Everything you need to know about M1 Finance Invest Review: Pros and Cons

M1 Finance Invest Review
M1 Finance Invest Review

M1 Finance: M1 Finance is an American financial service company that was founded in 2015. M1 Finance Invest offers a unique blend of automated investing, credit card, and extensive portfolio customization, as well as borrowing and spending options. To build your strategy, you can choose from over 60 pre-built portfolios known as “pies”. This platform allows experienced investors to automate their strategy and align it to their risk appetite, diversification goals, and personal preferences. M1’s low-cost platform charges no fees for investment management or trading. This makes it more affordable for investors. To help you determine if M1 Finance’s Roboadvisory is right for you, we’ll be taking a closer look.

What is M1 finance?

M1 Finance Investing offers online trading platforms that offer investment pies, one-click rebalancing, and customized portfolios. You can choose from pre-built portfolios or auto-invest, or create your own portfolio with stocks and ETFs.

  • M1 Invest You can either build your own portfolio using stocks and ETFs, or you can invest in premade portfolios. M1 will handle everything for you. You have complete control over your investments. There are no management or trade fees. Start today with only $100 – $500 for retirement accounts.
  • M1 Spend Online banking accounts that come with a debit card. There is no minimum balance.
  • M1 Loan This loan service allows you to borrow up to 40% from your portfolio at a very low-interest rate.

M1 Finance Company Overview

Account Minimum$100 ($500 for retirement accounts)
Fees$0 (misc fees may apply) 
Goal PlanningRetirement
Available AssetsIndividual Stocks, ETFs, REITs
Interest Paid on Cash Balances1% (M1 Plus members only)
Customizable PortfolioYes
View Portfolio before FundingYes
Customer ServiceEmail, Chat, Call
Financial Advisor AvailableNo
Cash ManagementInterest, bill pay, atm fee reimbursement (M1 Plus members only)
Tax-Loss HarvestingNo
External Account Sync/ConsolidationInbound Transfers, no aggregation
Mobile AppYes, Android, iOS

How M1 Finance Works

M1 Finance Invest makes it easy to create a highly customized portfolio. Although it may seem daunting at first, the process is very simple.

M1 Finance accounts are built around investing. M1 Spend integrates with your investment account to automatically fund it. M1 Borrow is a line credit that you can use against your minimum $10,000 investment account balance.

M1 Finance’s investment account was designed for self-directed investors. You can customize your portfolio with stocks or ETFs (including fractional shares) or choose from one of our expert-designed portfolios. M1 allows you to answer questions about your financial goals, and make informed investment decisions using M1’s tools.

M1 allows you to visualize your portfolio balanced with its “Pie” interface. This interface helps you see the weight and performance of each stock or ETF.

Here’s how M1’s pie investing works:

1. CREATE YOUR INVESTMENT PROFILE

M1 Finance allows users to create what they call “Pies”. Your pie is a visual representation of your portfolio. A Pie can contain up to 100 investments. Each slice can be either stock, ETF, or another pie.

You can also invest in more than 6,000 stocks or ETFs that are listed on the NYSE and NASDAQ exchanges. This is in contrast to other robo­advisors which do not allow you to choose individual stocks.

Each slice can be set at a different percentage. If you decide to invest 10% in Apple then that would be 10% of your pie. You can also invest in one of their 80+ pre-built Pies if you aren’t sure what you should invest in. Expert Pies can be added to your portfolio as slices. Multiple pies can be made for different purposes. Each pie is a piece of the overall pie.

2. FUND YOUR ACCOUNT

M1 Finance automatically purchases shares from your investments when you add money to them. It does this according to the percentages that you have set. You’ve allocated 10% of your pie to Apple in the example above. You can add $1,000 to your portfolio. M1 would need $100 to buy Apple stocks.

If you prefer to “set it & forget it”, you can also set up an automatic contribution. M1 will take the funds from your linked account and invest according to plan.

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3. MODIFY YOUR PIE

Your Pies can be modified at any time. If you wish to sell your investment, simply remove one slice. To invest in something else, add another slice. It’s easy to do the trading without having to worry. M1 Finance Invest can also rebalance portfolios as required. Continue reading to find out more about this feature and other features.

