The Bottom Line: M1 Finance empowers you to manage your money and build wealth with ease. Just create and automate your portfolio and we'll take of the rest. It offers a unique combination of automated investing with a high level of customization.
Top Investment App
AT A GLANCE
- Mix of personalization & automation Investing
- Exceptional customer service
- Low trading fees
- Outstanding customer reviews
Top rated investment app
Pros & Cons
Do you want to learn how to invest in the stock market with confidence?
Do you want to do it in a way that saves you time and earns you more?
If you said yes to both of those questions, buckle up! You’re in for a real treat. There’s actually an investing platform out there whose sole mission is to:
- Save you time by managing your investments for you
- Earn you more by charging zero fees or commissions
- Boosts your confidence by giving you real-time snapshots of your progress and helpful news
What is this magical investing platform I speak of? Everyone, meet M1 Finance.
Account Minimum: $0
Promotion: Invest for Free
What Is M1 Finance?
M1 Finance is a robo advisor and brokerage firm rolled into one. It gives users the best of both worlds by offering prebuilt portfolios and the ability to customize anything they want.
In a world where most robo advisors choose your portfolio for you based on a questionnaire, M1 Finance gives users more control over their money (while still offering guidance when needed).
If that wasn’t already revolutionary enough, M1 Finance takes it one step further by offering its services for free. Seriously, there are zero fees or commission.
M1 Finance started in April 2015 and is based out of Chicago, Illinois. It currently has over 25,000 users and over $100M in assets under management.
How Does M1 Finance Make Money?
M1 Finance is a fee-free platform. Here are five ways it makes money:
- Interest on cash. Just like banks, M1 Finance earns interest on any cash sitting in your account. The company mostly lends cash to banks, so it's ready at a moment's notice.
- Interest on lending securities. The company short-sells securities and earns money on interest and the principal amount required to borrow (usually 102% of the security).
- Interest on borrowed money. When you take out a loan using M1 Borrow, the company keeps a percentage of the interest you pay.
- M1 Spend. Same as #1 on our list, M1 Finance earns interest on any cash sitting in your M1 Spend checking account.
- M1 Plus membership fees. This subscription-based service costs $8.33 a month for your first year and $10 after that.
Who Is M1 Finance Best For?
- New investors. Looking to dip your toes in the investing waters? M1 Finance is perfect for that. The site has several expert-built pies that take the guesswork out of building your portfolio yourself. Plus, its education center walks you through everything you need to know about investing.
- Experienced investors. Are you an experienced investor who wants more control over your portfolio? M1 Finance gladly hands over the reins. Investopedia even named it the Best Robo Advisor for Sophisticated Investors.
- Those who want guidance, but also want to choose what they invest in. M1 Finance is the perfect goldilocks investment platform.
The company manages your investments and will automatically reinvest if needed, but users also have the option to completely manage things on their own if they’d like to.
Customers Love M1 Finance... Look at a few reviews
Reddit users love M1 Finance. They recommend it to anyone and everyone.
Reddit user Nestledrink says: “I'm still baffled that M1 is not well known yet among the mainstream masses as this is really the best way to invest. You have the advantage of choosing your own securities and set them up according to your risk tolerance. This is far cry from other robo-advisor that only offer the same portfolio without the ability to customize them.”
- Reddit user Nestledrink -
Another Reddit user, Chalkfinancial, states: “I tell everyone I know about M1 Finance. Hands down the best vehicle for long-term investing.”
- Reddit user Chalkfinancial -
The caveat? Users admit the platform isn’t for active trading. Robinhood, a competitor to M1 Finance, has made its claim to fame by appealing to day traders.
M1 Finance, on the other hand, takes the less-sexy long-term approach.
What Makes M1 Finance Unique?
While investing platforms are a dime a dozen, here are five ways M1 Finance stands out from the pack:
Bank and invest all in one convenient location. M1 Spend is a smart cash management system featuring a high-interest bearing checking account a debit card that earns up to 1% cashback.
This feature lets you set up direct deposit, pay bills, and earn unlimited rewards on all debit card purchases.
The current APY for the checking account is 1.5% — 25x higher than the national average!
All funds in M1 Spend are FDIC insured and held by Lincoln Savings Bank.M1 Spend is a brand new feature. It’s open to M1 Plus members now and will open to Standard members in October 2019.
Note: M1 Spend is a brand new feature. It’s open to M1 Plus members now and will open to Standard members in October 2019.
M1 Plus Membership
Take your M1 Finance experience to the next level with M1 Plus. For the price of $10 per month, investors get access to hot features like:
- 0.25% discount on borrowed funds
- 1.5% APY on M1 Spend checking account (compared to 0% for Standard members)
- 1% cash back with debit card purchases (compared to 0% for Standard members)
- Tungsten metal debit card (compared to a plastic one for Standard members)
- Second daily trading window (compared to one window for Standard members)
- $500,000 in securities protection (compared to $250,000 for Standard members)
Plus, new members enjoy 20% off their first year — dropping the cost to $8.33 per month.
M1 Finance lets you borrow cash instantly through M1 Borrow. Use this money to invest in your portfolio or transfer it to your bank account for other purposes.
