M1 Finance
Monthly Fee
Minimum Deposit
Our Rating
M1 Savings APY
M1 Finance is a self-directed investing platform that feels like a compromise between robo advisor and broker. You can trade in thousands of stocks and ETFs, building your own customized portfolio. Yet, you can enjoy a fully automated investing experience.
This is not strictly a robo advisor, rather your investments are automated while you continue to make all the pertinent decisions. It provides a comprehensive suite of financial services that cater to the needs of sophisticated investors, emphasizing customization, flexibility, and control.
In addition to investing, customers can earn high interest with M1 high-yield savings account. M1 also offers personal loans and lines of credit through M1 borrow.
How do I start investing with M1 Finance?
You can start by opening an account online, selecting your investment strategy, and depositing a minimum of $100 for personal accounts or $500 for retirement accounts.
Is M1 Finance safe?
Yes, M1 Finance uses bank-level encryption and security measures to protect your data and funds, and it is a member of SIPC, which insures investments up to $500,000.
Can I automate my investments with M1 Finance?
Yes, M1 Finance offers automated investing features such as automatic rebalancing and recurring deposits to maintain your portfolio balance.
What types of accounts does M1 Finance offer?
M1 Finance offers individual and joint taxable accounts, as well as traditional, Roth, and SEP IRAs.
What kind of customer support does M1 Finance provide?
M1 Finance offers customer support primarily through email, with limited phone support for urgent issues.
Can I transfer my existing brokerage account to M1 Finance?
Yes, you can transfer an existing brokerage account to M1 Finance by initiating an ACATS transfer.
Can I buy fractional shares on M1 Finance?
Yes, M1 Finance allows you to buy fractional shares, enabling you to invest in expensive stocks with smaller amounts of money.
Pros | Cons |
|---|---|
Customization and Control | No Real-Time Trading |
No Trading Commissions | No Tax-loss harvesting |
Automation | Limited Investment Options |
Fractional Shares | Limited Account Types |
Low Minimum Investment |
M1 Features I Mostly Liked
Here are the key features that I found most appealing in M1 Finance:
-
Pie Investing
The M1 Finance platform centers around portfolio “pies” which are groups of investments.
You can create pies for specific investing goals such as socially responsible investing or retirement. Each pie has slices, with up to 100 slices per pie. You can customize this pie to your preference by reallocating some of the investment categories.
You can pick your investments from a pool of over 6,000 stocks, ETNs, and ETFs, and specify the weight of each slice till they add up to 100%.
The slices can be individual investments or even other pies or groups of pies. This creates a highly flexible and customizable investing approach.
-
The Variety of Account Types
Many investing platforms have very limited account types, which I find difficult to use for my changing investing needs. However, M1 supports both individual and joint brokerage accounts and Individual Retirement Accounts.
When I’m looking at investing for the short or medium term, there is a taxable brokerage account but I can also take advantage of the tax benefits of an IRA for long term retirement investing. You can also access a custodial trust account if you want to invest money for your children or grandchildren.
I even discovered a concierge service to help with an IRA rollover, making it a great platform for all stages of your investing journey.
-
Building My Custom Portfolios
There is a choice of over 6,000 stocks and ETFs listed on the NYSE, BATs and Nasdaq stock exchanges to build a custom portfolio.
It is very easy to search for specific stocks through the screener tool as shown below, but I prefer to browse according to the dividend yield, market capitalization, market sector, or P/E ratio.
All you need to do is choose your preferred stocks or funds and then indicate how many shares you want to add to your portfolio. What’s great is that M1 offers full and fractional shares, so I was able to make the most of my entire investment fund.
For ETFs, there are different screener criteria including dividend yield, expense ratio and total assets.
You can also sort the ETFs by type including currency, commodities, bonds, equities, asset allocation or industry. You can then browse the asset details before you decide if you want to add it to your portfolio.
-
Pre-Made Portfolios Selection
If you lack the time or confidence to build your own portfolio, you can use a pre-made or “expert pie.”
I found this a great way to get into using the platform. There are almost 100 of these pies and they are organized into different categories.
General Investing is tailored to specific risk tolerances which makes them quite similar to the typical portfolios I’ve found with robo advisor platforms.
These range from ultra aggressive to ultra conservative with diversified stock, bond and real estate ETFs.
You can also choose from retirement pies, responsible investing if you prefer a socially responsible approach and simple stocks and bonds pies.
I like the income generating pies with short to long term bonds and dividend stocks and “hedge fund followers” which copy the strategies of the big hedge funds without the excessive fees.
-
Getting Loans Through M1 Borrow
This is a great feature that allows you to use your existing M1 account balance as collateral for a loan. You do need to have an account balance over $2,000, but you can borrow up to 50% of your total account balance.