M1 Finance Pros & Cons

ProsCons
Just $100 to startOnly offers stocks and ETFs
Investment integrated with banking and line of creditNo tax-loss harvesting
Margin loans accessible at low-interest rates with $5K investedNo access to human advisors
No account management feesLimited financial calculators, tools, and goal planning
Low expense ratiosNo aggregating of external accounts for investment allocation purposes
Dynamic RebalancingNo futures, options, mutual funds, individual bonds, or cryptocurrencies
Low account minimums
Fractional share trading
Extensive portfolio management customization options
Spending and borrowing options complement portfolio management
No commissions

M1 Finance Cash Management

M1 Finance, which complements the portfolio management product, offers digital banking, a credit option, and cash flow allocation to complete the platform.

  • M1 You can seamlessly integrate a checking account and your investments with Transfer money, make direct deposits, and use a debit card to spend. You don’t need to have a minimum balance. All deposits are insured for up to $250,000. M1 Plus members get 1% cashback, 1% interest rate, and check sending capabilities.
  • M1 Plus members can get the Owners Reward Card, a unique credit card. Members can get up to 10% cashback on spending related to companies that they have invested through the platform. There is no annual fee.
  • M1’s Smart Transfers are available for Plus customers. They allow you to create a rules-based strategy that will allocate excess cash to spend, investing through brokerage accounts, or maxing out your annual IRA contributions. You can layer rules to ensure that cash management matches your needs.

M1 Finance Portfolio Construction

Portfolio construction is the main distinguishing feature of M1’s platform. An investor can choose from more than 60 pre-built Expert Pies that align with a range of strategies, including passive investing, mimicking hedge fund strategies, and socially conscious options. The passive portfolio can be built by simply using two ETFs, one equity, and one bond. These funds track the global market and allow investors to choose between the two funds according to their risk preferences. You can also create Custom Pies that allow you to pick your own holdings or combine them with an Expert Pie.

The Expert Pies can help you to leverage a variety of asset allocation options. These include fundamental analysis, technical analyses, value investing, and buy and hold.

M1 Finance Minimum investment

To get started, you will need to invest $100 minimum. You can fund your account with only $10 per month after that. The minimum investment in retirement accounts is $500.

M1 Finance Services available

M1 Finance Invest offers joint and individual brokerage accounts, and Roth and SEP IRAs. Trust accounts, checking accounts, and a line credit are also available. Premium membership M1 Plus gives members $125 per annum of perks on these products

  • M1 Spend is an FDIC-insured, fully functional checking account. There is no minimum balance or monthly fee. M1 Plus members get 1% APY, 1% cashback on debit card purchases, and ATM fee reimbursement for up to four transactions.
  • M1 Borrow allows you to borrow up to 35% from your balance of taxable investments, once it has reached at least $10,000. This line of credit has a low variable rate of interest, no credit check, and is open to all applicants. M1 Plus members receive a reduced interest rate
  • M1’s Dynamic rebalancing allows you to keep your portfolio in balance when you trade. M1 Plus members also have access to automated features that optimize investments.

How to Start M1 Finance?

Starting with M1 is different from other Robo-advisors. The typical questionnaire asking about your risk tolerance, goals, and net worth will not be displayed.

You can create an M1 investment account by following these steps:

  1. Sign up: You will need to provide your email address and password at this stage.
  2. Make a pie: This system will help you navigate your first practice pie.
  3. Open an official account: Your phone number will be required to confirm your identity. You will then be officially signed up with your personal information (name and address, birthdate, Social Security number).
  4. Choose a type of account: You have the option to choose from a single taxable account, joint, IRAs, (Traditional Roth, Roth, or Sep), or Trust. Next, create your pie.
  5. Fund account: To fund your account, you will need to link a bank account.
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That’s all. M1 will take care of everything once the funds have been transferred. M1 will purchase your investments according to your pie. Changes can be made at any moment.

M1 Finance APP

M1 Finance is an entirely online program. Access the platform from your computer or via the mobile app. You can access it from both iOS and Android smartphones.

