M1 Finance is a robo-advisor that allows you to build customized portfolios easily. In addition to investing, M1 allows you to borrow money and park your money in a checking account. The app gives a complete picture of your finances in one view.
M1 Finance Review
Customizable portfolios
You can set your target allocation of stocks or ETFs on your M1 app. Whenever you invest, M1 Finance will buy stocks or ETFs to meet your target allocation. If you don’t like to build your own portfolio, you can copy one of the model portfolios.
Low minimums
You don’t need thousands of dollars to get started with M1 Finance. Minimum investment is $100 for taxable accounts and $500 for retirement accounts.
No commissions
There are no commissions for trading stocks and ETFs.
No management fees
Most robo-advisors charge annual management fees. But M1 finance has zero management fees. Any money saved in management fees allows you to grow your money faster.
Fractional shares
M1 allows you to invest fixed dollar amounts, which means you can buy fractional shares in stocks and ETFs.
Dynamic rebalancing
M! Finance will keep your portfolio at its targeting allocation automatically by buying or selling shares as necessary. M1 does not charge anything for automatic rebalancing.
For funds that are already invested, you must ask the app to rebalance. M1 Finance is not as effective in this regard as other robo-advisors. But the app does make it easy to see your portfolio allocation against your target allocation.
M1 offers portability
If you choose to move to another brokerage, you can move your portfolio from M1 to the new brokerage. Most robo-advisors don’t offer this feature. They hold your money in their proprietary funds and when you move your money to another brokerage, you have to sell your funds creating a huge tax mess.
Investing for retirement
M1 is a good place to invest your retirement funds. It offers traditional IRAs, Roth, and SEP IRAs.
M1 Plus
M1 Plus gives you extra awards and features. It is free for the first year and costs $125 thereafter.
2% loans
M1 plus members can borrow money at 2% interest. The maximum loan amount is 35% of your portfolio. The only requirement is that you should have more than $5,000 or more invested in a taxable account. There are no credit checks or any paperwork that you need to complete.
1% APY checking account and 1% cashback on debit cards
You can earn 1% interest on your checking account and 1% on your spending on the debit card. The checking account has no monthly fee and no minimum balance. The debit card offers ATM fee reimbursement for up to four transactions a month.
Automated transfers
You can set up automated “If, then” transfers across M1 products
Custodial account for children
M1 offers two daily trade windows (morning and afternoon, the standard is one trading window) if you have $25,000 in your portfolio
Write checks online
You can send physical checks online without touching your pen
Cons
- Investing with M1 finance is automated. You don’t have access to financial advisors or investment advice.
- M1 Finance does not offer tax loss harvesting. So you lose the ability to reduce your taxes by offsetting your capital gains with losses.
Bottom Line
M1 Finance offers a great way to integrate your investing and checking accounts into a single account. If you are a self-directed investor, it’s a great way to build a customized portfolio without all the tedious work of buying and selling shares and maintaining a target allocation. M1 Finance also allows you to borrow money cheaply against your portfolio. Signing up for M1 Plus gives you additional rewards. It’s free for the first year and $125 per year after that.