M1 Finance Review
- Are you a DIY investor who wants the flexibility to choose your investments (from 1,000’s of ETFs and stocks)?
- Do you want to buy and sell investments for FREE?
- Would you like the opportunity to select pre-made investment portfolios?
- Are you interested in letting someone else rebalance your investments for you?
- Do you want a company to help you invest for a secure financial future?
If you want to invest to build wealth and financial security, then consider M1 Finance.
What is M1 Finance?
*Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.
M1 Finance Review
Name: M1 Finance
Description: Free investing app with portfolio management included.
- Investment Choices
- Ease of Use
- Tool & Resources
- Investors who want to pick stocks and funds on their own.
- Investors who want free investment management.
- Investors who want pre-made investment portfolios.
- Free investment management and trading
- Low $100 minimum investment required
- Low cost loans available
- High yield cash management available
- No tax-loss harvesting
- No access to human financial advisors (consultant available for help setting up your account)
- No risk quiz available
One of the most comprehensive robo-advisor platforms to hit market, M1 Finance offers a unique twist to the fintech landscape – hundreds of investment options for free.
No trading fees, and free rebalancing of your investments!
In fact, I opened an account with M1 Finance recently!
What makes M1 Finance stand out in the robo-advising arena is its access to thousands of investments from exchange traded funds to individual stocks.
M1 Finance portfolios are easy to visualize as each investment is shown as a slice of pie. The whole M1 Finance pie represents your entire investment portfolio.
You can create your own portfolio, called M1 Finance Pies, selected from roughly 500 investments. Or, you can create several distinct portfolios or pies.
The M1 Finance robo-advisor also offers pre-made expert pies to choose from. I just invested in one of the expert pies! (Find out which one later in this post.)
I’m excited to find out how it performs in comparison with my other investments.
- M1 Finance Review
- What is M1 Finance?
- M1 Finance Features at a Glance
- What is M1 Investing?
- Who Benefits from the M1 Finance Robo-Advisor?
- Types of Accounts
- Is M1 Finance Insured and Safe?
- M1 Finance Free Stock App Rocks
- Features and Drill Down
- M1 Finance Sign-up Process
- M1 Pre-Made Hedge Fund - Pershing Square Capital Management
- M1 Finance Pros and Cons
- M1 Finance Review – Goldilocks Approach: Not to Hot, Not too Cold
- How does M1 finance work?
- What is M1 Investing?
- Is M1 Finance free? Does M1 have fees?
- Is M1 Finance insured?
M1 Finance Features at a Glance
|Overview||Free robo-advisor with opportunity to customize investments.|
|Minimum Investment Amount||$100 for typical brokerage account. $500 for retirement account.|
|Fee Structure||Zero account management + trading fees. M1 Plus is $125 per year.|
|Top Features||Choice to use pre-made portfolios or to create your own. M1 Finance manages + rebalances. M1 Borrow + M1 Spend offer lending and banking.|
|Free Services||Account creation, management + rebalancing. Investment trading.|
|Contact & Investing Advice||Email or phone 9-5 M-F CT + on-screen help button.|
|Investments||6,000 stocks and/or ETFs traded on the NYSE, NASDAQ + BATS exchanges|
|Accounts Available||Individual and joint taxable accounts; traditional, Roth, SEP and rollover IRAs; corporate, trust, LLC + partnership business accounts.|
|Promotions||Current promo includes limited interest free loan from M1 Borrow|
What is M1 Investing?
What Differentiates M1 Finance From Competitors
M1 Finance is the most creative automated financial platform online at present. This robo-advisor is unique and offers:
Pre-made investment portfolios based upon risk tolerance, similar to comparable robo-advisors. But, this is just the beginning, there is so much more.
Over 6,000 stocks or ETFs traded on the NYSE, NASDAQ and BATS exchanges for DIY investors.
M1 rebalances the assets back to your preferred allocation.
Pre-made “expert” portfolios (also called M1 expert pies) from the following categories:
- General Investing – perfect for well-balanced investments that match up with your risk level (like a typical robo-advisor).
