Is M1 Finance Right For You? A Non-biased Review
M1 Finance is an online platform that is best known for its investing capabilities. But if you dig a little deeper it has a lot more to offer than just investments.
M1 Finance also offers a checking account with debit card as well as a money borrowing option.
On the investment side, M1 Invest has some pretty amazing and unique features. This platform allows you to create a highly customizable portfolio in conjunction with an automated investing service.
They are able to combine elements of traditional online brokerage accounts and existing robo-investing tools, which sets it apart from other robo-advisor platforms
Disclaimer: After using M1 Invest for personal use and being really excited about their offerings, we have become an affiliate. This means that this article contains affiliate links and that we may receive a small commission if you sign up with our links at no additional cost to you.
We never promote products or services that we don’t use personally and only endorse those that we feel may be of benefit to our readers .
Is M1 A Robo-Advisor?
A Robo-Advisor is a digital platform that offers automated financial planning and investing based on the client’s finances and goals . There is little to no human interaction and supervision.
Robo-Advisor platforms are typically low cost, with no or low account minimums, and available 24/7 as long as you have an internet connection.
M1 Finance is considered a Robo-advisor but is very different due the fact that investors can choose the amount of control that they have over the contents of their portfolio.
Features of M1 Finance:
Invest your money in individual, joint, IRA or trust accounts. M1 invest uses a pie based interface that allows you to either build a completely customizable portfolio or choose an “expert pie.” An expert pie is a professionally designed pie that you can choose, to align with your goals.
If you have a brokerage account with $10,000+ in it, exclusive of retirement accounts, you can take advantage of this feature. M1 claims to have one of the lowest rates on the market with a current interest rate between 2% -3.5%.
There is no paperwork, credit checks, loan officers, or denials because your portfolio acts as the collateral.
This is a digital checking account. Like other checking accounts it comes with a debit card but the one downfall is that you are only reimbursed for ATM fees one time per month.
This is their premium spend account that comes with an annual fee of $125. It offers 1% APY checking, 1% cash back on qualified debit card purchases, and reimburses ATM fees 4 times per month. You also get a 0.25% reduction on M1 Borrow rates and an extra daily trade window.
Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Trust. M1 Finance does NOT support 401k, Solo 401k, bonds, forex, 529, or futures.
Available: M-F 9:30 – 4:00 EST and by submitting a request online.
M1 Online Support also provides detailed explanations on how to set up your portfolio, invest, buy, and sell among other activities.
There is no chat function on the website.
All MI Finance customers: 9:30 am EST each day the NYSE is open.
M1 Plus customers: A second trade window is open at 3pm EST.
**M1 Plus customers who have less than $25,000 in one account may choose to invest in one trading window. M1 Plus customers who have $25,000+ in one account may trade in both trading windows.
Dividends are automatically reinvested into your portfolio once it reaches $10. This feature can be toggled on or off.
How Does M1 Invest Work?
Sleek and Intuitive Pie Based Interface:
There are nearly 100 pre-built pies to choose from or you can build your own from over 6,000 stocks and funds. When you customize your own pie you can add up to 100 “slices” to be as diversified as you choose.
Different Expert Pie Categories to choose from:
- General Investing
- Plan For Retirement
- Responsible Investing
- Income Earners
- Hedge Fund Followers
- Just Stocks & Bonds
- Other Strategies
Within each category there are several expert (pre-made) pies to choose from. A snippet of information is given for each pie including holdings, dividend yield, performance, and risk. You can then click each pie for more detailed information.
M1 Finance Lets You Buy Fractional Shares:
Yes, you read that right….fractional shares!
Simply put, a fractional share is equity on a security that is less than one share.
The ability to purchase fractional shares is a major positive in our opinion. It is a great way for someone to buy stock in a company such as Amazon and Apple without having to shell out a ton of money.
The ability to purchase fractional shares allows you to invest in a company at a level that is comfortable for your financial situation. You don’t have to be a millionaire or have a time machine to go back to a lower stock price to be able to own a piece of the pie.
Who Can Sign Up For M1 Finance?