The platform is extremely user-friendly. A summary of your portfolio will appear, including its value, gain, loss, and return.

Simply click the “edit” button to make changes to your pie. The page will allow you to change the target percentages, and add or remove slices. M1 Finance will adjust automatically as you do this.

Click on the “Add button” to add a new investment. You will be taken to the “Research tab” where you can search for any stock on the most popular U.S. stock exchanges.

Click on a stock to see more information, including price history and performance data.

The platform is easy to use and makes it very simple to create pies. The mobile app works in the exact same way and is an excellent companion.

M1 Finance Features

M1 is unique because of a few key features. It’s pie-based investing is where it shines.

M1 Finance Pies: M1 Finance pie allows you to keep your M1 Finance portfolios in pie format. It is easy to customize your portfolio by adding slices to the investment pie.

You can also see a visual representation of your pie. Slices shrink or grow depending on your weight relative to your target allocation. You can create investment pies by dividing each asset into one piece. These slices could be stocks, bonds, ETFs, and so on. M1 automatically balances each slice when you invest to match the percentages that you have specified. Either you can make your own pie, or you can use M1’s expert pies. We’ll discuss what those are later.

Security Features:

  • Two-factor authentication
  • Military Grade 4096-bit encryption
  • SIPC Insurance for investments
  • FDIC Insurance for deposits

Expert Pies: M1 Finance offers expert pie, which makes it easy to invest with M1. Expert pies are investment portfolios that have been pre-made by M1’s expert team. M1’s expert pie can be used as-is or added to existing portfolios. To maximize returns, they are based on Modern Portfolio Theory.

Here are some examples of expert pies:

  • General investing strategies: A general strategy for investing that is based on risk tolerance.
  • Retirement plan: Target-date funds that are less aggressive over time.
  • Responsible investment: Investment funds that invest in companies that have high scores on ESG principles.
  • Income earners Stocks paying regular/high dividends
  • Hedge funds followers: Pies that imitate the strategies of well-known hedge funds. Berkshire Hathaway and Coatue Management are two popular hedge funds.
  • Stocks and bonds: Portfolios that include different combinations of stocks & bonds, such as 90/10,80/20, etc.
  • Other strategies – There are many other strategies that can be used, such as value & growth and ARK Invest.

An expert pie may contain stocks, bonds, and ETFs. M1 has it all, whether you are interested in socially-responsible investing or stocks and ETFs generally. An expert pie can be used as-is, or it can be made as a portion of your custom pie and then added to other slices. This means that expert pies can be made part of your custom pie. You can also customize portfolios in this system.

M1 performs a quantitative analysis of all ETFs traded to identify the best for each pie. Each pie is chosen for its best combination of performance and diversity. You can view each expert pie and also see the performance chart. This will let you know what you can expect.

M1 Finance Invest has a variety of products that can be used to achieve different goals such as socially responsible investment. Investors who are looking to invest in companies that reflect their values will love this.

Smart Transfers: Smart Transfers let you transfer money automatically into your accounts. This feature is only available to M1 Plus members. However, it allows you to automate certain actions that would otherwise need to be done manually.

You can, for example, set up a rule that transfers money to your brokerage accounts when your M1 Spend account value exceeds $1,000. You can also use a rule that maxes out your annual IRA contribution. Smart Transfers make it easy to set up your investments so that you don’t spend too much time on them. This feature is only available to M1 Plus members. However, everyone who signs up automatically is eligible for a one-year free trial of M1 Plus.

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M1 Plus

M1 Finance’s basic plan is free to anyone who signs up, but the Robo-advisor offers more features and a $125 per year upgrade plan called M1 Plus. Sign up for the program and you might be eligible for a year of M1Plus.

Here’s what the annual fee gets you:

  • Additional afternoon trade window in addition to the morning one
  • Custodial accounts
  • Smart transfers (more details below)
  • Margin loans at a reduced rate
  • 1.5% interest on your balance in your cash management accounts
  • 1 percent cash back on your debit card purchases
  • Monthly reimbursement of up to 4 ATM withdrawal fees
  • All international fees are refunded

The extra fee you pay may be worth it depending on how you use your account. However, you can still get reimbursed ATM fees at other Robo-advisors.

