M1 Finance is a popular investing app that’s making a name for itself in the robo-investing space. We’re putting this service to the test with our no-holds-barred M1 Finance review. Stay tuned to see if this up-and-coming service lives up to its reputation.
M1 Finance: Overview
M1 Finance is a top-notch robo-advisor service with low fees, no required minimum deposit for an account holder, and no commissions.
However, M1 is more than just an advisory service. It’s a fully-outfitted investing hub that helps you build and organize your nest egg.
The platform offers various types of accounts, including traditional and tax-advantaged options.
Your M1 Finance account includes dozens of portfolio allocations options. Each allocation or “pie” was hand-picked by M1’s team of financial experts.
Unlike many competing services, M1 allows you to further customize your portfolio allocation with a wide selection of stocks and ETFs.
M1 Finance combines convenient automated investing features with above-average customization options. This uniquely-balanced value proposition helped M1 Finance attract more than 500,000 since its launch.
M1 Finance vs Traditional Broker: What’s the Difference?
M1 Finance and other robo-advisors offer substantial benefits over the traditional model. With a traditional broker, you have to request each trade specifically. However, micro-managing your assets in this fashion is a real chore.
Most people simply don’t have the time to tinker with their portfolios every day. Even if you have the time, there’s a good chance you will make a costly mistake if you don’t take the time to research every move.
Undoubtedly, neglecting your portfolio can cause it to underperform or, worse, suffer declines. Many people are migrating to robo-advisor services, like M1 Finance, as an alternative.
Robo-advisors like M1 Finance put your portfolio on autopilot. The software ensures your portfolio constantly maintains the optimal asset balance for your financial goals. You will never have to enter a manual trade order.
Automatic portfolio rebalancing gives you the ease and convenience of a full-time financial advisor without the massive price tag. Subsequently, more people are ditching traditional brokers in favor of more affordable alternatives like M1 Finance.
What’s Included with M1 Finance?
- Automatic portfolio rebalancing
- Wide variety of allocation options
- M1 Spend
- Smart transfers
- Fractional share trading
- Research, analysis, and educational resources
- First-class customer service
Automatic Portfolio Rebalancing
Like all robo-advisors, automatic portfolio rebalancing is M1 Finance’s key value feature.
We’ll explain everything you need to know about M1’s rebalancing feature, but first, in case you’re unfamiliar, we want to explain how portfolio rebalancing works.
How Does Portfolio Rebalancing Work?
Portfolio allocations aren’t static by nature. Shortly after you make an investment, the market will move, and asset prices will move along with it. As your holdings fluctuate in value, they will constitute varying shares of your portfolio.
This effect tends to be minimal at first, but it can balloon to huge variations over time. If it’s not addressed, your portfolio could become imbalanced and susceptible to outsized risks.
For example, you put 50% of your $100,000 portfolio in a tech ETF that quickly doubles in value. Your investment grows to $100,000, so your overall portfolio totals $150,000.
Therefore, your 50% allocation has grown to include two-thirds or roughly 66.6% of your portfolio. Your portfolio is now imbalanced, and it could turn into huge problems down the road unless someone corrects it.
For folks that use a certified financial advisor, this process goes on in the background and they probably never even realize it. However, most of us don’t have the luxury of having a professional financial planner on the payroll, so we’re left to our own devices.
In the example scenario, you have to sell some of your tech holdings and invest proceeds in diversified assets to rebalance your portfolio.
M1 Finance Portfolio Rebalancing
Portfolio rebalancing bridges the divide between full-service asset management and affordable brokerage services.
Robo-advisors like M1 Finance automatically buy and sell assets on your behalf to ensure your holdings stay in line with your stated investment objectives.
Once you’ve decided on an allocation, M1 automatically manages your portfolio to ensure it stays on track. All you have to do is make deposits and watch it grow!
M1 Finance gives you a wide array of allocation options to choose from. Each focuses on a different investing strategy or goal, including growth, capital preservation, value, and more.
These are some examples of M1’s most popular allocation options:
Hedge Fund Followers: Plays copy-cat with Wall Street’s top firms.
General Investing: Balances risk and growth.
Income Earnings: Prioritizes income investments. Perfect for retirees.
