There can be high barriers for entry into the world of investing. You might spend countless hours researching options to make an informed choice, or you might pay high commission and management fees to an adviser to manage your investments.
The advent of robo-advisers, however, has been lowering those barriers. Today’s do-it-yourself investors have better tools and face lower costs than ever before.
Now, investing app M1 Finance aims to lower costs to make investing more accessible and affordable.
M1 Finance review
Robo-adviser M1 Finance is a digital investing platform that’s comparable to other apps such as Robinhood and Betterment. A clever blend of a brokerage account and investment portfolio manager, M1 Finance allows you to buy stocks and exchange-traded funds (ETFs), as well as manage allocations — all in one portfolio.
To do so, you can build out multiple “pies,” which are collections of stocks and ETFs. Each pick is a “slice,” and you set the target percentage to get the balance you want. M1 Finance also offers a range of preset “expert pie” templates, designed to help you achieve different investing goals.
Our M1 Finance review covers the basics, benefits, and drawbacks of this app. Here’s what you need to know to decide if M1 Finance investing is worth trying.
Pros of M1 Finance
M1 Finance’s biggest benefit is free trading. Users can sell, buy, or manage investments without facing any commission or markups.
Other popular brokerage services will charge a fee every time you buy or sell stocks. But your transactions are fee-free at M1 Finance, so you can save money.
While many brokerages make you buy whole stocks, M1 Finance also offers fractional shares. You can invest the full shares or even as little as one ten-thousandth of a share. On a $50 stock, for example, you could spend $10 to buy just 20% of a share.
M1 Finance also provides automated features that can help you manage and maintain your investments:
Recurring contributions: Users can fund their M1 Finance portfolios in lump sums, or over time with recurring deposits. You can set up automatic monthly transfers from a connected bank account and tie them to specific investing pies to keep your portfolio growing. This feature also makes M1 Finance ideal for the dollar-cost averaging investment strategy.
Automatic rebalancing of portfolio: M1 Finance directs your new contributions toward underweighted slices first. This keeps your portfolio balanced and in line with the allocations you’ve set, even as some slices overperform or underperform.
Tax minimization: When you sell your shares and withdraw funds, you could face tax implications. M1 Finance says it automatically prioritizes sales to minimize your tax liability on any gains.
Cons of M1 Finance
Like any other investing app, M1 Finance won’t meet the needs of every investor. Here are some cons to consider when deciding if you should try this app:
It might not be easily accessible for beginners: M1 Finance is easy to set up, but that doesn’t mean you’ll know how to use it to achieve your investing goals. Beginners might find it difficult to research and evaluate stocks within the app. There’s also a minimum deposit of $100 required for investing in stocks or $500 for individual retirement accounts (IRAs). If you want to start simpler or with a smaller deposit, the app Acorns might better fit your needs.
- Limited options: M1 Finance offers only stocks and ETFs.
Veteran investors might need more: The robo-adviser’s pie system can take some getting used to, and might not be what some seasoned traders are looking for.
No real-time pricing, buying, or selling: M1 Finance processes all transactions just once a day, which limits its costs and helps keep the app free. So it’s not designed for people looking to trade more frequently or capitalize on daily market fluctuations.
How M1 Finance works
M1 Finance uses pies to build and manage your investment portfolios. These pies are made up of slices, which comprise the individual stocks or ETFs. You can include up to 100 slices in each pie. You’ll need to decide the portion of the pie that each slice should take up, and set a target percentage to match.
There are a few options to set up your M1 Finance investing pies:
Create a pie from scratch, handpicking assets and adding them as slices. Look up stocks and ETFs you’re interested in and get a snapshot of the investment. M1 Finance allows you to view a security’s performance, price history, expense ratios, and more.
Choose one of the expert pies offered through M1 Finance (pictured below). These pies are selected by experts at the company. They’re grouped by investment purpose, too, so you can quickly find portfolios that match your financial goals.
Customize expert pies. You can select one of the expert-pie templates and tweak it to your liking. Adjust allocations or add your own selections to make the perfect pie.
Using these pies, you can build the mix and balance of assets you want. Pies also make it easy to manage and automate your customized investment fund.
Additionally, you can add multiple pies in your M1 Finance portfolio to combine different approaches and risk profiles. This can help you to hedge bets, set up funds for different goals, and build out a well-rounded and diverse investment portfolio.
How to set up your M1 Finance account
Getting started with M1 Finance is a smooth process, thanks to the app’s intuitive interface and streamlined sign-up steps.
You need an email address and password to create an account. The app will give you a quick introduction to its pies and features.
Then you can pick stocks, choose expert pies, or build custom allocations right away.
Once you’ve built at least one pie, you can click through to the next step: creating a brokerage account. You’ll need to select the type of account you want, such as:
An individual or joint brokerage account
A retirement account, such as a traditional, Roth, or a simplified employee pension IRA
A brokerage account for entities such as businesses or trusts
Next, you’ll be asked for contact information such as your name, mailing address, and phone number. You also will be required to provide your Social Security number, citizenship status, and employment status. In addition, you’ll face questions related to regulatory disclosures.
After completing these details, the app will want to know about your financial details and investing needs. Then, you’ll get to finalize account information entered so far, and review and agree to M1 Finance’s legal disclosures.
All that’s left now is to fund your investments. You’ll need to make a minimum starting deposit of at least $100 for brokerage accounts and $500 for IRAs. You can fund your M1 Finance account by integrating it with select popular banks, or by providing a bank account and routing number.
Once your account is set up and funded, you’ll arrive at the M1 Finance dashboard (pictured below). From here, you can manage your portfolio by reviewing your holdings, adjusting or setting up pies, making deposits, and taking other actions.
M1 Finance costs and fees
The robo-adviser’s low costs are one of its biggest draws. In December 2017, M1 Finance said it was removing all trading fees to become a free investing platform.
The company does charge fees for a few other actions, such as account statement requests or processing wire transfers.
Investors might face other costs, however. For example, any ETFs you hold through M1 Finance will charge the regular expense ratio fees.
M1 Finance customer service
The company’s customer service department can’t help you with everything. The app doesn’t provide investment advice or recommendations, for instance, and can’t provide access to an adviser.
But it’s easy to get more information or technical help to use the app from the M1 Finance support center. Its FAQ section offers plenty of quick and clear answers, and it’s searchable, too.
On a mobile device, click on the “Help” button displayed on the dashboard. This will open a window in which you can type your question. You’ll have the option to send a message to its team, too.
In addition, you can reach M1 Finance’s team via:
Customers report positive experiences when interacting with M1 Finance’s customer service. “I just submitted a customer support ticket and received a response and help in 36 minutes,” said one reviewer of the iOS mobile app.
Choose M1 Finance for DIY investing
M1 Finance will appeal to buy-and-hold investors interested in managing their own portfolios. The low costs and lack of trading fees can help you get the most gains from your funds. And its investing pies, combined with the ability to set up automatic transfers, make it easy to customize and build a portfolio that fits your needs.
But traders might need to look elsewhere to find features for faster transactions, turnarounds, and gains. Beginners who try out the M1 Finance app might need to seek out additional information and investing guides to make wise financial moves.
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