M1 Finance Fees

The basic M1 Invest account comes completely free. There are no monthly or management fees, minimum balances, trading fees, and no management fees. M1 is a great low-cost investment platform if you have a retirement account or a taxable account.

M1 wants to make money, of course. M1 Borrow charges fees for its other services such as M1 Spend, margin loans, and M1 Borrow. The fees for the portfolio line credit through M1 Borrow are quite high at 3.5% for basic members and low at 2% for M1 Plus members.

M1 Finance Assets Available

Individual StocksYes
Mutual Funds No
Fixed Income No 
REITs Yes 
Socially Responsible or ESG Options Yes 
ETFs Yes 
Non-Proprietary ETFs Yes 
Private Equity No 
Crypto, Forex No 

M1 Finance Customer Service

  • Phone Call: 312-600-2883 Monday to Friday, 9 a.m. – 5 p.m. ET
  • Instant Help Chat Bot
  • Email Support with 24 hour turnaround time
  • Robust Help Center articles 
  • No access to human Financial Advisors
Is M1 Finance Invest Safe?

Yes, M1 is a reliable investment Robo advisor that offers beginner-friendly customer service. You have control over your money and can save money for the long term with this investment platform. It is a registered broker/dealer in FINRA and a member of SIPC. M1. will ensure that your information and assets are protected.
SIPC Insured. SIPC is a federal corporation that helps you protect your securities for Up to $500,000 Per account in the event that the brokerage goes out of business. SIPC will not protect you against losing your investment money.
M1’s clearing company also offers supplemental insurance that goes beyond the SIPC limits.
Military-grade encryption M1 protects all data stored and transferred within its system with 4096-bit encryption.
Additional login security M1 uses two-factor authentication, and a fingerprint ID/face identification login to protect your account.

How does M1 Finance Invest make money?

M1 Finance earns money by charging investors M1 Plus, M1 Loan, and interest on securities lending. It also earns money through cash management and payment-for-order flow (PFOF).
M1 Borrow can be another source of revenue. The company charges interest on money borrowed. M1 Plus users pay 2%, while free users get 3.5%.
A basic M1 Invest account can be opened for free. You can create a portfolio quickly and never spend anything unless you upgrade to M1 Plus.

Is M1 finance Invest right for you?

M1 is a great platform for investing with minimal fees. A basic account is free of management fees and is one of our favorite Robo-advisors. The company manages assets worth more than $5 billion.
Automated investing simplifies the process of investing and makes it easier for passive investors to manage a healthy portfolio and personal finances.
M1 Finance isn’t great for day traders or active traders, as there is only one trading window (9:00 Central). M1 Finance Invest only allows trades during this window.
You can’t transfer funds to your M1 Finance account on weekends or after this time. They won’t be used until the next business day at 9 a.m. M1 Plus customers will get two trade windows and an afternoon trade window. However, this is not enough for active traders.
M1 is the right choice if you want to simplify investing and build a portfolio that grows your investments without much intervention.
Your portfolio will need virtually no maintenance if automatic deposits are enabled. M1 Finance’s automated balance will allow you to achieve this.
While it’s important to keep it checked from time to time it might not be necessary to do so every day or every month. M1 is an excellent platform for investors of all types, regardless of their goals. It’s worth checking out if you want to invest.

Bottom line

M1 Finance will feel like metaphorical peanut butter and chocolate mash-up to some clients. It offers a wonderful combination that perfectly suits their taste buds.

  • You have the flexibility to create your portfolio, and you can use portfolio templates to help you design it. This will give you the best of both worlds.
  • M1 Finance automates many aspects of your financial life. This includes your investment portfolio as well as your cash management and spending.
  • M1 Finance doesn’t offer much guidance or planning in regard to investing. Investors need to be more do-it-yourself.

Wealthfront and Betterment are two options for investors who feel they need professional advice on building a portfolio. They can help you structure your portfolio and give you the freedom to invest in any areas you choose. For total investment freedom, those who are looking for a full-brokerage experience can look into Interactive Brokers.

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