M1 Finance is a unique robo-advisor platform that offers a hybrid approach to investing. It blends automated investing with human guidance, giving users the best of both worlds. In this M1 Finance review, we'll take a closer look at the features and benefits of this platform and help you decide if it's the right fit for you.
How does it work?
How Does M1 Finance Work?
M1 Finance is a robo-advisor and online-only brokerage that's unlike much of what is currently on the market. When you join, there's no questionnaire to determine your objectives or risk tolerance, as with other robo-advisors. Users choose their investments the same way they would at a brokerage account, and M1 Finance handles the buying, selling, rebalancing, and allocation of funds.
The M1 platform has more than 80 pre-designed portfolios – dubbed “pies” by the firm – that include a variety of investment techniques. M1 Finance's portfolios, which range from extremely conservative to very aggressive in terms of asset allocation, provide investors with a lot of alternatives that are not traditionally offered by most robo-investing platforms.
Pros & Cons
Pros and Cons of M1 Finance
What does M1 Finance Offer?
Invest
M1 Finance provides users with automated, commission-free investment accounts that allow them to grow their portfolios easily. With Invest, users can create customized portfolios with something M1 Finance calls Pies.
Pies are pre-made portfolios of stocks and ETFs that you can use to invest in specific companies or sectors. For example, there is an S&P 500 Pie, a Technology Pie, and even a responsible investing ESG Pie. You can also create custom Pies for your investment portfolio, in which you can add individual stocks and ETFs at any allocation rate you set to make custom portfolios.
Account Types:
Brokerage Account – This taxable account can be used for long-term investing or short-term trading.
Roth IRA – With a Roth IRA, you can grow your money and withdraw it tax-free in retirement. With 80+ expert-built pies, no management fees, and automated contributions, it's an excellent choice for people looking to create a retirement account.
M1 Crypto – M1 Crypto is a new addition that allows you to buy, sell, and hold cryptocurrencies with all the same features as a regular brokerage account.
Borrow
M1 Borrow allows you to borrow against your existing M1 Investments without the extra paperwork and underwriting most personal loans require. With this margin loan, you'll also get some of the best rates in the industry, with interest rates as low as 3.50% directly deposited into your M1 checking account.
Features:
- Automatic dividend reinvesting
- Fractional shares
- Zero management fees
Checking Account
With the M1 checking account, you'll get 3.30% APY on your cash balance, which is 43x the national average. This means you'll earn more interest in two weeks than at a traditional bank.
You'll also get a debit card and access to over 55,000 fee-free ATMs and earn unlimited 1% cash back on all debit card purchases. Finally, there are no minimums to sign up, and your money is FDIC insured for up to $250,000 by M1's partner Lincoln Savings Bank.
Features:
- 3.30% APY bank account
- Unlimited 1% cash back on all debit card purchases
- Get paid 2 days early with a direct deposit
- Send & deposit checks from your phone
Credit
M1 Finance's Owners Reward Card lets you earn up to 10% cash back at select companies you've already invested in. For example, if you have invested in Spotify, you'll get 10% cash back each time you make a purchase.
For a complete list of eligible brands, reference the list below. The card has an annual fee of $95.00, but this fee is waived if you have M1 Plus.
M1 Plus
With M1 Plus, you'll get all of the features from the free M1 features and additional benefits for $125 per year. However, M1 Finance is currently offering a free 3-month trial.
Features:
- Free Owners Reward Card ($95.00 annual fee is waived)
- An additional trading window (allows you to buy stocks & ETFs in the afternoon)
- Get 3.30% APY on your idle cash in your investment accounts
- Margin loans at a discounted rate (Pay only 3.5% instead of 5.0%)
- 4 monthly ATM fee reimbursements
- No international fees (For debit & credit cards)
- Smart transfers & custodial accounts
- M1 Plus community
Features
What are M1 Finance’s Top Features?
Automated Investing
M1 Finance will automatically invest into a specific pie you select from the start. For example, if you want to invest in the S&P 500, you can choose that pie, and M1 will automatically invest your money into that.
You can also automate contributions to invest money into your account regularly.
IRA
With a Roth IRA, you can grow your money and withdraw it tax-free in retirement. With 80+ expert-built pies, no management fees, and automated contributions, it's an excellent choice for people looking to create a retirement account.
Features:
- 3 different retirement accounts – Traditional, Roth, SEP IRAs
- No management fees
- Fractional shares & automatic contributions
Investment Pies
Investment Pies are like investment portfolios that you can customize to your liking. You can select from over 80+ expert-built pies, or you can build your own. There are also some specialty pies like the Hedge Fun Followers Pie, which allows investors to track top funds like Berkshire Hathaway, Tiger Global Management, and more.
Automatic Rebalancing
Maintaining the asset allocation of your investment pies is essential for staying on track with your goals. Keeping your asset allocation can be difficult, but Mifinance will automatically rebalance your pies for you. This means that if one asset class in your pie starts to do better than the others, Mifinance will automatically sell some of that asset and buy more of the others to maintain your original allocation. This is an excellent feature for people who want to set it and forget it.
