Over the past few years there has a few brokerages that offer free investing for the small retail buyer of stocks. The two I have used so far are Robinhood and M1 finance. While I have used Robinhood since it's release I am very new to M1 finance. Both offer 100% free investing in most equities but they do it a little bit differently. Robinhood is similar to your normal online broker only stripped down where M1 finance uses a system of what they call pies that are basically subfolders of stock in your total account controlled by percentages. Here is what I like about each one:
Robinhood
• You can buy using traditional buy and sell orders for exact pricing. With M1 Finance it does one buy and sell order in the morning and you can't control your buy or sell price.
• Robinhood Gold offers a very reasonable priced margin account to buy using leverage if you desire. I believe M1 has plans for margin accounts in the future.
• You can keep a stock without putting more money into it. M1 Finance sells your stock if you set the fund rate to zero so you either have to keep funding a stock at a rate at least 1% or M1 sells it.
• No minimum to open an account and start trading where M1 Finance requires $100 for your 1st funding.
M1 Finance
• Lets you invest in fractional shares so you buy a very small portion of stock like Google, Amazon, or even Berkshire Hathaway class A if you so desired for little starting capital.
• It can automatically reinvest dividends into your portfolio thanks to fractional share, Robinhood's only option is a cash payment into your account.
• integrates with Mint and Personal Capital where Robinhood does not.
So which one do I use? The answer is both but for different tasks. I use Robinhood for my short term trades. If I want to get into a stock for a day or two Robinhood is my choice. I just started using M1 for my longer term dividend personal stock pics in a new experiment. The compounding effect of dividend reinvestment and the use of Personal Capital is a must for me as it keeps track of all my accounts. Its nice to have them all automatically tracked and to see how much my total monthly dividend payment average is.
The main disadvantage of the two is the lack of tools, charts, and info like you get with an Etrade or TD Ameritrade. I use my Etrade for the research as they offer superior information compared to the other two.
I still have my Etrade and Vanguard accounts as my main brokerages and I am not ready to transfer them over anytime soon but they sure are great vehicles for a new investor to get started with out all the fees.