The fund is technically a personal loan, so you’re free to use it however you wish.
Users borrow at the Federal Funds Rate (currently 2%) + an additional 2%. So, if you borrow $1K, your interest rate is 4% (3.75% if you’re a Plus member).
The caveat? You must have at least $10,000 in a joint-taxable or individual-taxable account to qualify.
Those meeting this requirement can borrow up to 35% against their securities. So, if you have exactly $10,000 in your account, you can borrow up to $3,500.
This new way of transferring funds lets you move money within your Invest, Spend, and Borrow accounts with ease.
Want to move money from your checking account to your individual investment account? Do it in the Transfers tab.
Want to view how much money you have total with M1 Finance? Get a snapshot of that info in the Transfers tab.
It’s a convenient way to track your funds in one place. And it’s brand new as of August 2019.
M1 Finance Mobile App
Don’t want to manage your money from your laptop?
M1 Finance has a sleek mobile app that lets you borrow, spend, and invest straight from your phone.
It’s available to Apple and Android customers.
Benefits Of Investing With M1 Finance?
So, now that you know what makes M1 Finance unique, let’s talk about some benefits you get when you invest with M1 Finance.
Fully-customizable portfolio. With most robo-advisors, you choose from a list of preset portfolio options. With M1 Finance, you get to fully-customize everything.
Fractional shares. M1 Finance is one of the only robo advisors that lets you purchase fractional shares. This is perfect for high-priced stocks where you may not be able to afford an entire share. If Apple is $200, but you only want to spend $50, you can buy ¼ of a share.
Auto-invest. Automate the investing process by having funds deposited into your M1 Finance account on a regular basis. You can even set up a schedule to deposit investments from every paycheck. M1 Finance makes reaching your financial goes even more of a breeze with this time-saving feature.
Dynamic rebalancing. When you turn auto investing on, M1 Finance automatically purchases more of the under-weighted items in your portfolio as you deposit cash into your account. This helps rebalance your portfolio and bring it back to your desired weights.
How Does Investing With M1 Finance Work?
Once you open your account, you build your portfolio using “Pies” — think of these as the building blocks of your portfolio.
You can choose a pre-built “Expert Pie”, make your own, or do a combination of both. Expert Pies were created by Chartered Financial Analysts (CFAs).
They’re based on stated objectives like planning for retirement, earning income, or investing responsibly.
Once you’ve selected your Pies, you then choose the weight of each Pie within your portfolio.
If you want more of your portfolio to be based on responsible investing, for example, you can make that 40% and have the other 60% divvied up between three other Pies.
You’re in total control.
Once your portfolio is how you like it, fund your account to get started. You can manually move money into your M1 account or set up recurring deposits.
You can also transfer an existing brokerage account or rollover a 401(k).
Want to make changes to your portfolio after you’ve funded your account? That’s easy too.
M1 Finance lets you:
- Add Pies
- Remove Pies
- Change weights of Pies within your portfolio
Once you make changes, you then choose how to fund them.
- Buy or sell securities yourself,
- Rebalance, or
- Turn on auto-invest and have the platform do it for you
After you’ve gone through these steps, sit back and watch compound interest work its magic.
Is There Anything I Should Watch Out For?
So, what should you watch out for with M1 Finance?
There aren’t many drawbacks, but here are a few things that might trip up new M1 Finance customers:
It’s not for active traders. M1 Finance believes time in the market is more important than timing the market. With that mindset, the platform isn’t set up for active trading. Any trades made outside the 10 a.m. ET daily window go through the following day.
No mutual funds. All securities in your M1 Finance portfolio must be on either the New York Stock Exchange or NASDAQ. Because of this, mutual funds aren’t currently offered. The site offers ETFs and stocks for free, so this shouldn’t be a dealbreaker for most investors.
No tax-loss harvesting. Most robo advisors harvest losses, which helps offset taxes. M1 Finance doesn’t offer this service yet.
Only Plus members earn rewards on Spend. If you do M1 Spend, you won’t earn 1.5% APY or 1% cash back unless you’re a Plus member. You can use this calculator to see how much you’d net in rewards after purchasing the membership. For most people, the rewards will outweigh the cost of the M1 Plus membership.
M1 Finance Alternatives
Below are answers to some popular questions about M1 Finance.
Is M1 Finance better than Robinhood?
How do I contact M1 Finance customer service?
Is M1 Finance FDIC insured?
Do I need to be a US citizen to invest with M1 Finance?
Can you have more than one M1 Finance account?
Should You Invest With M1 Finance?
The cool thing about M1 Finance is that it caters to a broad range of investors. It strikes the perfect balance between managing your portfolio yourself and having an expert hand guide you along the way.
M1 Finance is perfect for everyone from hands-off investors to experienced pros.
And if you’re looking for a holistic platform that comes with a competitive checking account, debit card, and lets you invest on margin, M1 Finance fits the bill. It’s an investing platform for all, and it sets the bar high for its competition.The bottom line: Give M1 Finance a try. You won’t lose any money to commission or fees and you’ll have plenty of investment tools at your fingertips to help you along the way.
Have questions about M1 Finance we didn’t answer? Drop them in the comments below.
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