M1 Finance vs. Acorns: Which is Better for Automated Investing?

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M1 Finance vs. Acorns

Choosing an investing or trading platform can be a challenge because there are a lot of options to consider. Two of the leading platforms that help to automate your investing are M1 Finance and Acorns. But, which is better?

In this article, we will make a direct M1 Finance vs. Acorns comparison to help you make an informed decision.

M1 Finance vs. Acorns Summary

The main difference between M1 Finance and Acorns is that M1 Finance gives the investor far more control. It allows you to automate investing, but you can choose the investments or portfolio allocations. Acorns is a simple platform that will invest on your behalf, but you have much less control and fewer options.

M1 Finance is better suited for self-directed investors who have some knowledge or experience. Acorns is more suitable for those with no investing experience who are not concerned about having control over the specific investments in their portfolio.

M1 Finance Overview

M1 Finance

M1 Finance is a self-described “Finance Super App” with an aim to become a one-stop-shop for finance. The primary focus of this platform is to assist investors with products in three key areas: investing, spending, and borrowing.

The M1 Finance philosophy is to make investing accessible for an average person that wants to meet their goals with low-cost and long-term investment strategies. The company is tailored to meet this purpose and it’s free to set up a basic account.

Upgrading to the M1 Plus premium account costs $125 per year and it offers some extra perks that make the package worthwhile. Brokerage account investments have a $100 minimum and this rises to a $500 minimum for the retirement accounts.

Acorns Overview  


Acorns is a robo-advisor that was launched in 2014 by Walter and Jeff Cruttenden. The goal of the company is to make investing accessible for everyone, and over the years they have added checking and retirement accounts. Acorns helps the user to invest their spare change from purchases into diversified portfolios with ETFs.

In 2020, Acorns had $3 billion in assets under management, and this rose to $4.7 billion in 2021. Acorns has 9.5 million regular users, there are no minimum balances, and the ability to invest spare change makes it very beginner-friendly.

Key Features

Although both of these platforms allow you to automate your investing, they go about it in very different ways. Let’s look at the key features of each platform so you can see which one aligns with your needs.

Key Features of M1 Finance

There are several key M1 Finance features that many active and passive investors love.

Portfolio Level DRIP

This is an auto-investing feature that you can turn off if you wish, but it will reinvest your dividends and allow you to earn compound interest. Any dividends you earn in your portfolio will be directed toward your cash balance. When the balance exceeds $25, it’s automatically invested across the entirety of your portfolio.

Your money is always working for you and you don’t need to worry about inefficiency in your portfolio. M1 Finance has a 30-minute video tutorial on how this process works and it’s easy to get the system running.

Fractional Shares

M1 Finance will ensure that all your money is put to work in order to generate profitable returns to build your portfolio. It’s possible to purchase fractions of shares or stocks or ETFs that are traded on the platform for as little as 1/10,000th of a share.

This is a handy feature if you want to purchase expensive stocks such as Amazon that can trade at $3,000 per share or more. Some other apps and platforms will only allow you to purchase whole shares which will increase the difficulty of diversification.

Periodic smart rebalancing is performed to make essential adjustments to maintain performance. The purpose is to keep your investments as close to your target portfolio allocations as possible. Without lifting a finger you can rebalance your portfolio at any time.

Expert Portfolios

Any investor on the M1 Finance platform has access to dozens of expert “pies” including target-date funds (TDFs), which are a great fit for retirement planning. Many robo advisors charge fees for their pre-built portfolios, but M1 is one of the few platforms that charges no management fees. This is a very attractive feature for a casual investor or people new to the investing world.

M1 Finance Tax Minimization

M1 offers a tax minimization feature that helps investors to minimize their taxes when they invest using the M1 platform. Sales are prioritized initially with the sales of capital losses that will offset the capital gains. Then the lots that have long-term gains are sold and the selling lots with short-term gains are sold last.

These strategies work very differently from a typical full-scale tax-loss harvesting approach. The evaluation process of tax-loss harvesting where the built-in losses in the portfolio are discovered to make savings is complex. But, the M1 platform tax minimization process simply ensures that you don’t sell anything that will generate a large tax bill later, and this is easier to understand.

