M1 Finance App Review: The Easiest Way To Automate Your Investing
In today's M1 Finance app review, we're breaking down the free investing platform that not only automates investing but also automates portfolio rebalancing. With their pre-built selection of custom portfolios and the ability to customize your own portfolio, they make it easy to start a diversified investment account that uses automation to efficiently manage itself. I’ll be breaking down all the features of M1 Finance, discussing it's pros and cons, and explain who I think this app is most ideal for.
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☑️ Quick Summary ☑️
- 100% free investing platform (no monthly subscription fees & zero trading commissions)
- Can invest in thousands of individual stocks and ETFs
- Can buy fractional shares of any stock or ETF
- Smart portfolio rebalancing feature built-in
- $100 account minimum to get started investing
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What Is The M1 Finance App?
The M1 Finance app is an easy to use robo-advisor investment platform that is just as ideal for new investors as it is for experienced investors. Not only is it 100% free to use, but M1 Finance also provides an array of features that make it stand out from the competition.
Available on both iOS and Android devices, the M1 Finance app makes it easy to view, manage, and track your investments right from a single dashboard.
In addition, M1 Finance also has a website version so you can easily access your portfolio and manage your investments from your computer or laptop as well.
How Does The M1 Finance App Work?
One of the reasons M1 Finance is such a great platform for new investors is because they let you invest in fractional shares of both individual stocks and ETFs.
Essentially, this means instead of having to buy a full share of a stock that may costs hundreds of dollars, you can invest in a “partial share” of it, for a much lower amount (i.e., $10 or $50 worth of that stock).
- If you're new to investing, an ETF stands for Exchange Traded Fund. Essentially, an ETF is a basket of related stocks grouped together in one investment. And individual stocks (also known as "single stocks") are individual companies such as Amazon, Google, Walmart, etc.
- ETFs are often composed of individual stocks related by a specific sector of the market (i.e., a technology ETF composed of technology related companies).
M1 Finance lets you invest in what they refer to as custom “pies.” Essentially, these pies are custom portfolios of stocks and/or ETFs within your M1 Finance account.
Now don’t worry, if you are new to investing M1 Finance does offer more than 60 prebuilt and diversified pies to choose from.
Each prebuilt pie listed includes its dividend yield, historical performance and risk level so that you can choose a portfolio based on your financial goals, time frame, and investing style (conservative, moderate, or aggressive).
However, if you would like to build your own custom portfolio you can do that just as easily. You will simply create a new “pie” and select your choice of individual stocks and/or ETFs.
Once you have either chosen a prebuilt portfolio or customized your own, M1 Finance will take it from there. They will manage your account and maintain your portfolio allocations exactly as you set them through smart rebalancing.
In addition, whenever you make any new contributions to your portfolio, M1 Finance will also allocate that contribution exactly as you have set in your custom pie. You can also make changes to your portfolio allocation at anytime.
Not only can you create different pies for various investment goals, but there is no limit on how many pies you can own in your M1 Finance account.
You can currently invest in over 6,000 individual stocks and ETFs on the M1 Finance platform.
Dividend Reinvestment: If any stock or ETF you own in your portfolio pays you a dividend it will first be deposited into the cash balance of your account. Once your cash balance reaches at least $10, it will automatically be reinvested back into your portfolio for you.
You can see my full M1 Finance app review in the video below:
Automatic Deposits: You can automate investing with M1 Finance through setting up automatic contributions from a linked bank account. This allows you to set up deposits to your investment account on a weekly, bi-weekly, or monthly basis.
Essentially, this makes investing on a consistent basis achievable without having to think about it. Even if it just a small recurring investment you set up, these consistent contributions will help your portfolio grow over time. You can also pause these automatic deposits at anytime.
M1 Spend is a free checking account built into the M1 Finance app. The M1 Spend checking account is FDIC-insured and has two tiers:
M1 Spend: the default M1 Finance checking account (this is free)
- M1 Spend will allow users to receive paychecks, pay bills, and pay with a debit card - all for free. However, the basic M1 Spend offers 0% interest (APY) on checking and 0% cash back.
M1 Plus: their premium membership
- M1 Plus users will get 1.5% interest (APY) on their checking account, 1% cash back on all purchases with their M1 Spend debit card, lower APR for loans using M1 Borrow, a second trading window, and more.
- However, M1 Plus is an upgraded membership and does have a monthly membership fee. The costs for this upgraded membership are currently TBD as they roll out it out soon.
M1 Borrow: M1 Finance now also offers a portfolio line of credit that is instantly accessible with an APR of 4.25%. To qualify, you must maintain a margin brokerage account with a balance of at least $10,000 and you can borrow up to 35% of your portfolio. IRAs do not qualify.
- Note: do keep in mind that if you choose to use M1 Borrow you are opening a line of credit. Also keep in mind that interest rates can rise so always make sure you’re aware of these risks if you use M1 Borrow.
Tax Minimization: M1 Finance also offers a feature called “Tax Minimization” on all their investment accounts. This feature enables you to sell asset positions in the most tax-favorable way.
Whenever you sell an investment, M1 Finance prioritizes the sale in a way that will minimize your taxes. The order of assets sold looks like this:
- Losses that offset future gains
- Lots that result in long-term gains
- Lots that result in short-term gains
Account Types Offered
M1 Finance currently offers the following different account types:
- Individual (default investing account)
- Traditional IRA
- Roth IRA
- Rollover IRA
- SEP IRA
You can even choose to open both a non-retirement account and a retirement account if you would like.
Are There Any Fees?
M1 Finance is a 100% free investing platform. Again, there are no monthly subscription fees, zero trading commissions, and no surprise brokerage fees.
You can open an account with M1 Finance with no minimum amount required, however to begin investing your account must have at least $100 to get started.
Is My Money Safe With M1 Finance?
As a member of SIPC (Securities Investor Protection Corporation), M1 Finance is SIPC insured against brokerage failure. Securities in member's accounts are protected up to $500,000, including up to $250,000 in cash. For further details, please see www.sipc.org
SIPC insurance is investor protection for investment brokerages. Now unlike a bank's FDIC insurance, SIPC does not protect against the decline in value of your securities. Investments in the stock market are subject to fluctuations in market value.
However, SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm. SIPC works to restore to customers their securities and cash that are in their accounts when any potential brokerage firm liquidation begins.
Who would I recommend the M1 Finance app for?
Ideal for new investors
- M1’s platform is completely free to use. There are no trading commissions, no brokerage fees, and no monthly subscription costs.
- M1 Finance offers the ability to invest in fractional shares of stocks and ETFs.
- M1 also offers pre-built diversified portfolios you can invest in
Ideal for passive investing with a little more control over customizing your portfolio
- If you want a bit more control over customizing your portfolio, M1 Finance offers access to over 6,000 individual stocks and ETFs that you can invest in.
Ideal for smart rebalancing
- M1 Finance makes passive investing and portfolio management easy. Through their smart portfolio rebalancing feature, you can easily rebalance your investments with the click of a button.
Who would I not recommend the M1 Finance app for?
Not as ideal for active stock traders
Not as ideal for investing automation tools
Sign Up Bonus
New M1 Finance users can join here, and get a free $10 sign-up bonus when first opening an account and funding it.
At the end of the day, the thing that separates M1 Finance from other robo advisors is that they give you complete control over your investments.
M1 Finance manages your portfolio and automates its rebalancing, but you still have full access to choosing your investments, and can make changes to your allocation at anytime.
You can try the M1 Finance app here.
Or feel free to see how M1 Finance compares to today's other top investing apps here.
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