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What Are the Best Canadian Alternatives to M1 Finance?

What Are the Best Canadian Alternatives to M1 Finance?

American Fintech investment companies have become very popular as of late. With apps like Robinhood, Personal Capital, and now M1 Finance, it has us, Canadian investors, wondering if they have plans to expand to their neighbours to the north? Speaking about M1 Finance specifically, is the investment management platform available in Canada? And if not, what is a comparable Canadian alternative?

What is M1 Finance?

M1 Finance is an investment management platform driven by its highly user-friendly app. It is based out of Chicago and was established in 2015 by Brian Barnes.

Like some other Fintech companies, M1 Finance offers free ETF and stock trading. But where they differ from other companies is their full complement of services and products provided for free. M1 is a combination of discount brokerage, robo-advisor, and high-yield checking account with lower borrowing rates.

With M1 Finance, investors can build their own portfolio or choose from the 80+ pre-designed ones.

How Much does M1 Finance Cost?

M1 Finance has two different plans – Basic and M1 Plus.

Their Basic plan has no annual fee and has the following features:

  • Invest for free in a portfolio of stocks and ETFs
  • Flexible portfolio line of credit with an interest rate of 3.5%
  • M1 Checking Account that comes with a debit card.

It’s important to note that the Basic plan requires a $100 account minimum. And you must have a minimum of $10,000 invested to take advantage of the flexible portfolio line of credit. You can also only make trades at one time of the day.

The M1 Plus plan comes with a few more features and carries a $125 a year price tag. 

  • Afternoon trading window
  • Flexible portfolio line of credit with an interest rate of 2%
  • Earn 1% cashback when you spend and 1% APY when you save in your M1 Checking Account

With all M1 Finance plans, your investments are insured up to $500,000 by the Securities Investor Protection Corporation (SIPC), and the money in your spending accounts (M1 Checking Account) is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.

What Makes M1 Finance Unique?

Besides offering free trading of stocks and ETFs, what sets M1 apart is their visual investment pie charts. You can easily keep track of your portfolio with their app and pie charts. They break down your investments to easily see your asset allocation.

You choose your asset allocations, and your “pie” is automatically rebalanced. Or you can select an “expert pie” based on your risk tolerance, and the app does everything else for you.

Is M1 Finance Available in Canada?

Unfortunately, no, M1 and all its features are not currently available to Canadians. To take advantage of what M1 has to offer, you must be a US citizen or Green Card holder over 18 with a current US mailing address.

M1 has also not given any indication of plans to expand to Canada.

M1 Finance Alternatives in Canada

There is no perfect Canadian alternative to M1 Finance. But depending on what aspects are attractive to you about the app, one of the various Canadian alternatives may be the right fit for you.

Justwealth

If the more than 80 pre-designed portfolios of M1 are attractive to you, Justwealth is an excellent Canadian alternative.

Justwealth is “Canada’s most comprehensive online portfolio management platform.” It has an app and desktop interface, making it easy to use their platform. With Justwealth, you get a Personal Portfolio Manager that will help you build an appropriate portfolio of low-cost ETFs that fits with your goals. They have 70 different custom portfolios to choose from with a low 0.5% portfolio management fee.

One of the benefits of Justwealth over M1 is that Justwealth offers tax-loss harvesting. You can also invest in your registered or taxable accounts.

More Justwealth features:

  • Investment policy statement
  • Rebalancing and ongoing management of your portfolio
  • Tax-efficient investing
  • Canadian and USD accounts

You can also invest with peace of mind because your investments with Justwealth are insured through the Canadian Investor Protection Fund (CIPF) up to $1 million.

Wealthsimple Trade

If free ETF and stock trading are attractive to you, then Wealthsimple Trade is a great Canadian alternative to M1.

Wealthsimple Trade offers commission-free stock and ETF trading through its app. There is no minimum balance to get started, and you can invest in a taxable account, TFSA, or RRSP.

Like Justwealth, your investments with Wealthsimple Tarde are also protected by the CIPF up to $1 million.

Wealthsimple Trade does not have any monthly fees or inactivity fees, but they also don’t have a full desktop interface yet. They are currently in the beta testing mode of a desktop version with some of their users.

With Wealthsimple Trade, you also have the option of signing up for Wealthsimple Cash, a hybrid saving and chequing bank account for your money, similar to the M1 Checking Account.

Questrade and Passiv

If the freedom to pick your investments and have your portfolio automatically rebalance to your preferred asset allocation is attractive to you, then Questrade and Passiv may be the best Canadian M1 alternative.

Passiv turns Questrade into a modern portfolio management tool. It has two pricing tiers, with the paid Elite option currently being offered free by Questrade for its users. Linking Questrade and Passiv lets you automatically rebalance your portfolio. With a bit of work to get started, you can set it and forget it with your investment portfolio.

Questrade also has commission-free purchases of ETFs, with commissions only when you sell. For long term buy and hold investors, the Questrade-Passiv partnership is a great fit.

More Questrade-Passiv features:

  • Invest in taxable or registered accounts
  • CIPF and IIROC protected investments up to $10 million
  • App and desktop interface
  • No monthly fees

No Perfect Canadian Line of Credit Alternative

And finally, if the investment line of credit offered by M1 Finance is the most attractive feature to you, unfortunately, there is no perfect Canadian alternative.

While all of the above investment platforms (Justwealth, Wealthsimple Trade, and Questrade-Passiv) have their unique features, none of them offer you the ability to borrow money against your portfolio.

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