M1 FINANCE REVIEW: PROS, CONS, SERVICES, AND USER EXPERIENCE

M1 FINANCE OVERVIEW

M1 Finance offers a captivating fusion of automated investment and extensive portfolio personalization, complemented by borrowing and spending functionalities. You can choose from over 80 pre-constructed portfolios called “pies,” or you can create your investment strategy.

M1 Finance

Before we go any further, let’s look at the pros and cons of M1 Finance.

PROS OF M1 FINANCE

Combining investment, banking, and lending functions

An M1 Finance account provides access to diverse investment options, an interest-earning checking account, and a revolving credit line linked to your portfolio balance. I manage my finances conveniently in a single platform, benefiting from advantages like low-interest borrowing without credit checks and automatic transfers to my investment portfolios.

Invest without fees

Meticulously cost-conscious, M1 Finance eliminates commission, account management, checking account upkeep, and borrowing application fees. It prioritizes maintaining low investment fund expenses and even covers ATM fees.

Smart Portfolio Adjustment

After I deposited, M1 Finance’s algorithm identified underweighted portfolio segments, directing funds to align with my chosen allocation. When withdrawing, the algorithm sells overweighted portions first, ensuring adherence to my target allocation.

Retirement investment

M1 Finance goes beyond conventional brokerages, offering traditional, Roth, and SEP IRAs and regular stock brokerages and trust accounts.

CONS OF M1 FINANCE

Access to advisory services or recommendations

Unlike peers, M1 lacks investment guidance or suggestions and doesn’t grant access to human advisors.

Tax-loss optimization

If you are in a higher tax bracket or with substantial accounts, you may forego tax-loss optimization, a strategy that offsets taxable capital gains to reduce tax liability.

Automated rebalancing

While M1 Finance’s Dynamic Rebalancing maintains my asset allocation using incoming and outgoing funds, it won’t automatically readjust existing investments. I need to instruct the app for this task. Unlike fully hands-off robo-advisors, this brokerage’s design allows easy monitoring of portfolio allocation versus targets, prompting manual rebalancing when needed.

IS M1 LEGITIMATE?

M1 Finance is a safe choice in the financial world with its registration under FINRA, ensuring trustworthiness. SPIC’ insurance coverage shields you from losing stocks and cash, removing doubts in your head.

Lincoln Savings Bank hosts M1 checking accounts and is FDIC-insured up to $250,000, bringing about a sense of calm in turbulent times. Military-grade 4096-bit encryption and two-factor authentication provide added layers of security, so your mind remains at ease.

HOW MUCH CAN YOU EARN FROM M1 FINANCE

Depending on your investment and market performance, you can earn between 19-29% APR.

M1Finance APR

Moreover, you can also earn cash back rewards up to 10% on credit card spendings as well.

M1Finance cash back reward

On top of it, if you move your account from another broker to M1Finance, you get up to $15,000 as a bonus. The bonus comes with certain terms and conditions.

M1Finance bonus

HOW TO OPEN AN M1 FINANCE ACCOUNT

Let us look at how you can open your M1 account today.

First, search for the M1 finance official website on your browser. On the home page of their website, click on the get started button.

Get Started Button

You will then be required to input details, which include your email address and a password, after which you click the sign up now button.

M1 Finance Sign Up Details

M1 Finance offers you a free 3-month trial if you choose to accept. You can use the three months to familiarise yourself with the platform’s work.

M1 Finance Free Trial

To complete the signing-up process, you must comply with a 2-factor authentication security measure.

M1 Finance 2FA 

Once you’ve established a username and password, M1 will guide you to their onboarding sequence. During this process, you’ll gain an understanding of the platform’s functionality and respond to some general inquiries related to your investment background.

The portfolio creation section lets you choose from pre-arranged investment selections or tailor the portfolio according to your preferences.

You’ll be requested to choose an account to initiate the process. M1 supports various account types, including brokerage, traditional IRA, Roth IRA, SEP IRA, custodial (exclusive to M1 Plus), and trust accounts. Remember that the minimum amount required to open an account is $100 (or $500 for IRAs).

Once you have your portfolio, M1 has designated your chosen account, and you have provided your banking details, you are all set to commence your investment journey.

M1 Finance Account

WHAT IS MINIMUM AND MAXIMUM DEPOSIT AMOUNT WITH M1FINANCE?

