First Hand M1 Finance Review – Inside a Real Account

If you’ve heard of Robo-Investors, you probably know the names Betterment and Acorns. M1 Finance takes the aspects of these Robo-Investors and makes it more customizable and personable. This M1 Finance Review goes into a live account so you can see for yourself what it’s all about!

When I first started investing, I never heard of Robo-Investors. If I had, I don’t know if I would have trusted them right away either. The idea was so new back then and there was no one to show me how they can work effectively.

Now, investing has been made so easy to get started that almost everyone that decides to save for their future wants to get involved in stocks.

M1 Finance prides itself on a vision that focuses on transforming financial services and providing the greatest value possible for its customers.

What is M1 Finance?

M1 FinanceM1 Finance focuses on taking the benefits of Robo-Investing technology and using it to build a portfolio that fits your exact needs as an investor.

Rather than just asking you to choose between different risk categories and trusting that the perfect portfolio is built, they give you access to customize every aspect of your portfolio.

In a way, it’s similar to a brokerage account as well since you can select individual stocks and ETFs to invest however you like but I’d say it’s close to a Robo-investor because once you set it up, it runs itself for the most part.

How Does M1 Finance Work?

Portfolios are selected by the investor in two manners. They can be selected from premade templates known as Expert Pies or they can be handcrafted by the investor by building a custom pie. Investors also have the flexibility to make an unlimited amount of pies in case they want to invest for different reasons or further diversify.

M1 Finance’s Premade Expert Pies

There are over 80 premade templates for you choose from by first deciding on the types of investments you want to take part in. Simply start by clicking on Expert Pies and the following option appears to allow you to select your category:

m1 finance pie templates

 

Let’s say, you always heard that investing in a mix of Stocks and Bonds was the best way to save for your future. You could click on Just Stocks and Bonds and the following screen will appear:

stocks and bonds portfolio

You now have the choice of choosing from one of the premade portfolios that makes up a percentage of stocks and bonds that meet your investing goals. These particular portfolios are made up of ETFs from Vanguard. If you chose the 70/30 pie, you’d have 70% invested in a Vanguard Total World Stock Fund and 30% invested in a Total Bond Fund.

I know what you are thinking, that doesn’t look like a pie. What gives?

If you actually click and select one of the above funds, it’ll look like this:

m1 finance expert pie

Is that better? Now you can actually see the performance of that pie and sort by timeframe as well. If you are happy with it, simply add it to your portfolio and fund it with as little or as much money as you’d like.

Here’s a list of all the Expert Pies you can choose from:

  1. General Investing – Choose a pie based on risk tolerance
  2. Plan For Retirement – Select the date you want to retire for a tailored pie that reduces risk the closer you are to retiring
  3. Responsible Investing – Select this category for a pie that’s focused on socially responsible companies
  4. Income Earners – Pies dedicated to income investing through paid dividends
  5. Hedge Fund Followers – Invest in these pies to follow the top hedge funds
  6. Just Stocks and Bonds – the category showed above where you can choose a balance between stocks and bonds
  7. Other Strategies – invest in pies dedicated to global growth, domestic value, or others

Choose Your Own Adventure By Creating a Pie

You can literally build a pie out of the companies you believe in or mix it up with different ETFs to make up the perfect portfolio for your goals.

I have been following Berkshire Hathaway a lot as well as Google and Amazon.

If I were to buy one share of stock in each company, it would cost me around $230 for Berkshire Hathaway B (BERK-B), $1400 for Google (GOOG) and almost $1900 for Amazon. That’s more than $3000!

I want to be able to invest evenly in all three as you can see, it would cost me a lot to invest the same amount in each company.

If I make a Pie with 33% of each of those three companies, I can invest any amount of money and have equal parts of all three companies.

Below is an account I opened for this review back in August 2019.

I put $250 in my “Big 3” Pie with these three companies and split it into even thirds.

building a custom pie with m1 finance

You will notice that I initially placed 1/3 of the money in each account but that now the percentages are slightly off because some portions of the pie do better than others.

One feature that I loved about this was that I can press one button
and it will automatically rebalance the pie to make up 1/3 in each of the
three stocks again in order to preserve my diversification.

m1 finance custom pie performance

This portfolio performed pretty well (17% in about 5 months) so I’ll probably start adding to it.

I would never put all of my money in a single portfolio consisting of only three stocks but this is just a small portion of my overall investments that I used to try out this service so you can see what it’s like.

How is M1 Finance Different From Traditional Robo-Advisors?

As I demonstrated above, being able to select the mix of your investment portfolio with such precision is not seen in other Robo-advisors. I am impressed that this actually offers so many expert portfolios to choose from.

Being able to select a portfolio based completely on your own stock picks also makes M1 stand out from the competition.

The small pie I created above consisted of very expensive stocks. I like that I could still build a portfolio with a small amount of money and not be restricted by share prices.

Some Robo-Advisors only allow you to choose from 3-6 options based on your risk tolerance. Others may offer a little more flexibility but not to this degree.

How is M1 Finance Different from Traditional Brokerages

With a traditional brokerage like TD Ameritrade or Webull, you choose the stocks or funds that you want to invest in and then buy shares at a set price.