- You must be a U.S. Citizen or a permanent U.S resident
- You must be 18 years of age or older
- You must have a current U.S. mailing address
What Is the Sign Up Process?
The sign up process is simple and straightforward.
First you simply enter your email and a password to start the process.
Then you are then prompted to create a trial pie so that you can see how the pie interface works.
The next step is to verify your identity and fill in your profile info.
Lastly you have the option to fund your account with a bank account. To complete the funding you can log into your bank account directly with Plaid or do it manually if your bank is not listed.
That’s it – Now you are ready to build your pie or explore the expert pies to find an investment portfolio that fits your financial goals.
If you are more of a visual person, check out this M1 Finance YouTube tutorial on how to open an account and see just how easy it is:
Is M1 Finance Good For Beginners?
M1 Invest is good for beginners as long as you have some knowledge of how investing works already.
As with any investments you should also have a financial goal in mind. This will allow you to make more informed decisions when choosing an expert pie or creating one, in order to provide you with most beneficial and strategic investments.
As a beginner investor, you must remember that this is still a robo-advisor so there is no/little human advising and assistance. The best thing is for you to do your research ahead of time and know the risks associated with your actions.
M1 Invest definitely wins as far as ease of use for a beginner. The expert pies of pre-built portfolios make it easy to start off, if you don’t want to choose your own investments.
This platform allows for a convenient way to just set it and forget it, which new investors may find less stressful.
Another benefit for a new investor is that you can start with very little money, lowering your risk of loss.
Who Is M1 Not Ideal For?
Despite M1 Finance’s innovative and unique features, it is not for everyone.
Those that would not benefit from M1 include:
- Investors who need a financial advisor
- Those who want to invest in cryptocurrency
- Investors and savers who are looking for custodial accounts including 529s
- Professional day traders who make several trades each day
Pros/Cons of M1 Invest
|FREE – No broker fees or commissions||Not ideal for active traders|
|No minimum opening deposit – but investing starts at $100 / $500 for a retirement account||Cannot connect outside accounts to M1 invest for a total view of your portfolio|
|Automatic portfolio rebalancing||No mutual funds|
|Can trade fractional shares||No tax loss harvesting|
|Can place ETF/individual buy/sell stock orders||1 time per day (or 2x with M1 Plus) trading may mean that you miss out on the best buy/sell price|
Important Details To Note Including M1 Finance Fees:
- US only platform
- There are no human financial advisors
- There is a list of banks that M1 finance does not support (see site for details).
- M1 offers 6,000+ exchange-listed securities
- No fees to open an account, no commission fees, and no broker fees.
- Accounts with less than $20 in them with no trading in 90 days are charged a $20 fee.
- IRA termination fee is $100.
Is M1 Finance Safe And Legit?
- Securities in M1 Invest accounts are insured up to $500,000 by the SIPC (Securities Investor Protection Corporation)
- M1 Spend checking accounts may be insured up to $250,000 by FDIC insurance.
- 256-bit SSL Encryption: The entire M1 platform utilizes 256-bit SSL data encryption.
- Regulatory Oversight: M1 Finance is a registered broker/dealer with FINRA (Financial Industry Regulatory Authority)
How Does M1 Finance Make Money?
As stated on their website: “We make money from interest – earning interest on cash in different forms, earning interest on lending securities, and interest on margin loans (via M1 Borrow). We also make money when people use our soon-to-be-released card, from market makers who execute trades, and through the annual fee on our optional M1 Plus membership.”
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Final Thoughts On M1 Finance:
Despite M1’s automatic features and hands off approach to investing you still have as much control as you want over your investments .
They oversee the day to day management and optimization of your account which allows you to have more time to focus on other things. You no longer have to check on your investments daily to reallocate your money and reinvest the dividends.
Two of our favorite things about M1 Finance is the Pie based interface for investing and the fact that you can buy fractional shares.
We also like that you can use the filter to search for different stocks and funds that you may have not known about otherwise.
M1 Finance is very user friendly.
It is great for those who are looking for a more passive strategy of investing. In our opinion, M1 Finance is definitely worth checking out.