How do commission-free ETFs work?

Commission-free ETFs work by allowing investors to buy and sell shares without paying a commission on each transaction. This is highlighted by the platform M1 Finance, which offers commission-free trading and the possibility to buy fractional shares of ETFs. This setup is highly beneficial for retail investors, particularly those starting with smaller amounts, as it eliminates the costs associated with buying into mutual funds that traditionally have minimum investment requirements and associated fees.

One major benefit of using commission-free platforms like M1 Finance is the ability to invest in ETFs with no minimums and no asset management fees, making it financially accessible and efficient for individuals to engage in investing without the traditional cost barriers. Moreover, the absence of a commission encourages frequent trading and rebalancing of portfolios without additional costs 1.