If a stock costs $25 per share and you have $112 to invest, you can buy 4 shares and the rest of your money will sit in your account for you to invest at a later time.

With M1, you can invest any amount of money into a portfolio. The portfolio can even consist of a single stock if you desire but you can also add several more stocks or choose a fund as I showed above.

M1 will then invest your money for you so you aren’t buying the shares yourself. This is why you can purchase stocks that seem unaffordable such as in my Big 3 example.

Another big difference is that once you select a portfolio, you can set your account to auto-invest when funds are added and add to your account automatically.

M1 Finance Can Auto-Invest Reoccuring Deposits

You can link your bank and make auto-deposits which makes investing even easier. Simply select an option to allow M1 to withdraw a set amount of money from your account on a given day each month or even biweekly or weekly.

M1 will make the deposit and place it in your account or any pie that you choose.

If you choose Auto-Invest, M1 will make the trades necessary to invest your newly added money into the portfolio you desire at the beginning of the day following the deposit.

By doing this, you can watch your pies grow pretty rapidly. I have not done this yet but it is easy to setup. Features of M1 Finance

m1 finance automatic deposits

Features of M1 Finance

Next, let’s list the features of M1 Finance:

  • Create your own portfolio with any combination of stocks and/or ETFs
  • Automatic investing with direct deposit
  • One-click rebalancing of your portfolio
  • Select from over 80 professionally developed portfolios
  • Member of SPIC and registered with FINRA to protect your money
  • Socially responsible portfolios available
  • Ability to purchase fractional shares
  • Web-based and mobile apps for Android and Apple
  • Reinvested dividends
  • Customer support available by phone and email

Types of Accounts

There are a few different types of accounts you can open. The one showcased in this review is an individual investing account.

Here are all of the types of accounts you can open with M1 Finance:

  • Individual Investing Account
  • Joint Investing Account (information for both parties will be required to open this type of account)
  • Retirement Account – Choose from Roth, Traditional, SEP IRA or rollover an existing 401(k)
  • Trust Account

Does M1 Finance Have Fees?

One of the best parts of M1 Finance is that there are no fees. If you have a $100 account, there is no fee. If you have a $5000 account, there is no fee. Even if you have a $100,000 account, there is no fee.

M1 Finance charges no fees for managing and rebalancing portfolios. It charges no commission fees when buying and selling assets.

So how does M1 Finance make money?

Like all brokerages, they make money from the interest of uninvested money in your account. This is a negligible amount to you as a user because most of your money should be invested in a portfolio or pie. They also make money if you upgrade to their premium service M1 Plus.

M1 Plus offers perks for high balance accounts such as an additional daily investing window in the afternoon (only necessary for large accounts that have frequent deposits).

M1 Plus also offers reduced fees on borrowing money from their M1 Borrow Service which is similar to requesting margin on your account and is really beyond the scope for most beginners and intermediate investors.

Lastly, M1 Plus offers a 1.5% APY checking account. The service costs $125/year so you’d have to have quite a high balance to justify joining for that reason alone.

For all investors that do not upgrade, M1 Finance will charge NO FEES.

Is M1 Finance Safe?

protection shieldYes. It is a member of SIPC so your cash is securities and cash are protected up to $500,000 ($250,000 for cash).

M1 Finance is also regulated by the SEC and FINRA to ensure ethical investing practices.

It gives you the option of 2-factor authentication to ensure you are protected from having your account accessed by someone that isn’t you.

All data is stored and transferred using military-grade encryption (4096-bit encryption for the techies out there).

Drawbacks of M1 Finance

Most Robo-investors offer Tax Loss Harvesting (TLH). Tax Loss Harvesting sells off assets that have are at a loss for the year to help reduce your tax liability.

Usually, Robo-investors will replace these assets with similar ones to ensure your portfolio is weighted the same and the whole process is pretty transparent to the investor. Minimizing tax losses automatically can be really handy by M1 Finance doesn’t currently offer this feature.

Another drawback is that they don’t really offer too much educational content for general investing. They do have a lot of videos designed to help you use their app effectively but not that many on learning how to invest.

Benefits of M1 Finance

The main benefits are the fact that you have a lot of flexibility in building your portfolio. Like I mentioned before, you can choose from over 80 professionally designed portfolios and you can even choose your own.

In addition to being able to choose portfolios, you can further customize your portfolio by choosing multiple pies. This gives you even more control and helps you achieve goal-oriented results.

For example, you can have a 70/30 stocks and bonds pie for retirement and a Pie made up of Government Bonds and other low-risk assets for medium-term goals such as saving for a home downpayment or a vacation in 5-10 years.

Even though M1 Finance doesn’t have Tax Loss Harvesting, they do offer Tax Minimalization which means that if you are withdrawing a portion of your balance, M1 will sell assets in an order that is most logical for reducing taxes owed.

Another benefit to me is being able to set up auto-deposit so that my investing pies grow on a continuous basis.

They have also really gone the extra mile in designing their mobile apps alongside their desktop website. No matter how you decide to access M1 Finance, the experience and user interface is well done.

What Do We Think?