Industries and Sectors: Concentrate funds into various asset classes and industries.
Responsible Investing: Focuses on companies with positive social and environmental impacts.
Plan for Retirement: Protect your assets when you’re close to the finish line.
M1 Spend is an FDIC-insured checking account integrated directly into the M1 Finance App Mainframe. It includes a debit card for your checking account so you can access your cash from anywhere.
Entry-level users can use M1 Spend for free, but they won’t collect interest on their unused cash or earn cash-back rewards.
You can access upgraded features if you upgrade to M1 Plus, but you won’t get them with the free version.
The included debit card is a nice feature because it gives you quick access to your cash. This a stark departure from many traditional brokers who make it difficult to withdraw cash from your account.
M1 Spend makes the platform a lot more suitable for busy working people who need quick access to their cash in the case of an emergency. Best of all, it’s totally free.
Thousands of stocks trade publicly, and the market prices each one differently. Unfortunately, some of the best companies have lofty price tags.
The most famous case is Warren Buffett’s Berkshire Hathaway, which is currently going for around $350,000 per share. Less dramatic examples include Amazon, trading for more than $3,000 per share, and Google, trading for upwards of $2,000.
With most brokerages, you couldn’t get a piece of these companies unless you had thousands of dollars to fork out upfront. This made it difficult for many small-budget investors to buy the best-performing assets on the market.
Fortunately, fractional trading has totally disrupted this exclusionary pricing structure. Now, investors can buy tiny pieces of stocks as small as $1, so you can make small micro-investments in top companies.
M1 Finance was one of the first apps to adopt fractional-share trading, and it’s still one of the leading providers of the service.
To summarize, fractional trading is a game-changing feature for retail investors, and it adds tremendous value to the platform.
Research and Educational Tools
M1 Finance offers several tools for learning about investments, the different securities available, and how to save for your retirement. Among the tools you can use to learn with M1 holdings are:
These lessons include detailed breakdowns of M1’s various portfolio options. If you’re a beginner, you’ll surely appreciate such a detailed outline of the available portfolio options.
Remember one of the first rules of investing: Always know what you’re buying. Get familiar with your holdings with the detailed resources you’ll find in the Expert Portfolios section.
M1’s education center includes a variety of articles and videos that expound on how to use the M1 and how to spot lucrative investment opportunities.
The library includes resources for dozens of subjects ranging from beginner to advanced. It’s a perfect place to pick up some new knowledge or sharpen your skills.
M1 offers a wide variety of video courses that educate new users on how to use the platform. These videos provide step-by-step demonstrations of the platform’s various features, including bank account linking, recurring transactions, and more.
Customer Service Review
M1 Finance offers a robust set of customer service resources, so you can always find help when you need it.
Expertly-detailed FAQs are also put at your disposal to answer most of the inquiries that customers pose. Most of them include step-by-step videos addressing a particular feature.
You can also get assistance during regular business hours using the contact us feature. Live assistance is available Monday through Friday from 9:30 am to 4:00 pm EST. You can also submit a support request 24/7 through the website and app.
M1 has regular business hours, as well as extensive help resources available on their websites. It might not sound that extraordinary, but it’s more than many “free” trading apps offer. All things considered, M1 gets solid marks on customer service.
How Much Does M1 Finance Cost?
M1 Finance has a relatively simple fee structure, for the most part. You can open and fund your account for free. Once your balance exceeds $100, you can start investing.
There are some account maintenance fees in certain instances, but there are no trading commissions or mark-ups. Plus, M1 doesn’t charge fees for platform usage, deposits, or withdrawals.
You get a lot of value with M1’s free account, including complimentary cash management with M1 Spend. However, you can get even more if you upgrade to M1 Plus for $125 per year.
M1 Plus Review
If you upgrade to M1 Plus, you can access several premium features, including:
M1’s Smart Transfer feature ensures you won’t run short on cash when it’s time to pay the bills. It automatically analyzes your spending and compares it to your cash balance.
If the system detects a potential cash shortage down the road, it will automatically transfer funds from your investment accounts to cover the shortfall.
This feature is optional. You don’t have to use it if you don’t want to. However, the Smart Transfer feature is very customizable, so you can probably find settings that fit your needs.