- Plan For Retirement
- Responsible Investing (Socially Conscious)
- Income Portfolios
- Hedge Fund Followers
- Industries + Sectors
- Just Stocks and Bonds
- Other Strategies
M1 Borrow allows anyone with an account balance of at least $10,000 to borrow from their account.
The portfolio that I opened is from the expert portfolio, “Just Stocks and Bonds.”
I opened a simple two stock portfolio with 60 percent invested in the Vanguard Total World Stock ETF (VT) and 40% invested in the Vanguard Total Bond ETF (BND). You might wonder why I didn’t just buy these funds on my own in an investment account. The answer is, M1 Finance will rebalance these funds back to my preferred 60% stock – 40% bond portfolio at any time, just like other robo-advisors. And since M1 Finance doesn’t charge fees, it’s an ideal investment management tool.
I’m also doing an experiment to find out how the returns on this simple portfolio compares with those of more complex robo-advisory investments!
Who Benefits from the M1 Finance Robo-Advisor?
- The DIY investor who wants to farm out the laborious task of rebalancing his or her portfolio.
- The new investor seeking a pre-made investment portfolio in line with her risk tolerance.
- The investor who wants to copy the hedge fund investors, without researching their strategies.
- The retiree seeking access to target date investment portfolios and the opportunity to invest on their own.
- The income investor who wants a pre-made portfolio.
- The cost conscious investor who wants their personal portfolio managed and rebalanced for free.
M1 Finance Fees
M1 Finance is free for the basic platform, which includes:
- Commission free stock, bond, ETF trading
- Investing in all M1 Finance pies and pre-made portfolios
- Investment rebalancing
The only fees you can expect to pay are the underlying ETF and mutual fund management fees that go directly to the fund provider.
As you’d expect, M1 Finance does charge for services such as overnight mail delivery, paper statements, retirement account termination and a few more.
M1 Plus is a higher level service for investors that want:
- A super charged checking account. The m1 Plus account offers a high yield checking account and a debit card with 1% cash back. Finally, M1 plus customers get 4 ATM withdrawal fees reimbursed per month.
- Lower borrowing costs
- Two daily trading windows, instead of one
The M1 Plus service offers more services for a low annual fee.
The fee for M1 Plus is a reasonable $125 per year.
Next, take a look at an actual investor and how he goes through the M1 Finance investment platform.
What is the M1 Finance Minimum Deposit?
Unlike many other robo-advisors, M1 only requires $100 to get started! And you can open an account for free.
Types of Accounts
M1 Finance caters to individuals and business accounts. The company also handles trust accounts.
Available M1 Finance accounts:
- Individual and joint investment accounts.
- Roth, traditional and SEP IRA accounts
- IRA rollover accounts
- Business accounts for corporations, LLCs, or partnerships
- Revocable and irrevocable trust accounts
M1 IRAs (traditional and rollover) and M1 Roth IRAs are excellent accounts to supplement your workplace 401(k) and build up extra cash for retirement!
Is M1 Finance Insured and Safe?
Your money is insured by SIPC (Securities Investor Protection Corporation) against loss of cash and securities from a brokers failure. It does not protect against normal investment price declines.
M1 Spend and M1 Plus accounts are further insured through Lincoln Savings Bank.
Apex Clearing Corporation is M1’s clearing firm and custodial bank. Apex is a well-known firm and provides similar functions for many of the world’s largest institutional and retail brokers.
M1 employs top level security. Your data isn’t stored on any device and all information is encrypted in transit between your computer and M1 as well as on the M1 servers.
M1 Finance Free Stock App Rocks
Invest for free in your favorite stocks and ETFs with the M1 Finance app. No trading fees or commissions. Once you have $10,000 invested the M1 app enables a low-cost portfolio line of credit. While the M1 Visa Debit Card link sends excess cash automatically into your investments. The M1 Finance app is available in iOs or Android.
