M1 Finance Review – Customize Your Investing Pie
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
If you want to to mix being able to customize your portfolio with the convenience of automation, M1 Finance may be the right choice for you.
9/10
Cost
9/10
Features
8.5/10
Ease of use
9/10
Services
8.5/10
If you already have a good working knowledge of personal finance, you probably know that you should be building a portfolio. M1 Finance allows you to build a portfolio that meets your needs without paying the high fees of going to a traditional brokerage. Read on below to learn more about what this robo-advisor has to offer.
In this article
What is M1 Finance?
Founded in 2015, M1 Finance is a more personalized take on your traditional automated robo-advisor. Rather than being geared towards day traders, M1 Finance is committed to serving long-term investors looking to build a customized portfolio at a low-cost price point.
It’s important to note that M1 Finance is likely best suited for more experienced investors. Since the company does not offer the opportunity to consult with a financial advisor, it may not be the right fit for new investors who feel uncomfortable setting their financial goals or managing their portfolios.
How does M1 Finance work?
Getting started with this investment platform is fairly simple. First, you create an account by choosing an email address and password before being asked to verify your email.
Building your portfolio
Once your account has been created, you’ll move on to the fun part - building your portfolio. At M1 Finance, portfolio creation is centered around “pie investing,” where every investor’s portfolio is broken down into a pie chart. This feature makes it easy to visualize the distribution of your assets and holdings.
To help you get started, M1 Finance allows you to make a selection from a series of expert pies. Expert pies are professionally curated portfolios based on different investment strategies and risk tolerance levels. You can choose an expert pie to serve as the base of your portfolio, or you can leave it entirely as-is.
If you have more specific ideas about how you would like to invest, M1 Finance also allows you to create custom pies. Creating a custom pie involves choosing from a selection of ETFs, mutual funds, and individual stocks and fine-tuning their allocation in your portfolio.
Choosing your investment account
After you’ve customized your portfolio to your liking, it’s time to choose the type of investment account you want. The investing platform allows you to choose between a retirement account, an individual or joint investment account, or a trust account.
Next, per the USA Patriot Act, you’ll be asked to provide personal information, such as your name, address, and social security number. Besides, you’ll also be asked general questions about your financial standing and risk tolerance.
Funding your account
The last step in this process is funding your account. If you’re with a bigger bank, M1 Finance lets you connect your account by simply entering your online banking login credentials. However, you can enter your bank account and routing numbers if you're with a more regional bank.
How much does M1 Finance cost?
For the most part, the M1 Finance investing platform is relatively low-cost. Trades are commission-free, and there is no minimum balance requirement either.
M1 Plus
In addition to the regular platform, M1 Finance offers additional benefits through its M1 Plus platform for a $36 annual fee, which will be charged after a 90-day trial period. Plus, members get access to the option to open custodial accounts and an additional afternoon trading window, among many other features.
Also, they are given rewards, including a 5.00% APY on checking accounts and 1.5% cash back on qualifying debit card purchases. Plus, membership lets you borrow up to 40% of your portfolio's value.
- In under 3 minutes, start investing spare change, saving for retirement, earning more, spending smarter, and more.
- Make your first successful Recurring Investment (min $5) - get your $20 bonus within 10 days of following month
- Over 13M All-Time Customers
- Over $22B Invested
M1 Finance Features
The M1 family of products
At its core, M1 Finance is more than an investing platform. In addition to M1 Invest, M1 Finance also offers the following services:
- M1 Borrow. With M1 Borrow, any user with $2,000 or more invested per account can borrow up to 40% of their account balance on margin. These loans charge a rate of between 19.99% to 29.99%. The company also offers personal loans of up to $2,500 to $50,000 at a fixed rate of 7.99% to 21.75%. Repayment can be made in two to seven years.
- M1 Spend. M1 Spend is an FDIC-insured checking account and debit card that integrates with the M1 Finance mobile app. With your M1 Spend account, you can deposit your paycheck, pay bills, and handle expenses with an M1 Finance Visa debit card. Another feature, the Owner's Rewards Card, offers between 1.5% and 10% in cashback. This card doesn't have an annual fee.
- M1 Save: M1 Finance offers a high-yield savings account with a 5.00% APY. Exclusive to M1 Plus members, this FDIC-insured account has no minimum deposit and offers "industry-leading" APY.
Fractional shares
Another feature that sets M1 Finance apart is its ability to invest in fractional shares. As the name suggests, fractional trading involves having equity in a security that is less than one full share, which means that you can invest in bigger companies without putting up the money to buy a full share.
Automated rebalancing
Rebalancing your portfolio every so often is important. This process involves returning your investments to their original Targets in your portfolio to maintain their risk level. Typically, this process can be costly and time-consuming. However, with M1 Finance’s dynamic rebalancing feature, it’s all done for you at predetermined intervals.
