M1 FINANCE REVIEW: FREE ROBO ADVISOR

Looking for a place to invest and grow your cash?

M1 Finance could be that place if you are looking for a free investment platform with some amazing features that can be automated to invest for you. 

M1 Robo Investing allows you to invest in Individual Companies, ETFs or a combination of both it’s 100% up to you, plus you set the targets, decide how much and when you want to invest and sit back and watch it happen.

I’m here to go over the details of M1 Finance in this year’s M1 Finance Review 2020, but if there is anything you would like to know more of – let me know!

Click Here To Start Investing With M1 Finance

What Is M1 Finance?

M1 Finance is an investment platform that was launched in 2016 and is considered an online Robo Advisor and Brokerage hybrid. 

M1 Finance offers individuals the opportunity to invest in Stocks or Exchange-Traded funds (ETFs) all with features of a traditional brokerage account and built-in Robo advisor. 

First, you select your account type of taxable, retirement, or both, Then, you select your investments and your allocations and begin investing. 

You can choose to manually invest, or you can automate the entire portfolio! M1 Finance is the go-to brokerage for the modern-day passive investor.

M1 Finance focuses on low-cost passive investing with additional features such as automatic rebalancing of your portfolio with purchasing new shares and tax minimization strategies.  The only fees associate with M1 Finance are with any ETFs you invest in, otherwise M1 Finance is completely FREE!

How Does M1 Finance Work?

Step 1: Creating An Account!

Start here by downloading the M1 Finance app.

When you sign up, you will be guided through the process of choosing an account type and building your portfolio or “pie” as they call it. 

You can choose from premade pies, or create a custom pie from a selection of ETFs and stocks offered on M1 Finance.

Your pie may contain anywhere from 1 or up to 100 slices, each with a 1% target towards them.

When you create an account, they will need information such as your name, and email.

Step 2: Choosing An M1 Account!

Once your account is open, you will be guided to select a type of brokerage account you would like to create.

This is where you need to decide what type of investment account you are going to open up, Individual Investing, Joint Investing, Retirement, or Trust Account. 

You can open up additional accounts after the initial process, so don’t worry if you want to open both an Individual Investing and Retirement account.

After selecting your account, you will be asked questions about your investing experience. 

They will also ask here for more personal information such as your address and social security number, this is used for M1 Finance to verify your identity and report your investments to the IRS.

Step 3: Link Your Bank & Create Your Pie!

After you have set up your M1 Finance Account, you will be able to link a bank account and begin transferring funds to begin investing.

M1 Finance requires a minimum deposit of $100 for the Individual Account or $500 for the Retirement Account to begin purchasing stocks.

If you have already built your pie in previous steps, or choose one of M1 Finance pre-made pies. 

As-is M1 Finance will invest your money automatically across your portfolio based on your target allocations. 

If you earn dividends during your investment journey or add more money to your account, that money will be invested as soon as your cash balance exceeds $25 as of April 2020.

This means if you were to invest $25 every Monday into your account, M1 Finance would sweep the $25 and any previously paid dividends into your portfolio automatically.

You can turn off the auto-invest feature at any time by swiping the Aut-invest feature to the left.

Building and Growing Your Portfolio

If you are new to investing or to M1 Finance, you may want to consider dollar-cost averaging into the market. 

This is a simple way of investing your money into your portfolio over a period of time rather than all at once. 

Let’s say you have $1,000 to invest each month. You may want to invest just $250 into the market every week over the course of the month. 

Adding $250 weekly over a year (52 weeks) can easily become $13,000!

By using this method, you are lowering your risk of investing at the top of the market.  When you invest using dollar-cost averaging, you have less risk of being all in at the top of the market. 

There are disadvantages to dollar-cost averaging, one example is that by dollar-cost averaging is that you may miss out on high market returns by not being fully invested during that time.

This is a question you must answer for yourself, do dollar cost average or lump sum investment?

M1 Finance Fractional Shares

M1 Finance allows investors to purchase fractional shares. The use of fractional shares allows investors of all stages to invest in stocks with a high share price and be fully invested. 

Traditionally, you could not buy stocks such as Amazon, Google, and many other others unless you could afford a whole share. 

Now, with M1 Finance you can own as little as .00502 of a share for as little as $10 and it is completely FREE!

Want your money working 100% of the time, fractional shares allow investors to consistently dollar cost average on a weekly, monthly basis. 

Better yet, it allows investors to diversify their portfolios the way they want, and not end up overweight in a certain stock or sector due to the share price.  

