonds, and international stocks.

Sure, DIY investors could invest in those, too, but then rebalancing becomes a necessity. With a robo-advisor like Betterment, all of that is done for you.

Betterment At-a-Glance:


0.25% (Digital), 0.40% (Premium)

Minimum Balance


Account Types

IRA, Brokerage, Cash, Checking

Best For

Passive Investors

Initially, it might seem that the biggest difference between Betterment and M1 Finance is that Betterment doesn’t have a free option. While that is true, remember that Betterment requires no ongoing maintenance.

While M1 Finance can be mostly automated, you’ll still have to check in quarterly, at the very least.

But Betterment automatically rebalances investments, meaning you can realistically set it up so you never even have to check it.

Betterment Pros

  • Passive investing: One of the best things about Betterment is that it’s passive. That means you can completely put your investing strategy on autopilot.
  • Pre-selected investments: Depending on who you ask, this can be either a pro or a con. But if you’re new to investing and just want to grow your money, this is a nice feature. You may be able to get a slightly better return if you hand-pick your investments, but you can’t go wrong with Betterment’s portfolios.
  • Tax-loss harvesting: Still one of Betterment’s best features, tax-loss harvesting allows you to save money on taxes. And it’s all handled by the algorithm.

Betterment Cons

  • No custom portfolios: Again, this can be a pro or a con depending on who you ask. However, Betterment doesn’t let you select your own investments. You can only choose what percentage of stocks vs. bonds your portfolio should contain.
  • Management fees: You get a whole lot of value from Betterment’s 0.25% management fee. But if you want the best return possible, you may do slightly better with a DIY portfolio.

M1 Finance vs. Betterment: Comparison


0.25% management fee

Minimum Investment



$0 or $125/year (M1 Plus)

Minimum Investment


  • M1 Finance: DIY investing.
  • Betterment: Passive investing.

As you can see, the biggest difference between M1 Finance and Betterment is the investing style.

M1 Finance is best for those who want to build a custom portfolio that is easy to manage. There are no commission fees and a basic account has no monthly or annual costs, either. However, M1 doesn’t offer financial advisors or tax-loss harvesting.

Betterment is best for those who just want to invest without having to worry about maintaining their portfolio at all. In addition, Betterment investors don’t pick the specific stock/bonds in their portfolios, making it ideal for beginner investors. Betterment advisors who want help from a financial advisors for a cost of $199 or $299.

Account Types

  • M1 Finance: IRA, rollover IRA, brokerage, checking
  • Betterment: IRA, rollover IRA, brokerage, cash, checking

M1 Finance offers most of the basic types of accounts. The one thing M1 Finance has that Betterment doesn’t is a kind of loan capability called M1 Borrow. However, it doesn’t work quite like your typical loan.

Instead, it allows you to borrow up to 35% of your portfolio’s value. For that privilege, you’re charged a 3.5% base interest rate, or 2% for M1 Plus members.

Betterment offers a a full range of accounts. The main difference from M1 is that Betterment offers a high-yield cash account, something M1 currently doesn’t offer.

Betterment’s cash account has a high yield, giving you a place to store cash you don’t want to invest in the market. It brings things full circle by offering an online checking account.


  • M1 Finance: No fee for a basic account; $125/year for M1 Plus
  • Betterment: 0.25% (Digital), 0.40% (Premium)

As you can see, M1 Finance and Betterment have different fee structures.

M1 Finance offers a premium service with an annual fee. If you only have a basic account, you can use M1 without incurring any service fees at all – something that isn’t possible with Betterment.

Betterment charges all its users a small percentage. That percentage is 0.25% for Digital members or 0.40% for Premium members.

Most investors should start with Digital. This plan gives you all of Betterment’s flagship functionality.

The key difference with Premium is that it gives you access to financial advisors, but it requires a $100,000 minimum balance.

And that is not to mention the higher fee. Generally speaking, only investors with sizable portfolios will benefit from Betterment’s Premium plan. For everyone else, you will pay the 0.25% management fee.

Investment Classes

  • M1 Finance: Stocks, Bonds, ETFs
  • Betterment: ETFs

This is the area where M1 has a big advantage. When you invest with Betterment, your money automatically goes into its selection of ETFs.

On the other hand, M1 Finance is more of a sandbox and allows investors to hand-pick individual stocks, bonds, and ETFs. It also has pre-built portfolios called expert pies.

M1’s expert pies include portfolios for different risk levels, target-date funds, responsible investing, and more.

If you really want flexibility in your portfolio, M1 is the clear winner.

Minimum Balances

  • M1 Finance: IRA, rollover IRA, brokerage
  • Betterment: IRA, rollover IRA, brokerage, cash, checking

Neither M1 Finance nor Betterment require a minimum balance. That makes it easy to get started.

The only caveat here is that M1 Finance does require an initial deposit of $100. However, after that $100, there are no minimums of any kind.

M1 Finance vs. Betterment: Which One is Right For You?

M1 Finance and Betterment are both great ways to invest. Both have fee structures that won’t eat away at your returns and don’t require minimum balances.

That being said, they are best for different investing styles.

  • M1 Finance is ideal for DIY investors who want the lowest fees possible and want to be able to manage their own portfolio.
  • Betterment is ideal for those who simply want their money to grow without all the work of managing a portfolio. Its automatic tax-loss harvesting and access to financial advisors are also helpful.

While both platforms have their strengths, deciding which one is best for you is about determining which style of investing you prefer.

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