Related: Robinhood vs Stash vs M1 Finance
Who is M1 Finance best for?
Self-directed investors
M1 Finance is particularly geared towards self-directed investors. While similar online brokerages offer the opportunity to check in with a financial advisor, M1 Finance does not have the same capability. Given that absence, M1 finance will likely be better for those comfortable researching financial instruments independently.
Investors who want automation
If you don't want to move your money around physically, M1 Finance offers smart transfers, which allow you to set threshold-based rules to move money between your various M1 accounts and pies. However, it is worth noting that smart transfers are an M1 Plus feature, so you’ll have to pay a little bit extra for the privilege.
Who shouldn’t use M1 Finance?
New investors
Unfortunately, M1 Finance does not offer much help in figuring out your investment goals or researching different investment vehicles. With that in mind, if you are a new investor, you may consider using a different mobile app or a traditional brokerage. One of those options should give you access to a financial advisor who can help you figure out your perfect investment strategy.
Those interested in alternative investments
While M1 Finance offers a robust selection of stocks, ETFs, and mutual funds, that's all you'll have access to with this mobile app. If you want to trade alternative assets like cryptocurrency or Forex, you'll have to look into alternatives.
Related: How to Invest in Crypto
- In under 3 minutes, start investing spare change, saving for retirement, earning more, spending smarter, and more.
- Make your first successful Recurring Investment (min $5) - get your $20 bonus within 10 days of following month
- Over 13M All-Time Customers
- Over $22B Invested
M1 Finance vs. competitors
Robo Advisor | Cost | Financial Advisors |
M1 Finance | Fee-$36 per year | No |
Robinhood | Free-$5 per month | No |
Betterment | 0.25% annual fee on Digital Investing tier/1% on Crypto Investing | Yes, $299 |
Robinhood
Robinhood is another robo-advisor that offers commission-free trades. Since this investing platform does not have minimum balance requirements and does not have management fees, it's often considered a good fit for new investors. Robinhood also does not offer retirement accounts like IRAs or 401ks, probably better suited for short-term investors.
Betterment
If you want professional advice on your portfolio, Betterment is your option. This investing platform offers advice calls with financial advisors for an extra fee. However, the fees you pay with Betterment may be steeper than other options on the market.
Pros and cons
Pros
- Easy to use. The M1 Finance sign-up process is incredibly easy. If you already have an idea of how you want to balance your portfolio, you can do the entire process in a matter of a few minutes. Additionally, M1 finance offers the ability to connect directly with your bank and fund your portfolio, which is a nice feature.
- Charts. M1 Finance’s pie investing feature offers a visual way to see asset allocation, which makes it much easier to understand. In addition, having the ability to both choose from expert pies or create custom pies gives added flexibility.
Cons
- No financial advisors. Unlike some of its competitors, M1 Finance does not offer the opportunity to connect with a financial adviser, which can make it a poor fit for new investors to need a little more guidance.
- Lack of options. M1 Finance does not offer the widest range of investment vehicles. Investors who want to explore alternative assets may be better suited to a different app. In addition, investors only have access to one trading window, unless they sign up for M1 Plus, which means it's not the best fit for day traders either.
FAQs
What types of accounts does M1 Finance offer?
M1 Finance offers investment accounts (joint and individual), retirement accounts (traditional, Roth, SEP IRA), and trust accounts.
When does M1 Finance make trades?
With the free platform, M1 Finance makes all of your trades in a single trading window in the morning, which means that it's not a good fit for day traders who are only looking for short-term holds. However, if you sign up for M1 plus, you can gain access to a second afternoon trading window as well.
What fees will I face if I use M1 Finance?
Luckily, M1 Finance is super transparent about its fee structure. Its fees are largely based on the type of account you choose and the type of trade you make. However, you can see the full list of fees on their platform's costs page.
Is M1 Finance legit?
Overall, if you're an investor who wants to mix being able to customize your portfolio with the convenience of automation, M1 Finance might be a good fit for you. Its customizable pie and smart transfer features make this mobile app a great choice for those looking for a hands-off approach to personal finance and the ability to control their portfolio while on the go.
Yet, M1 Finance is not the right fit for everyone. While some new investors may find the site selection of expert pies a good place to start their investing journey, that's about all the site has to offer regarding guidance. It’s not the best fit for those looking for more guidance in setting their investing goals.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Writer
Tara Mastroeni is a real estate and financial writer whose work has appeared on Forbes, Business Insider, LendingTree, Realtor.com, ApartmentTherapy.com, The Motley Fool, and Freshome.com.
Share this article