The minimum deposit for M1FInance varies from $0 to $5,000 depending on your chosen account type. Look at the following table:

M1Finance minimum deposit table

Whatever account you choose, the minimum deposit stated in the above table is for one-time. For recurring payments, the minimum threshold is $10.

WHAT ARE PAYMENT METHODS AVAILABLE WITH M1FINANCE?

M1Finance offers popular payment methods like credit cards and checking account. The time for payment processing is 3-5 business days on average.

M1Finance payment methods

WHAT ARE TRADEABLE ASSETS AVAILABLE?

M1Finance offers more than 6000 stocks and ETFS available at Nasdaq and NYSE. Moreover, it also supports few cryptocurrencies like BTC, ETH and LTC.

M1Finance tradeable assets

M1FINANCE APP

M1Finance provides you with both iOS and Android apps. You can sign up, sign in or operate your investing accounts from your mobile device. The interface is easy-to-use with all the much needed features.

M1Finance app

SERVICES OFFERED BY M1 FINANCE

M1 Finance extends a range of account services that enhance flexibility for managing my funds. Transferring money in and out of the platform is seamless, and I can set up automated deposits into my portfolio monthly, weekly, or bi-weekly.

Moreover, I can place individual trade orders, granting me greater adaptability. If you wish to consolidate your investments under one broker, you can seamlessly transfer from external brokerage or retirement accounts into M1.

Furthermore, you can opt for marginal accounts, allowing you to borrow up to 40% of the account’s value once the balance exceeds $2,000.

Certain features vary depending on whether you hold an M1 Basic or M1 Plus membership (which involves a $95 annual fee). Regarding margin loans, M1 Basic members are subject to an interest rate of 8.50%, whereas M1 Plus members enjoy a lower rate of 6.95%.

Both membership tiers provide access to a checking account, but M1 Plus members receive additional benefits such as more cash-back choices, extra ATM reimbursements, and a wider range of payment methods. The credit card offer is exclusively available to M1 Plus members and comes with intriguing cash-back opportunities as well as the waiver of the annual fee.

CASH MANAGEMENT

In addition to the portfolio management service, M1 Finance provides a suite of financial tools, including digital banking, credit card choice, and a cash distribution feature that completes the platform’s offerings.

M1 Spend seamlessly combines a checking account with your investment holdings. You can move funds, establish direct deposits, and purchase using a debit card. There’s no requirement for a minimum balance, and all deposited amounts are safeguarded by the FDIC, offering insurance coverage of up to $250,000.

M1 Plus members enjoy extra benefits like a 1.5% cash back, a 5% interest rate, and the ability to send checks.

The Owners Rewards Card presents a distinctive credit card option exclusively accessible to M1 Plus members. With no annual fee, members can earn as much as 10% cash back on transactions associated with companies they’ve invested in through the platform.

M1 Finance Cashback

M1’s Smart Transfers, available to Plus members, permits you to establish a strategy based on rules to allocate surplus funds for expenditures effectively, maximize annual IRA contributions, or make investments across your brokerage accounts. These rules can be layered, streamlining cash management automatically to align with your requirements.

PORTFOLIO FORMATION

One of the key distinguishing features of M1’s platform is how portfolios are structured. Investors possess the capability to select from a diverse array of over 80 pre-designed Expert Pies. M1 has tailored these pies to various strategies encompassing passive investment, replication of hedge fund approaches, and socially conscious choices.

For instance, you can effortlessly assemble a passive portfolio using a pair of equity—based and bond-based ETFs that mirror global market trends. This arrangement permits you to distribute your allocation between these funds following your risk preference.

Alternatively, you can construct Custom Pies, which enable you to pick your holdings or combine them with an existing Expert Pie.

Portfolio Formation

The Expert Pies offer a range of asset allocation alternatives. These encompass fundamental analysis, technical analysis, value investing, long-term holding, growth-oriented investing, income-focused investing, small-cap emphasis, and plans for reinvesting dividends.

MANAGING YOUR PORTFOLIO

After configuring your investment “pies,” M1 Finance oversees your portfolio. It rebalances when you add fresh funds to prevent significant deviation from your original target allocation. M1 achieves this by directing new investments toward the segments of your portfolio that have fallen below their intended weight, aligning with your initial strategy.