Fractional Shares
M1 Finance also offers fractional shares, which means you can invest in a company even if you don’t have enough money to buy a whole share.
For example, if a company’s stock is $100 and you only have $50, you can still invest in that company by buying a fractional share. This is a great way to diversify your portfolio without spending much money upfront.
M1 Borrow
M1 Finance also offers a borrowing feature called Mifinance Borrow. With this feature, you can borrow up to 35% of the value of your account at a low-interest rate (As low as 3.5% with M1 Plus). This can be a great way to grow your account even faster by reinvesting the money you borrow.
High-Interest APY
M1 Finance also offers a high-yield cash account with a MasterCard debit card. This account has no fees and no minimum balance requirements. You can earn up to 3.30% APY (With M1 Plus) on your cash account balances.
Credit Card
M1 Finance's Owner's Rewards Card is a great way to earn cash back on everyday purchases. This card earns up to 10% cash back on select merchants you have already invested in. To learn more, look at our top 3 credit card picks for 2022.
Automatic Reinvesting
M1 Finance also offers automatic reinvesting, which is a great way to grow your account. With this feature, M1 Finance will automatically reinvest your dividends and capital gains into your account so you can compound your returns and grow your account value faster.
Notice: Since M1 Finance does not offer tax-loss harvesting, it's important that you do not rebalance your portfolio all the time to ensure maximum tax savings.
Customer support
Customer Service and Support
M1 Finance offers excellent customer service and support. They have a knowledge base, FAQs, and email support. They also have a live chat feature that is available 24/ hours a day, seven days a week.
Phone:
(312) 600-2883
Monday – Friday 9:00 AM – 4:00 PM (ET).
Live Chat:
Available 24/7
Email:
Monday – Friday with up to 1 business day to respond.
Fees
M1 Finance Fees
M1 Finance doesn't have any management fees. They also don't charge any commissions on trades, and they don't have any account minimums. Instead, M1 makes money through interest, lending securities and cash, and its M1 Plus membership. Compared to other robo-platforms, the fee structure is relatively low, making it attractive for potential new users.
| Category | Fees |
|---|---|
| Management fees for $5,000 account | $0 |
| Management fees for $25,000 account | $0 |
| Management fees for $100,000 account | $0 |
| Termination fees | $100 for outgoing transfers & IRA closures |
| Expense ratios | Typically between 0.06% – 0.20% |
| Mutual funds | N/A |
Bonus
M1 Finance Bonus
M1 Finance $10 Bonus
Compare
How does M1 Finance Compare?
Beginner friendly
Retirement account access (IRA, Roth IRA, & more)
Limited amount of crypto investment options
Crypto investing with 20+ different coins
Commission-free trading
No 24/7 phone support
Best customer service (Out of these 3 options)
Physical locations & brand reputation
M1 Finance Vs. Webull
M1 Finance is an excellent choice for people looking for a robo-advisor to help them invest their stocks. However, if you want a more hands-on approach, we recommend Webull.
M1 Finance Vs. SoFi
SoFi is an excellent choice for people who want to invest in stocks, but they also offer other products like student loan refinancing and personal loans. If you are looking for a one-stop shop, SoFi is a great choice. However, if you want a deposit and forget about it approach, go with M1 Finance.
M1 Finance Vs. Fidelity
Fidelity is a great choice for people who are looking for a traditional broker. They offer commission-free trades and have a large selection of mutual funds and ETFs. However, if you want a robo-advisor that will help you invest your stocks and manage most of your day-to-day tasks, M1 Finance is the better choice.
Bottom line
Why Choose M1 Finance?
FAQ
M1 Finance FAQ
Is M1 Finance Trustworthy?
M1 Finance is a secure website. They use 256-bit SSL encryption to protect your personal information. They also have two-factor authentication to protect your account.
Who owns M1 Finance?
M1 Holdidings Inc. owns and operates M1 Finance. The company is private and was founded by Brian Barnes.
How does M1 Finance Make Money?
M1 Finance makes money through interest on cash balances and loans, as well as commissions from trades. It also earns revenue from its M1 Plus plan, which costs $125 annually.
Does M1 Finance Offer Tax-Loss Harvesting?
No, M1 Finance does not currently offer tax-loss harvesting to both its free and M1 Plus users.
Which is better Robinhood or M1 Finance?
It depends on what you are looking for. If you are looking for a more hands-on approach over your portfolio, we recommend Robinhood. However, if you want a more passive approach, M1 Finance is a great choice. Both platforms have pros and cons, so it depends on your individual needs as an investor.
Is M1 Finance good for beginners?
M1 Finance is a great choice for beginners because it offers a wide range of features and tools to help you make the most of your money. With its low fees, easy-to-use interface, and wide selection of investment options, M1 Finance makes it simple to invest in the markets regardless of your knowledge of the markets.