What I found great is that you can choose your own repayment timeline and while you can use the funds to buy more ETFs and stocks, you can use the funds for practically any purpose.
The rates are reasonable and while this provides a lower cost way for investing on margin, I used the funds to pay for an unexpected expense without needing to sell my assets as it wasn’t the best time to liquidate.
-
High APY On M1 High Yield Savings Account
The M1 savings account offers a highly competitive rate, Earn 4.50% as of December 2024.
Also, with M1 Finance, you can earn interest on those funds until you invest them. Any cash in your M1 Finance account is automatically redirected into a high yield savings account. I love that I can enjoy a return on all my portfolio money even if it is not all actively invested.
-
Dynamic Portfolio Rebalancing
One of the highlights of M1 is the Dynamic Rebalancing feature. This automated tool ensures that the cash moving in and out of your account helps to maintain your investing targets.
If you transfer money into your account, it could be allocated to the slices that are under the target percentages. On the other hand, if you want to move money out of your account, it may come from slices that are over your targets.
This process is similar to using a robo advisor, it does require some manual intervention. But it is simple, periodically I just manually initiate the rebalance from my M1 dashboard.
-
No Trading Fees
While it is by no means unique, the final feature that I love about M1 Finance is that there are no trading fees. There are other commission free brokerage platforms, but many lack the comprehensive feature set available with M1.
The lack of trading fees makes it easier to maximize your returns, which can be particularly important if you have a limited investing fund.
Additional Features That Helped Me
In addition to the main features I use regularly, there are several additional features available for investors and savers:
-
Intuitive App
Having an app for your investing platform is nothing new, but the quality of the apps can vary greatly. The M1 app is incredibly easy to use. Using the app offers an almost identical user experience compared to the desktop platform. You can set goals and even conduct your research.
You can get a great overview of specific assets as you can see on these screenshots.
I enjoyed that the app guided me through almost every M1 function, from opening the high-yield savings account to applying for the M1 credit card.
I love that you can even rebalance your portfolio and investments with just one click, letting me keep everything on track for my goals even when I am on the go.
-
Smart Transfers
The M1 Smart Transfers can help to automate your finances. I went through and set rules following the onscreen prompts and gave permission for my account to automatically act.
For example, I set the smart transfers to maintain a minimum balance in my high yield savings account, moving the remainder over to be ready for investing. But, you could even set the account to take a margin loan if your balance drops too low or move cash from different accounts.
You can automate pretty much every aspect of managing your money on M1 including moving money from one of your savings goals to another.
The downside is that you need to have an M1 Plus membership to access this feature.
-
Financial Analysis Tools
Whether you’re new to investing or simply want to gain insights into your progress, you need access to analysis tools.
Fortunately, the M1 Finance platform has some great tools. You can log into your dashboard at any time to check your progress towards your goals.
As you can see in the screenshot above, I can immediately track my net worth along with my liabilities and potential investment fund. There is even a shortcut button to initiate a transfer from this screen to make things super simple.
-
Research Tools
M1 Finance also has some great research tools, so you can investigate potential assets further without needing to leave the platform.
I can view the performance of individual assets with key data and a shortcut button to add the item to my portfolio.
You can even delve into crypto and other asset classes to check if you want to further diversify your portfolio.
However, you can also follow the market news, even if you’re only using the app.
As you can see in the screenshot below, I like to read the top stories in the investing niche along with other helpful articles to improve my knowledge base.
Considering M1 is a low cost platform, this is a fantastic feature that can be very helpful for newbie and more experienced investors.
-
M1 Plus
Speaking of M1 Plus, this feature is something that I really love. While the basic M1 membership is fee free, you can subscribe to M1 Plus and access other benefits, unlocking the full suite of features. You can pay for your M1 Plus monthly or annually, with a discount if you pay annually.
The M1 Plus membership not only adds smart transfers, but you can get a discounted rate on margin loans, access to custodial accounts, very competitive high yield savings rates and an additional afternoon trade window. M1 Plus members can also get up to 10% cash back rewards with the M1 credit card.
M1 Fees: How Does It Work?
Another thing I appreciate about M1 Finance is that investing involves minimal costs. There is no trading commission on stocks and ETDs. While this is fairly standard among online brokerages, M1 doesn’t charge markups on trades, which is a common way to recoup the lost revenue with other platforms.
There is a $100 minimum balance requirement, which increases to $500 for retirement accounts, but this is quite reasonable considering the platform’s feature set.
If your assets are under $10,000, there is a $3 fee per month, but if you have an active M1 loan or your assets are over $10,000, this fee is waived.
What Can Be Improved
Of course, M1 Finance is not perfect and there are a couple of areas where there is potential for improvement.
-
Not For Traders
M1 Finance is considered to have limited investment options because it primarily focuses on stocks and ETFs, without offering other asset classes such as mutual funds, bonds, options trading or commodities.