M1 Spend

M1 offers a checking account which is known as M1 Spend and this is FDIC insured for extra peace of mind. Users can pay their bills, spend money with a debit card, and make deposits with this service. M1 Plus members can even receive rewards when they use their debit cards!

M1 Spend checking account funds are immediately available for investing and there is no three-day waiting period for the ACH transfer. The paycheck will be received up to two days earlier when you set up the M1 Spend direct deposit.

M1 Credit Card

The “Owner’s Rewards Card” is the official moniker for the M1 credit card that has been added as a recent feature to the platform. This allows you to make regular purchases and earn up to 10% cashback.

At the time of writing, there are 70+ participating companies across three tiers at 2.5%, 5%, and 10% cashback respectively. You’ll earn these levels of cashback when you purchase from these companies if you hold at least a fractional share of their stock in your M1 portfolio.

This credit card offers 1.5% cashback on every other purchase made outside these three tiers. The card can be set up to invest the cash back rewards directly into your pies, which is a nice feature.

The Owner’s Reward Card is available to every M1 Finance member (application required). If you’re an M1 Plus account member, the company will waive the $95 annual membership fee.

M1 Borrow

When your M1 Finance account has met the minimum $10,000 funding, you have access to the M1 Borrow feature. This allows you to borrow from your portfolio at competitive rates, which can be useful if you need a line of credit to cover unforeseen expenses. The interest rates can be as low as 2%, which makes this an economical alternative to a credit card or personal loan.

M1 can offer lower interest rates because you are essentially borrowing from yourself and your investment account is the collateral. That means if you default on the payment, you’ll lose some of the assets in your investment portfolio.

There are other helpful features, such as flexible repayments, tax deductibility on loan repayments, and more.

M1 Plus

M1 Plus is the premium version of a standard M1 account with extra benefits and features. The interest rates on funds held in your M1 Spend account are higher, which means that your cash is always working harder.

An extra cashback bonus of 1% is applied to all debit card purchases and this is credited directly to your M1 account.

M1 Plus users get a second trading window for the afternoon, which allows some extra flexibility when making investment decisions. M1 Plus users also get a lower M1 Borrow interest rate and this perk is well worth the cost of an upgrade.

If you’re interested in these features, you can upgrade to M1 Plus with an annual $125 fee.

Key Features of Acorns

Acorns is a popular and simple-to-use robo investing app with features that investors enjoy. They are:

5 Portfolio Options

Acorns has five different risk tolerance-based portfolio options to choose from. They are long-term, short-term, children, general, and major purchase. Simply select the option and then you are prompted to select one of five different investment strategies. They are conservative, moderately conservative, moderate, moderately aggressive, and aggressive. An aggressive portfolio will increase the risks and potential rewards, and a conservative strategy will reduce risk and also reduce potential gains.

The Acorns app has no individual stocks or ETFs and you need to pick one of these portfolio options. This can be seen as an advantage for new or casual investors and a disadvantage for serious investors that may want more control over their portfolios. But, it’s important to mention that these five portfolio options were developed with input from Nobel Laureate Henry Markowitz.

Acorns Early

Many investors with kids want to open a custodial investment account, and this is possible with Acorns Early. It takes less than three minutes to set up the account with no extra costs and you can work with a monthly or recurring weekly deposit.

This sets up an investing foundation for your kids and they are set up as UTMA/UGTA accounts so they’re not restricted. After they reach the age of majority, the child can easily transfer their Acorns account to continue their investing journey. This feature is not typically found in other robo investing apps and it certainly differentiates Acorns from its competitors.

Acorns Later

Investing and saving for retirement presents a different set of challenges, and Acorns Later offers a lot of features for a monthly fee of $3. Acorns Later will recommend a portfolio and IRA to meet your unique investment objectives. You can choose from a SEP IRA, Roth IRA, and Traditional IRA as an investment vehicle and take advantage of the tax breaks related to those account types.

Acorns Spend

This feature provides you with a metal debit card and checking account you can use to make your financial life simpler. All Acorns-related activity can be channeled through Acorns Spend, so you won’t need a separate investing and checking account.