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M1 Finance Fees and Features

M1 Finance tries to make all trades around 9 AM Central Time each day that the New York Stock Exchange is open, but can be delayed due to high volume.

No trading can take place outside the trading window.

• Possible ETFs used— M1 Finance has nearly 2,000 ETFs available for you to choose from, as well as any individual stocks that are available on either the New York Stock Exchange or the Nasdaq. (Preferred stocks are excluded.)

• Dividends— All dividend income will be reinvested in your portfolio once it reaches at least $25.

• Tax reporting— M1 Finance integrates directly with TurboTax & H&R Block.

• Margin account status— Since M1 Finance doesn’t hold any of your portfolios in cash, your account is established as a margin account if it has a balance of over $2,000. The margin account status enables you to withdraw money quickly from your account without having to liquidate asset positions.

• Free consultation— You can schedule a free consultation with a product specialist who will show you around the platform and discuss how it will benefit you.

• Account protection— The SIPC covers up to $500,000, including $250,000 in cash, against broker failure.

• Termination fee – $100 This is a fee most brokerages charge and is pretty standard for closing, or transferring accounts.

What is M1 Spend?

M1 Finance is a full-service banking platform, M1 Spend is another service they offer. 

M1 Spend is an optional checking account that offers a debit card, it can be linked to your investment portfolio in order to fund the account and integrated into the M1 Finance App. 

You have the ability to use M1’s debit card at stores, deposit your paycheck, and pay bills. 

M1 is also offering a premium version of M1 Spend called M1 Plus, The debit card offered by M1 Finance is fairly rare as it allows you to earn cash-back on your purchases which many other debit cards do not offer. 

For an annual fee of $125 ($50-$100 in the first year), M1 Plus offers the following;

• 1.00% APY per year on cash sitting in your account (This is subject to change, this is current as of April 2020).

• 1% Cash-back on qualifying debit card purchases.

• 4 Free ATM withdrawals per month

• $0 minimum balance requirement

• FDIC insured up to $250,000

• Exclusive access to a second trading window for more control over how you invest

• Borrow at a base rate of 2.00%

While it does offer some unique features, remember to check out the Best Online High Yield Savings Accounts post for other online savings with higher rates and no fees.

What is M1 Borrow?

M1 Borrow is one of the M1 Finance services which offers a way to take out a margin loan.  If you have a balance of $10,000 in your M1 Finance brokerage account, you will be able to take out a margin loan against your account balance at a current rate of 2.00% APY (as of April 2020).  There are always risks associated with margin loans, such as margin calls when you will be forced to sell positions in your account if the value dips below a specified amount.

Is M1 Finance Safe/Legit?

M1 Finance is a member of the SIPC or Securities and Investor Protection Corporation.  Being a member of the SIPC, you will need to be insured in the event that the broker “M1 Finance” goes out of business or goes financially insolvent. 

This means that each account at M1 Finance is insured for up to $500,000 in coverage and $250,000 for cash.  It is important to understand the SIPC does not insure you in the event your portfolio declines in value based on your investments.

M1 Finance is also a member of the FINRA or Financial Industry Regulatory Authority.  The purpose of FINRA is to oversee Broker-Dealers in the USA and protect you, the investor.

Is M1 Finance Right For You?

M1 Finance has many pros and cons that every investor needs to take into consideration. 

There are certain situations where I feel it makes sense for investors to use M1 Finance, while for others there may be some better options. 

Let us go ahead and cover a few of the pros and cons of the platform and I will leave the rest up to you.

What Are The Pros Of M1 Finance?

1. M1 Finance is 100% FREE with a variety of features and benefits for all investors.

2. M1 Finance offers complete flexibility with the use of custom pies.

3. M1 Finance allows investors to invest using fractional shares down to 1/10,000 of a share.

4. The platform can be 100% passive and automated to take your emotions out of investing.

5. M1 Finance offers retirement accounts such as IRA, Roth IRA, and SEP IRA.

6. M1 Finance allows an all-in-one-stop service for Investing, Banking & Borrowing.

What Are The Cons Of M1 Finance?

1. Investments are limited to Stocks and ETFs trading on the NYSE, NASDAQ, and BATS, so there are no mutual funds. (Who uses Mutual Funds?)

2. M1 Finance uses automated market orders, which means you cannot use other types of buy or sell orders to allow specific price targets.

3. M1 Finance Robo-advisor services can be limiting and do not offer very efficient tax-loss harvesting, but other platforms generally charge a fee for using their platform.

4. M1 Finance only allows for one trading window per day, without the use of M1 Plus which costs a fee.

Click Here To Start Investing With M1 Finance

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– Investing On The Go