“Favorite for investing. I like that I can select a balance of stocks (or pre built portfolio) and not have to worry about it, they handle the details. There are no fees which I think is a must anymore. They offer a good range of stocks and ETFs; I don’t need OTC, crypto-currency, or derivitaves, so both criteria are perfect. Trades aren’t real-time and that keeps me thinking longer term (daily window.)” J.N. in M1 Finance App Review
Features and Drill Down
M1 Finance Investment Strategies – Pre-made Portfolios
If you prefer to invest in a ready-made group of investments, then the pre-made portfolios are for you.
Typical M1 Finance robo-advisor services include a choice of pre-made investment portfolios according to your risk tolerance:
- Ultra Conservative
- Moderately Conservative
- Moderately Aggressive
- Ultra Aggressive
The Ultra Conservative portfolio is allocated with these funds in the following percentages (90% bonds vs 10% stocks):
- Short Term Treasury Bonds – SHY – 82%
- Municipal Bonds – MUB – 2%
- Small cap US Stocks – VB – 6%
- Large cap US Stocks – VOO – 2%
- Developed Market Stocks – VEA – 6%
- Emerging Market Stocks – VWO – 2%
On the other end of the spectrum, the Ultra Aggressive portfolio is allocated as follows (99% stock vs 1% bond):
- Large cap US stocks – VOO – 29%
- Mid cap US stocks – VO – 9%
- Small cap US stocks – VB 13%
- Developed Market Stocks – VEA – 34%
- Emerging market Stocks – VWO – 7%
- International Bonds – BNDX – 1%
- Real Estate REIT – VWO – 7%
The other general investing portfolios fall in between in their allocation percentages to stocks vs bonds. You can view all of the pre-made portfolios without funding an account, although you will need to go through the sign up process. Each of these “General Investing” robo-advisor replica portfolios contain between six and ten individual funds.
Compare; M1 Finance vs. Betterment
The remaining seven categories of pre-made portfolios are created in line with their designated strategy. For example, the income portfolio includes only domestic and international bond funds. The miscellaneous “Other Strategies” pre-made portfolios include Blue Chip, Global Growth and Global Value strategies.
M1 Finance DIY Investment Strategies and Asset Mix
If you want to create your own combination of investments (or investment pies) you can choose from 4,325 stocks and/or 1999 funds. M1 Finance also offers a stock screener to help you construct your own investment portfolio.
Whether you design your own or choose a pre-designed M1 Finance pie, the platform makes it visually clear which of your investments are off-target by changing the shape of the slice of pie. When new money is added or withdrawn, it automatically affects the section of your pie that is most off-target in order to rebalance itself.
For example, if you want 50% of your investments to be stock-based, but you are only at 48%, then any new money that you add to your investment portfolio will automatically go to the stock investments until your asset percentages return to a 50% stock mix.
You can also initiate rebalancing without adding funds by pressing the sales icon.
All trades occur during the M1 Finance trading windows:
- 9:00 AM est when markets open, until all orders are filled
- 2:00 PM est is a second trading window available to M1 Plus customers
Dividends are reinvested automatically once they total $10.
M1 tax efficient investing uses a strategy when selling securities to help reduce the amount owed on taxes automatically. It’s not tax-loss harvesting, but it does take into account potential tax consequences when selling an investment by choosing the shares with the lowest tax basis.
Free M1 Representative Consult
You can schedule a free consultation with an M1 Finance representative for guidance navigating the platform.
So, if you have any questions about the platform, you can speak directly with an M1 representative to guide you.
If your account is valued at $10,000 or more, you’re eligible to borrow up to 35% of the account value, and pay it back on your terms.
The process is fast and does’t require a credit check. The low interest rate is great if you want to refinance existing high interest rate credit card debt or pay for your wedding.
M1 Spend is an FDIC-insured checking account and debit card that is integrated with the M1 platform. It combines digital banking with bill pay and spending with the M1 Visa debit card.
You can even direct deposit your paycheck into your M1 Spend account!