Additionally, the platform stands out with a unique capability: You can manually trigger a complete portfolio rebalance at your discretion.

M1 allows one trading session during the day, but members who subscribe to M1 Plus with an account balance exceeding $25,000 gain access to two daily trading windows.

You can execute Individual buy and sell orders independently, separate from the pre-set “pie” selections. Fractional shares are available, ensuring you fully utilize your investment without the need to keep a portion of your portfolio in cash.

Another notable feature involves tax-efficient withdrawal management, structured to minimize tax liabilities. However, it’s important to note that the absence of a comprehensive tax-loss harvesting function could limit the extent of tax optimization in your account.

Additionally, the platform lacks an aggregation feature that allows you to link external investment accounts, depriving you of insights into your diversification across all your investment portfolios. This feature, commonly provided by many other robo-advisors, offers a comprehensive view of your overall net worth and progress toward your financial goals.

Portfolio Management

USER EXPERIENCE

Desktop Usage

Navigating the M1 website, featuring an uncluttered and intuitive interface, is a breeze. The instructions for signing up are straightforward, M1 presents the performance metrics clearly, and the layout is easy to navigate.

The site includes tabs dedicated to your portfolio activity and holdings, buttons for buying, selling, or rebalancing actions, and graphs that provide a detailed allocation breakdown. M1 Finance stands out in the realm of robo-advisors by excelling in user experience compared to traditional financial websites.

M1 Buttons

Mobile Interaction

Much like its desktop counterpart, the M1 Finance app is highly rated for its user-friendly nature. The app’s workflow closely mirrors the website’s, ensuring a consistent experience. Virtually all tasks achievable on the website can also be carried out on the app, allowing you to choose the platform that suits your preference.

M1 Finance Mobile

Tradable securities

Compared to numerous other brokerage services, M1’s selection of tradable securities is notably more constrained. While M1 clients can acquire stocks and ETFs, the availability extends to a restricted range of over-the-counter securities and cryptocurrencies.

For those seeking to incorporate pricier stocks into their portfolio without procuring whole shares, M1 does provide fractional shares.

M1 Finance Securities

Within the M1 platform, investors can choose from over 6,000 securities, some with starting prices as low as $1. However, it’s important to note that M1 does not include mutual funds in its offerings. This absence limits the extent of diversification possible for investors constructing their portfolios.

Additionally, the M1 platform does not facilitate options trading, a feature that might attract seasoned investors familiar with the associated risks.

M1 FINANCE’S CHARGES

M1 Finance distinguishes itself by not imposing any charges for portfolio management or trading activities. This unique platform facet directs more of your funds toward productive investments. Instead, M1 generates revenue through interest, securities lending, the Plus membership subscription, and payment for order flow.

When it comes to ETFs acquired via the platform, they come with fees that are paid directly to the fund manager, aligning with standard industry practices. Members of the M1 Plus tier must pay either a $95 annual subscription fee or a $10 monthly payment.

Furthermore, there is a supplementary fee schedule for extra account-related operations. The overall affordability of the platform stands out as an appealing attribute for investors.

Nevertheless, it’s important to note that there are IRA termination and outgoing transfer fees of $100. Additionally, for accounts with balances up to $50 that have remained inactive for 90 days, a $50 fee is applicable.

CUSTOMER SUPPORT

Clients using a robo-advisor might require assistance in two main areas: guidance related to investments and assistance with technical problems. Regarding product-related inquiries, M1’s customer success team can be reached via email from 9 a.m. to 4 p.m. EST on days when the U.S. stock market is operational.

Additionally, they have created a comprehensive collection of frequently asked questions (FAQs) and articles to offer customer support.

M1 Finance Customer Support

It’s worth noting that the company does not furnish personalized investment advice or specific stock recommendations. Instead, it imparts financial education through resources such as its blog, Taking Stock, and its newsletter, The Investor’s Mindset.

EDUCATIONAL MATERIAL

M1 Finance offers a variety of educational tools at your disposal. The blog hosts various articles covering various investment strategies and top financial practices. A particular emphasis of this content lies in equipping investors with knowledge to enhance their approach to long-term portfolios.

M1’s social media profiles, videos, and the “The Investors Mindset” newsletter provide further avenues to access these resources.

CONCLUSION

M1 Finance is an investment firm that offers numerous services at very affordable charges. You can become a member at a minimum deposit of just $100.

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