M1 Finance Review 2024
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The investment craze is at its peak, and everyone wants to cash in on the chance to create wealth for themselves. But navigating the sea of investment options can be a challenging task to handle.
For starters, you need to be constantly ahead of the curve and build a diversified portfolio. It’s a type of work that requires full-time attention.
That’s why a resource or tool to automate the investment process is indispensable. One of the most efficient providers of that type of service is M1 Finance.
Interest rate on savings: Between 0.06% and 0.20%
Fortunly Rating
Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.
Strengths
- No commissions or fees
- Allows you to trade in fractional shares
- Portfolio building at its best; flexible portfolio options
- Choose where your funds are invested
- Investment process is fully automated
- Easy to use
- Excellent asset allocation
- Requires no minimum deposits to open an account
Weaknesses
- Not friendly for newcomers on the investment scene
- Only one trading window per day
- No human influence in advisory services
- Does not offer trading in cryptocurrency and options
M1 Finance Overview
Our review begins with founder Brian Barnes, who started investing at a young age. Over the years, Barnes realized there weren’t many automated resources that could execute the tasks of advising, automatic deposits, and portfolio building.
He sought to create an investment space where investors could have their investment activities run on an automatic basis.
So, in 2015, he launched M1 Finance, a money-management resource that lets investors run automated processes while exercising complete control over their money.
It may sound unbelievable, but the service is completely free to use, and there are no hidden account fees involved.
Of course, there is a premium tier for those who seek access to more investment options than what the free membership offers.
It should be noted that M1 Finance doesn’t offer the services of financial advisors. Rather, it provides the tools necessary for wealth creation through portfolio building. There is a range of features that come with the package, so let’s take a look at them.
M1 Finance Features
Here are the main features you can expect with M1 Finance:
M1 Borrow Review
Through the M1 Borrow feature, users can borrow against their M1 Invest account securities to access loans with low interest. The purpose of these margin loans can range from medical expenses to repairs to motor vehicles or homes. Whatever securities lie in the accounts count as collateral for the loan.
The interest rates are lower in comparison to the interest rates for traditional loans since your assets are backing this loan. This means that if you don’t pay off the loan, M1 Finance keeps your assets and sells them to repay it. Additionally, the loan application process is much simpler, as is the repayment process.
Investors with extensive expertise have used the feature to increase their portfolios’ returns when they invest through margin accounts.
Investors with a higher risk tolerance can adopt this method, but if you generally prefer to stay on the safe side, the regular process is already set up to optimize activities and build portfolios that contribute to the holders’ wealth.
In conclusion, the M1 Borrow feature is unlike any other provided.
M1 Finance Pie Review
When you create an account, you are given a pie with various slices you need to fill up. The pie represents your investment portfolio, and each slice stands for an investment option, from individual stocks to ETFs.
Through the pie, M1 Finance helps you with portfolio management. There are over 60 pie templates to choose from, such as passive investing and socially responsible investing, whereas users can also create their own pies from options on the stock market.
Once all selections have been made, you are ready to start investing: The platform automatically disburses financial resources based on pie proportions. The financial resources available to each account consist of initial deposits and additional cash.
M1 Finance Plus Review
While signing up with M1 Finance gives you access to its tools and services with no commission or annual fee, the platform does have a paid service listing. It’s called M1 Plus and comes with the reimbursement of four monthly ATM fees, 1% cash back, and 1% APY.
In addition, this premium offer gives users an M1 Borrow loan rate lower than the rate for free subscribers, interest on the balance of your M1 Spend account, and access to an extra M1 trading window for accounts with $25,000 or more. Some users prefer to have a basic plan, and that’s understandable. However, the Plus plan is like VIP treatment in everything you already get with the basic plan.
Even though the pricing is a little over-the-top for yearly access, in retrospect, the available features are well worth the amount paid for the Plus plan. Not to mention that the chances of making a more profitable portfolio pie are inherent when you subscribe to M1 Plus.
M1 Pricing
Whereas operating a free M1 account comes at no extra cost, members who choose the M1 Finance Plus plan are charged a subscription fee for premium accounts, which is $3/month or $36/year.
Plus account holders get more flexibility with their own investments and financial planning, can unlock Smart Transfers, and borrow at lower rates. They also enjoy a special cashback bonus – earning 1% on whatever they spend. Even when they are not spending, they get a 1% Annual Percentage Yield.
M1 Finance Retirement Review
Retirement investment accounts on the M1 platform can be traditional or Roth individual retirement accounts. Both types of retirement accounts give the account holder complete control over account operations and are free from any commission or management fees.
The difference between them lies in tax deductibles, and where one is funded with pretax dollars, the other is funded with after-tax dollars.
- IRA and Roth IRAs require initial investments totaling $500. Both types of accounts are designed for investors with no active work history or those who have retired from active work. For instance, the Roth IRA doesn’t deduct taxes on any contributions or earnings.