Acorns Spend allows you to set up a direct deposit, use more than 55,000 ATMs globally, and they don’t charge any fees. There’s also a built-in feature known as Smart Deposit which allows you to pay yourself a portion of your income by investing it automatically.

Acorns Found Money

Shopping with one of the 350+ Acorns Found Money partners using an Acorns linked card will allow you to earn a cash bonus that can be applied to your investment account. There are many partner companies, including Apple, Walmart, and more. The best way to use this feature is in tandem with your rewards debit and credit cards. For example: you have a card that earns 5% with Walmart, you get an extra 5% with Found Money and this gives you a 10% bonus to purchase items.

Account Types 

Acorns offers taxable accounts, Traditional IRAs, SEP IRAs, and Roth IRAs. But, the IRAs are only available at the minimum mid-grade Acorns Plus plan, which costs $2 per month.

M1 Finance offers taxable, joint, Traditional IRAs, Rollover IRAs, Roth IRAs, SEP IRAs, Custodial (M1 Plus), and Trust accounts. These two platforms do not offer Solo 401k, 529, HSA, Non-Profit, and SIMPLE IRA accounts.

Both Acorns and M1 have FDIC-insured bank and checking accounts with a debit card. With the M1 checking account, you can earn interest and they have cashback but this is only available with M1 Plus membership which incurs a $125 annual fee. Acorns has a specific form of cashback in Found Money (detailed above) with the earnings channeled into your Acorns investment account when you shop with partner stores.


The Acorns platform doesn’t offer margin accounts.

The M1 Finance platform has a margin rate of 3.5%.

The M1 Plus account has a margin rate of 2%.

The M1 Plus accounts incur a $125 annual membership fee that gets you access to the lower 2% margin rate and the afternoon trading window. The M1 margin loan can be used to leverage your portfolio, major purchases, unexpected expenses, refinancing, and anything else you need.

Investment Products

Acorns has a limited investment product range. This is intentional. There are only five pre-built portfolio choices to keep things simple: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive. These are low-cost ETFs developed with input from Harry Markowitz, a well-known expert on modern portfolio theory.

No individual stocks are offered through Acorns. This is ideal if you want a hands-off approach with automatic investing and rebalancing.

M1 Finance offers more control and options within your portfolio with a wider range of investment products. With M1 you are offered individual stocks and most ETFs that are traded on all the major exchanges.

The simple pie-based interface allows you to construct your portfolio as you like or you could use “Expert Pies” that have been built by investing experts. This makes M1 an attractive option for new and more experienced investors.

It’s important to note that neither Acorns nor M1 Finance offers crypto, forex, options, or futures.


Let’s take a look at how each platform handles fees:

Acorns Fees

There are several tiers to the Acorns investing platform:

  • Acorns Core investing platform is charged at only $1 per month.
  • Acorns Core, Later and Spend platform costs $3 per month. This allows you to open a checking account to integrate your accounts and you can invest in a retirement account.
  • Acorns Core, Later, Spend and Early accounts are charged at $5 per month. This allows you to open custodial investment accounts for your children at no extra cost.

Acorns has a $5 minimum. You can open an account and get started with a very small investment.

M1 Finance Fees

M1 Finance is free to use, which makes it an attractive option for many investors that don’t want to pay fees, as well as to new investors. The platform is easy to use and the company holds over $2 billion in assets at the time of writing this article.

The standard M1 account requires a deposit of $100 and this rises to $500 to start a retirement account.

If you want to upgrade to M1 Plus to access the additional premium features, this incurs an annual fee of $125.

M1 Finance vs. Acorns Conclusion

M1 Finance has been designed for a long-term investor that wants to follow an active or passive investing approach. As an M1 user, you can set up recurring deposits, but it has been designed for a person that’s already saving money to invest. The platform has better features than Acorns, it’s flexible and there are zero fees unless you want to upgrade to M1 Plus. M1 offers a number of retirement accounts and many portfolio options while Acorns only has five.

The Acorns platform is designed for a new investor that may struggle to set aside the money required for investing. If you’ve ever wanted a set-and-forget approach or you forget to transfer funds, this may be a good fit for you.

Acorns is a simple-to-use app that puts your spare change to work. Acorns also offers a retirement account, but this incurs a fee of $3 per month.

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