There are other commission free trading platforms that offer these assets, so M1 would benefit from expanding its product offerings
-
Limited Account Types
M1 Finance has limited account types because it primarily focuses on individual and joint taxable accounts, as well as traditional, Roth, and SEP IRAs. It does not offer certain account types such as custodial accounts, 529 college savings plans, or solo 401(k)s.
This limitation can be restrictive for investors who need these specific account types for education savings or more diverse retirement planning options.
-
Limited Educational Resources
M1 Finance also has limited educational resources. If you’re an experienced investor and want to access market research, you may find M1 a little limited.
There is also a lack of helpful articles that can guide newer investors on strategy and other practices. While I found this information elsewhere, it would be nice if I didn’t need to leave the platform if I wanted to learn more.
-
Customer Support
There is also limited customer support. It is a hybrid platform that is not a complete online brokerage or a full robo advisor, which leaves it a little in limbo. If you do have an issue, you’ll not be able to speak to a human being via a phone support line.
There are limited chatbots on the platform that can provide accurate answers to customer queries, but when I have some specific issues, I need to rely on the email customer service team.
Which Type of Investor is Best Suited to M1 Finance?
M1 Finance offers a range of features designed to cater to different types of investors. Here’s a closer look at the types of investors who would benefit the most from using M1.
Young Investors: M1 is a great option for investors who already have basic investing skills and won’t need plenty of handholding. If you want a platform that will manage your investments without relinquishing complete control, M1 is likely to appeal to you.
Investors Who Need Control: M1 is also appealing to the type of investor who likes to choose their own investments or tinker with premade portfolios, as M1 will manage your portfolio and rebalance to keep your asset allocations aligned with your investment goals. This level of personalization is great, so you can tailor your investing to your preferences with the safety net of M1 automation.
Consolidated Investing and Banking: This platform is also a great option if you want to consolidate your investing and banking with some nice features with the M1 Spend cash management.
How to Open an Account With M1 Finance?
M1 finance requires applicants to be 18 years or old, be US citizens or permanent US residents, and have a current US mailing address. If you meet these requirements, follow these steps to get started with your M1 Finance account:
- Step 1: Provide your email and your preferred password on the M1 Finance sign-up page.
- Step 2: You can select from the prebuilt pies, or create your pie from scratch by selecting your preferred investments from a list of ETFs and stocks. The Expert pie is displayed on the screen as you customize your portfolio.
- Step 3: Select the type of account you want. Choose from an individual or joint taxable account, trust, or retirement account (traditional, SEP, or Roth). You will be required to complete basic information such as name, date of birth, and mailing address.
- Step 4: Link your bank account to the M1 Finance account to fund the account. Select your bank name from the list of banks in the M1 Finance database.
You can also choose to have a one-time funds transfer or set recurring monthly transfers to automate your investments. Usually, it may take up to two days for the funds to reflect in your M1 account.
- Step 5: After funding your account, M1 will buy the investments depending on your pie allocation. You can log into your account regularly to re-allocate the pies depending on how the investments perform.
How We Rate And Review Banks: Our Methodology
The Smart Investor team extensively reviewed hundreds of banks and credit unions. We assessed them based on four main categories, each with specific features:
-
Diversity of Products and Their Attractiveness (40%): We extensively analyzed the breadth and appeal of each bank's product offerings, including savings accounts, checking accounts, loans, investment options, and more. Higher ratings were assigned to banks with a diverse range of products that are attractive in terms of interest rates, fees, terms, and additional features. This category provides insights into the variety and value of the bank's offerings, crucial for meeting customers' diverse financial needs.
-
Account Features (30%): This category delves into the features and benefits accompanying each bank's accounts. We scrutinized factors such as promotions, deposit and withdrawal options, ATM accessibility, online and mobile banking functionalities, as well as additional perks like overdraft protection and rewards programs. Banks offering comprehensive and convenient features received higher ratings, reflecting the overall value of their accounts to customers.
-
Customer Experience (20%): A positive customer experience is paramount in banking, so we evaluated each bank's performance in this area. This included assessing the ease of account opening, quality of customer service, availability of support channels, and overall user satisfaction. Ratings were based on factors such as responsiveness, efficiency, and the bank's commitment to meeting customer needs, ensuring a seamless and satisfactory banking experience.
-
Bank Reputation (10%): The reputation of a bank is a critical consideration for customers. We examined factors such as financial stability, regulatory compliance, and public perception to determine each institution's overall trustworthiness and reliability. Higher ratings were awarded to banks with strong reputations, reflecting their credibility and ability to inspire confidence among customers.
By considering these categories, individuals can make informed decisions that align with their financial needs and preferences, ensuring they choose a bank that offers competitive products, excellent features, a positive customer experience, and a solid reputation.
