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We’ve initially compared M1 Finance to both Webull and Robinhood but feel the broker deserves a more detailed review.
M1 Finance is not your standard investing platform, and it is not intended for short-term trading. The unique brokerage was founded in 2015 and is aimed at long-term investors.
It is a sophisticated robo-advisor that combines automated investing and banking services.
DIY Investing with M1 Invest
The pie-based interface is the bread and butter of M1 Finance. Investors can create and customize their portfolios using percentage allocations within a pie. You can make multiple pies and allocate them within another pie.
For example, you can choose to create a pie of just tech stocks and another pie of only value stocks. You can then allocate 30% of your portfolio in tech and 70% in value. The stocks, bonds, ETFs, pies, and allocations you choose are entirely up to you.
The possibilities are endless.
If you prefer to leave it up to the experts, M1 has several prebuilt pies for you to choose from.
Fractional Shares and Rebalancing
Fractional investing is standard within the pie-based ecosystem. This is a huge plus because you’re able to put every dollar to work.
Rebalancing is not a headache anymore. M1 automatically balances your new deposits to keep your allocations in line. You can also initiate a rebalance at any time with a click of a button.
Automatic and Manual Investing
With auto-invest turned on, dividends and deposits are automatically invested throughout your portfolio. You can choose a cash balance minimum to keep a portion or all of your portfolio in cash.
A minimum of $25 is needed to create an automatic buy order. For example, if you leave your cash balance threshold at zero and turn auto-invest on, M1 will automatically invest funds once they reach $25 or higher.
You can easily set up a recurring deposit via ACH with a bank of your choice. You get to pick the amount, frequency, specific date, and even the day of the week for weekly deposits.
You can also choose to turn auto-invest off and manually initiate buy and sell orders. Portfolio allocation and balancing can still be done automatically.
M1 Basic allows for one trade per day in the morning. M1 Plus offers two trading windows, one in the morning and one in the afternoon.
M1 Finance offers several different investment account types.
- Individual Taxable
- Joint Accounts
- Trust Accounts
- Roth IRA
- Traditional IRA
- Rollover IRA
- SEP IRA
Fees and Commissions
M1 Finance was one of the first brokers to offer commission-free trades. There are no unnecessary fees or commissions to worry about. A minimum account balance of $100 is needed to open a taxable account. And $500 is required to open a retirement account.
There are some pretty standard miscellaneous fees that you will find with most brokers. They are all easy to avoid; view the breakdown here.
M1 Finance has the Securities Investor Protection Corporation (SPIC) Insurance and is a registered US broker. The company uses the industry-leading Apex Clearing Corporation as the clearing firm.
The platform incorporates strong military-grade encryption and offers two-factor authentication.
M1 Spend is the banking portion of M1 Finance. The feature is optional and free to use.
With M1 Spend, you get an FDIC-insured online checking account along with a Visa debit card. You can easily turn the brokerage into an all-in-one place for financial management.
M1 Borrow is the name for the brokerage’s generous margin loan service. Margin allows you to get a loan using your taxable portfolio as collateral.
M1 provides a line of credit up to 35% of your portfolio value with a variable rate (currently 3.5% at the time of this writing). Approval is not based on your credit score.
You can use the loan to purchase more investments, but you are not limited to that. M1 Borrow can be used for virtually anything you want. Be sure to use it wisely, and remember it is a loan tied to the value of your portfolio.
M1 Plus vs. M1 Basic
M1 Plus is a premium version of M1 Finance that costs $125 a year (at the time of this writing). It gives you access to a handful of additional features, including Smart Transfers.
Smart Transfers allows for automatic transfers between invest and spend accounts. You can set a minimum account balance for your spend account and have any excess cash automatically transferred to your investment portfolio.
M1 Plus includes a better margin interest rate, cash back on purchases, an increased ACH transfer limit, and more. Below is a comparison of features between an M1 Plus and a basic M1 account.
M1 has an exceptionally detailed FAQs and support page that can nearly answer any question/issue you may have. They also have direct support through email and over the phone.
As a growing and relatively new company, their customer service is still growing as well. Some customers have experienced long wait times over the phone and through email. Our experience has been overall pretty good, but this is still an area of improvement.
Web Platform and Mobile App
The web platform and mobile app are fast, easy to use, and filled with robust features. The research tools offer the basics like market cap, dividend yield, P/E ratio, etc. Advanced charting and in-depth financial information are not something you get with M1.
The Vision and Future of M1 Finance
Founder Brian Barnes did an ask me anything on Reddit back in December of 2020. We wanted to include some key discussions to help illustrate the direction M1 Finance is going.
A Redditor brought up the long wait times for customer support. Brian responded:
“At the beginning of the year, we had 5 people in support and now have ~40. We’ve also invested heavily in technology to help our reps better service customers. We’ve made significant improvements but still have work to do here.”
As you can see, the company is growing and intensely focused on better serving its customers.
When asked what M1 Does better than its competitors and why you should choose them, Brian responded:
“We help you manage your money in a comprehensive, intuitive, and low cost way.
If you want to invest money into an investment portfolio of your choosing with regularity, M1 is heads and shoulders above competitors in ease and low cost.
If you want access to liquidity, Borrow is one of the cheapest and most flexible options out there.
If you want a digital checking account, Spend is one of the highest interest rates on the market and offers cash back on debit.
If you want to tie it all together, Smart Transfers lets you define where you want your money going once and then your finances are optimized in the background as you live your life.
I can’t think of another competitor offering the breadth and value that we do.”
It is apparent M1 Finance is striving to be the best all-in-one platform for money management and long-term investing. What they have accomplished so far is impressive, and we look forward to watching the company grow and improve.
The Hands-Off Approach Is Ideal for Long-Term Investing
A Fidelity internal performance review conducted between 2003 and 2013 found that the best-performing investors were dead or inactive.
With M1 Finance, you can allow the robo-adviser to invest and balance your portfolio automatically. Once you create/choose a pie and set up a recurring deposit, you can basically forget it exists and let it compound.
Not touching your account has been proven to produce the best long-term results. Using M1 Finance for passive long-term investing makes it easy to leave things alone.
Dividend investors, passive investors, beginner investors, advanced investors, and more will love M1 Finance. The platform is clearly not for day trading or even short-term trading, and that is okay!
M1 Finance shines as a long-term investing tool to grow your wealth with ease. It’s digital banking products are an added bonus.
Overall, the brokerage offers features and convenience that are hard to match.