The M1 Spend checking account pays above market interest rates on your accounts cash balance. While the M1 Finance debit card awards 1% cash back on all spending.
M1 Plus customers receive extra benefits, from the M1 Spend feature.
We love that M1 has expanded to include not only investing but also banking and lending services. Of the stand alone robo-advisors, M1 is one of our favorites.
M1 Finance Sign-up Process
The sign up is quick and easy.
- Plug in your email address and create a password.
- Answer a few questions.
- Next you build a sample portfolio.
- Choose the account type by selecting from the account list.
At that point, before funding the account you can explore the platform’s features. You can look at the pre-made portfolios and explore the thousands of investment options for your DIY portfolio.
Finally, transfer money in to fund your portfolio.
The process is seamless, although it does take a few days to get the account up and running.
M1 Finance Investor Profile
Getting Started with M1 Finance
Learn how Jason, a young engineer invests with M1 Finance.
Jason – An Aggressive Investor
Jason is a risk taker, with a high paying job. He’s 35 with a well funded 401(k) account at work. He wanted to try one of the riskier portfolios. He decided to try a Hedge Fund Replication portfolio.
The Hedge Fund Replication Portfolios includes the following investment company choices:
- Berkshire Hathaway
- Coatue Management
- Green Light Capital
- Icahn Capital
- Paulson & Company
- Pershing Square Capital Management
- Tiger Global Management
- ValueAct Capital
Jason decided to invest a few thousand dollars in the Pershing Square Capital Management fund. The Pershing portfolio seeks to replicate Pershing Square Capital Management by investing in the holdings and allocation in the firm’s most recent SEC 13F filing. The securities in this pie are:
M1 Pre-Made Hedge Fund - Pershing Square Capital Management
|Investment Holding||Symbol||Percentage Investment|
|Restaurant Brands International Inc.||QSR||22%|
|Chipotle Mexican Grill Inc.||CMG||18%|
|Mondelez International Inc.||MDLZ||17%|
|Air Products and Chemicals Inc.||APD||09%|
|Howard Hughes Corporation||HHC||17%|
|Platform Specialty Products Corporation||PAH||07%|
|Valeant Pharmaceuticals International||VRX||05%|
|Nomad Foods Limited||NOMD||05%|
Next, Jason decided to create another pie (or investment portfolio). This time he’s choosing his own investments.
He appreciates the opportunity to create an several investment of pies.
Yes, M1 Finance is free. There are zero account management fees.
For investors seeking more features, M1 Plus is available for $125 per year.
“Like a bank that offers free checking, M1 Finance makes money through other services. M1 Finance makes money lending the user-owned securities and cash held intheir accounts,” says founder Barnes.
Loan and M1 Plus also make money for M1.
N0, M1 Finance is an investing, not trading platform. You can’t buy and sell the same securities during one day.
To keep costs low, M1 is only trading once per day during week-days NYSE trading hours or twice with M1 Plus.
M1 Finance Pros and Cons
M1 Finance Advantages
M1 Finance account management services are free.
The $100 minimum investment amount makes it easy for the new investor to dip her toe into the markets.
The visual structure of the M1 Finance pies makes it easy to understand what you’re invested in.
Adding money to your account is clear cut. The platform invests new money according to your asset allocation preferences.
The automated portfolio rebalancing makes investment management easy.
The opportunity to choose your own investments and receive portfolio rebalancing for free is a huge draw.
M1 Borrow is a nice option when you need extra cash for a low interest rate.
M1 Spend can even replace your checking account.
M1 Finance Disadvantages
In contrast with other automated or robo-advisors, M1 Finance doesn’t offer a risk quiz. This could be a disadvantage to a newer investor. Thus, if you’re not confident of your personal risk tolerance, you might seek an online risk tolerance quiz for guidance.
Regarding the Hedge Fund Replication choices, M1 invests in the publicly listed securities of the specific fund. Yet, you don’t know the price that the hedge fund manager paid for their holdings. And part of smart investing is buying at the right price. This option is best for more advanced or aggressive investors.