M1 Finance Roth IRA Review
M1 Finance is one of the few platforms that offer Roth IRAs with no fees attached. Since the funds that go into Roth IRAs are often after-tax dollars, tax cannot be deducted from any withdrawals made on the investments.
As is the case with every other type of account under the platform, there are no fees involved. Additionally, Roth IRAs are simple to run and give the owners complete control over their portfolios and investment strategy. There’s less paperwork involved and limited interference.
How Does M1 Finance Compare to Other Similar Services?
No charges, no commissions
Fully automated advisory
Annual charges start at 0.25% (digital plans) and 0.40% (premium)
Human advisors
0.25% per digital plan / 0.50% for premium plans
Fully automated advisory
M1 Finance App
The mobile experience on the app is a 5/5, as the app is well-designed and easy to navigate. All the website features are available to mobile users, whether it is opening a new account, funding the account, or even selecting the slices for your portfolio pie.
The layout is just right, so users don’t have to worry about an overcrowded screen. Since it’s mostly white, you won’t have to deal with any glare or unattractive colors either.
The M1 app is a step in the right direction when it comes to bringing the experience of the desktop version. Users can rest assured knowing they miss nothing whether they opt to use the app or the web.
M1 Website
The website is just as user-friendly as the app. Even when pie selections are being made, the M1 site never lags or slows down, which is highly commendable. You can also view how each pie and each slice are performing.
Investors familiar with how brokerage services work online will find M1 an improvement in terms of ease of use.
M1 Finance Customer Service
You can reach the company's customer support over the phone and write them an email. Keep in mind, though, that waiting times may be longer than expected.
However, in most cases, there is no need to contact direct customer support, especially regarding information about the account operation.
There is a detailed FAQ section with in-depth responses that help resolve many issues without contacting a service agent. Video sections that walk the user through specific processes are also available.
Overall, the efficiency of M1’s customer service is above average, earning it a 3.5/5 rating. Note, however, that M1 is not an advisory service and cannot give investment advice.
Customer Service Hours
M1 Finance customer services responds to inquiries within one business day. Users can reach the support and success team from 9 a.m. to 4 p.m. ET on days when trading occurs on the US stock market (Monday to Friday).
Reviewed by Fortunly
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The Investment Process That Runs Itself
Some people like to grab the proverbial bull by the horns and navigate the investment seas on their own, right down to every single deposit and reinvestment. For others, constantly monitoring these processes and manually building portfolios can be somewhat overwhelming.
M1 Finance exists for that segment of investors with a buy-and-hold mindset who don’t have time for hourly or daily tweaking.
If this kind of responsible investing is in line with your style, than this platform will enable you to keep your finances healthy. That’s why it’s a great idea to visit the website, get the app, and bake yourself an investment pie with all the right ingredients – free of charge.
FAQ
Is M1 Finance trustworthy?
M1 is one of the most trustworthy platforms out there. The fact that it’s an SIPC member and is also registered as a broker or dealer with the FINRA (CRD #281242) speaks to its legitimacy as a financial institution.
Can you make money with M1 Finance?
Yes. M1 is specifically designed to help investors grow their wealth. However, keep in mind that M1 doesn’t offer a tax-loss harvesting feature.
Which is better - Robinhood or M1 Finance?
It’s essential to note that, while both platforms charge zero commission, there are differences between them. Both offer users full control over their investments and are committed to getting users acquainted with trading and investments.
M1 is perfect for investors looking for investment strategies and then an automated process to keep deploying these strategies. Robinhood, on the other hand, lets investors learn the ropes on their own.
Where M1 makes it possible to invest money in ETFs and stocks only, Robinhood allows trading in cryptocurrency and options as well. Robinhood also offers investments in individual positions, while M1 is built for portfolios.
You make your own trades with Robinhood, while with M1, the investment process is automatized.
Overall, if you are looking to create a long-term portfolio investment, M1 is your better pick. Robinhood works better for trading in individual positions or those interested in investing in cryptocurrencies or options.
Is M1 Finance good for beginners?
M1 is an excellent resource for automated investing. While the app boasts a straightforward layout that is easy to navigate, beginners might have a hard time understanding how to create pies.
In other words, pie investing can be a difficult task to handle, given that there are no tools to guide newcomers on the investment scene. Your best bet would be to have some prior knowledge so as to make sound decisions on investments.
Does M1 Finance pay dividends?
Yes, it does, but all dividends belonging to a particular account are held until they reach the $10 mark. This sum is then reinvested into that account's investment portfolio. Dividend reinvestment helps clients build their own portfolio wealth through compounding, and the shares don't have to be sold.
What happens if M1 Finance goes out of business?
Even if M1 goes out of business, all user accounts and investments will be covered by SIPC protection of up to $500,000. Of course, this only pertains to the unlikely event of M1 Finance becoming defunct: It doesn’t apply to losses incurred during investing.
M1 Finance also has insurance covers that far exceed those of the SIPC. Individual accounts are protected from any functional problems relating to the platform.