If you decide to utilize Smart Transfers, it could save you from a major cash crunch down the road. Mistakes happen, but you don’t want to end up in a situation where you’re low on liquid cash.
Smart Transfers keeps a close eye on your cash flow to ensure you always have enough on hand to cover your most important bills. If you often have difficulty budgeting and saving, this feature could be a huge help.
Tap into a flexible line of credit through your M1 Plus subscription with M1 Borrow. You pay just 2% APR on any outstanding loans as an M1 Plus member.
While M1 Borrow isn’t exclusive to Plus users, you will pay 3.5% APR with a basic account. Upgrading to Plus shaves 1.5 points off the overall APR.
Unlike most brokers, M1 Finance allows you to use your margin for anything. You can withdraw it as cash and use it as you please.
M1 Borrow’s lending rates are significantly lower than most traditional lending options, like credit cards and short-term loans. If used effectively, it could save you lots of money in interest over time.
The reduced lending rates more than justify M1 Plus’s price tag, but it still has one more trick up its sleeve.
Cash Management Rewards
M1 Spend is available with a free account, but Plus users get a lot more.
In fact, your cash balance will earn interest a 1% per year rate. That might not seem like much, but interest rates are historically low because of the pandemic. You’ll have a hard time finding a savings account yield much higher.
In addition, Plus users also receive a 1% cash-back reward on qualifying debit card purchases.
Upgrading to Plus gives you even more incentive to utilize your M1 Finance account. If you make regular use of all M1 Plus has to offer, the benefits should easily cover the cost of the subscription.
Can You Trust M1 Finance with Your Money?
In short, yes. M1 Finance is a legitimate firm and its accounts are covered by the SIPC (Security Investment Protection Corporation). This protection ensures the company protects its clients’ assets within certain liquidity parameters.
You don’t have to worry about your money with M1 Finance, because this is an established firm with a long track record of honest business.
M1 Finance: Pros and Cons
M1 Finance Pros
- No trading taxes, fees, or asset management expenses on M11 holdings
- Invest in small pieces of top-tier stock with fractional trading
- Customize your investments with a wide variety of adjustable portfolio allocations.
- Access low-interest loans through M1 Borrow
- Get a comprehensive overview of your finances with M1’s user-friendly dashboard
- Includes dozens of detailed education resources and instructional videos
- Choose from more than 80 different portfolio “pies”
- Quickly access your cash with M1 Spend
- M1 Plus members get access to exclusive perks like smart transfers and cash-back rewards
- Put your portfolio on autopilot with M1’s automatic rebalancing system
M1 Finance Cons
- Limited access to individual investments
- No integration with outside accounts
Is M1 Finance Right for Me?
M1 might be a good fit if you fall into one of these categories:
M1 makes investing easy, so you don’t need a lot of experience to get started. It’s an ideal option for beginners.
Investing takes time, and most busy adults simple can’t give their nest egg the attention it deserves. M1 makes it easy to get the most out of your money without disrupting your day-to-day life.
All-in-One Financial Services
M1 is a one-stop shop for financial services. You can borrow, invest, and manage your cash, and you can do it all from the mobile app. Who needs a bank?
M1 Finance Reviews by Members
Here are some testimonials from M1 users that we found online:
Final Review: Is M1 Finance Worth It?
All in all, M1 Finance offers a robust selection of investing tools and financial services. Best of all, the service is almost entirely free, and there are no commissions or trade mark-ups.
You can get even more out of this trading app if you take advantage of M1 Borrow and M1 Spend. Having access to this low-interest line of credit could save you hundreds in interest if you ever run into a cash crunch.
The best thing about M1 is that it gives everyday people the ability to tap into the market’s true potential. Thanks to M1 Finance and other robo-advising platforms, you don’t have to have a finance degree to start building life-long wealth through the stock market.
All things considered, M1 Finance is an absolutely excellent service. If you want to start investing with a minimum upfront expense, M1 is an excellent option. You don’t need any experience, cause M1 will manage your portfolio for you. All you have to do is grow your account.
We highly recommend M1 Finance for all types of investors. Even if you’re an experienced trader, M1 Borrow is a much more affordable alternative to traditional lending.
That’s it for our M1 Finance review.