M1 doesn’t offer tax-loss harvesting, although they do offer “tax minimization” which allows you to sell investments in the most tax efficient way.
M1 Finance Review – Goldilocks Approach: Not to Hot, Not too Cold
You choose how engaged you want to be with your portfolio management. From pre-made pies to DIY investment portfolio creation, you decide which investment road to take.
M1 Finance is great for on-the-go portfolio management with apps for ios and android devices.
I just invested in the expert pie: “Just Stocks and Bonds”! It’s great for the new investor or someone seeking a simple diversified investment portfolio.
M1 Finance is user-friendly, so once your initial portfolio is set up it is easy to manage. Just like a bank account, investors only need to worry about depositing or withdrawing money and the new M1 Spend will handle the direct deposit of your paycheck.
The platform itself takes care of the trading and the money gets allotted to your pre-determined specifications.
Even with a fully customizable platform, some people worry about the human touch some robo-advisors lack. M1 Finance has a customer support team available during business hours, so if their extensive FAQs can’t answer your questions, a real human can.
M1 Finance offers a promising alternative to other investing options out there. If you’re stuck between a DIY approach and a fully automated robo-advisor, then M1 is a nice in-between solution. In particular, this platform adds depth and customization to the robo-advising market. Engaged investors, who want hands-on and easily accessible investing options, will find that M1 Finance has a lot to offer.
If you’re sophisticated enough to know what you want in your investments, but don’t want to constantly rebalance and maintain your investment portfolio, M1 Finance is a good alternative. (Click on the link to check out the M1 Finance site.)
We’re all so busy today, that you need to pick and choose how you’ll spend your time. If you like to pick your investments, and seek investing inspiration as well, then consider M1. With the low $100 entry fee, and free account management anyone can dip their toes into the investing world.
|Overview||A goals based automated investment advisor. Financial advisors available for all.||Free robo-advisor with opportunity to customize investments.|
|Minimum Investment Amount||Betterment Digital - No minimum investment amount required. Betterment Premium-Requires $100,000 minimum. a||$100|
|Fee Structure||Digital-0.25% AUM up to $2 million.|
Premium-0.40% AUM up to $2 million
Reduced fees above $2 million.
|Zero fees for investment management. M1 Plus-$125 per year.|
|Top Features||Goal-based ETF investment portfolio. Rebalancing. Tax-loss harvesting. SRI, smart beta + income portfolios. Human financial advisor access.||Unlimited variety of investment vehicles & strategies. Choose your own investments or pick from pre-made investment portfolios. Access to socially responsible funds. Rebalancing.|
|Free Services||See promotions.||No management fees. Includes free rebalancing + buying and selling securities.|
|Contact & Investing Advice||Phone and email support, 7 days per week.||Phone (M-F) and email, 7 days per week.|
|Investment Funds||Low-cost, commission-free ETFs.||Stocks, bonds, funds, and more. |
|Accounts Available||Single and joint taxable brokerage. Roth, traditional, rollover + SEP IRA. Trust.||Single and joint taxable brokerage. Roth, traditional, rollover + SEP IRA. Trust. Business accounts.|
|Promotions||Free management fee promotion in effect (time limited)||Ongoing free investment management.|
- Robinhood vs. Acorns vs. M1 Finance – How to Choose the Best Investment App
- Betterment vs. Wealthfront vs. M1 Finance – Robo-Advisor Comparison
- M1 Finance vs. Personal Capital – M1 Finance Robo-Advisor Comparison Analysis
- M1 Finance vs. Robinhood – Which Free Trading App is Best?
- M1 Finance vs. Vanguard Personal Advisor Services – Should I Pay for a Robo-Advisor?
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.
*Using margin involves risks: you can lose more than you deposit, you are subject to a margin call, and interest rates may change. To learn more about the risks associated with margin loans, please see our Margin Disclosure (https://s3.amazonaws.com/m1–