When I first downloaded the app I thought, “just another investing app”. After using it and building a custom pie, I really like it. I enjoy being able to make my own pie as well as choosing from professional templates.

This gives me the ability to rely on the advice of professional investors as well as utilize my own research and analysis.

There are other apps that offer similar experiences. For example, Betterment offers Tax Loss Harvesting and takes into account external investing accounts when building a portfolio.

I also really like Acorns because it allows me to round up purchases to the nearest dollar and invest it into a similar fund. I use Acorns for saving for shorter-term goals such as home remodel projects and vacations. It isn’t nearly as customizable though.

M1 Finance is perfect for experienced investors who want to set up a custom portfolio and check on it minimally. It’s also great for beginners because it is easy to use and is very visually appealing so you can see the money working for you.

If you want more information or want to start investing with M1 Finance, I encourage you to signup and start building your first pie.

If you signup below and deposit at least $100, you’ll get $20 added to your account for free by M1 Finance. Full disclosure, they will also give me $20 for referring you.

Signup for M1 Finance and Build Your First Pie!

I hope you found this review of M1 Finance useful. Let me know in the comments what you like or don’t like about M1 Finance! I’d love to hear your opinion as well!

Until next time, let’s start investing!

12 thoughts on “First Hand M1 Finance Review – Inside a Real Account”

  1. M1 sounds like a really interesting way to invest. I just got into investing about 9 months ago and I’ve been using an app that a friend recommended. It’s one of the ones you mentioned that just asks you to choose between different risk categories and then they build the portfolio for you. M1 financing sounds interesting to me because you can choose different “pies” and customize your investments more. I also like that there’s no fee! The one I’m currently with only offers no-fee up until $500 I think. Definitely thinking about making a switch now!

    Reply
  2. I like the sound of M1 Finance. I have used Acorns before but I did not like the fact that you really had no control of where your investments go, and then I moved on to Stash, but it looks like M1 Finance has many more tools and charts to utilize in order to see what stocks are doing good and which ones are not. Thank you for the information, I am going to give this a shot!

    Reply
  3. Thank you for this! I have been researching personal investing options for a while now, and it can get pretty overwhelming. It’s nice to have the information set out clearly. The screenshots are helpful also. 

    I’ve been using Acorns for the last 6 months or so. I don’t have a lot in there yet, but I figured it’s probably best to leave it alone and not stress over checking on it so often, lol! 

    Do you think it would be worthwhile to take that money out of Acorns and put it into M1 Finance instead?

    Is tax loss harvesting something I should be concerned with as a beginner investor?

    Reply
    • Great questions! Tax Loss Harvesting is useful in reducing taxes owed but in the end all taxes are paid whether or not TLH is utilized. TLH just takes a little sting out of the bite so to speak by taking reducing taxes now.

      Eventually when you take out your winners though, you will be taxed on them and may not have much cushion left because you already claimed the losers. It’s really just personal preference.

      If you have an Acorns account and like the rounding up feature, I’d leave your money there and continue to grow it. You could always open an M1 account and try it first. Maybe you’ll prefer one to the other or use both as I do.

      Good luck!

      Reply
  4. This was an informative and useful explanation and review of the M1 Finance tool. I had not heard of this tool but I am aware of the Robo-investing tools that you have mentioned. I have even used a couple and had moderate success with them.

    It appears that the M1 Finance tool has more features that can add to your profits, and the one that stands out is the ability to balance out your investment allocations with a touch of the button. That is something that is very helpful as the portfolio that you build will get out of sync with your goals over time with the market swings in prices of the stocks selected.

    The biggest advantage that I see (there are many) is that there are no fees to use their platform. The money they earn from uninvested funds is enough for them to have profits and offer their services for free. I will be checking this out and more than likely I will give them a try. Thanks for the heads up on this one! 

    Reply
    • The one touch rebalance is a great feature but i should also mention that by rebalancing there could be tax implications since some assets will be sold to rebalance. This isn’t a big deal for small accounts but could be for large accounts. That being said, most brokerages charge for this service.

      Reply
  5. Hi Eric – thanks for sharing such a great and informative post! I’d heard of M1 Financing before when I was looking for a Robo. Decided to try Wealthfront also because of the TLH benefit you mentioned – but what i didnt realize, until only after reading your article about M1, is all the flexibility with building pies! I totally overlooked it at the time thinking all Robo’s were pretty much the same as you mentioned.

    For me now as an investor, my appetite and strategies have changed so I’m going to think about giving M1 another look. Thanks for your  article. Be curious to know your thoughts on the performance of Robos in general. Last year was a cracker for stocks but I’m gravitating more towards real estate these days. Diversification is key! 

    Reply
    • I plan on reviewing Wealthfront next. I know a lot of people that read my reviews are from outside the US and that Wealthfront is popular in Canada. I’m glad you’re thinking about giving M1 Finance a shot! You are right about real estate and if you decide to try M1, consider adding REITs to part of your Pie!

      Reply
  6. Thank you so much for sharing this wonderful and informative article with us.

    First of all, I would like to know more about the difference between M1 finance and Traditional Brokerages. I am new to M1 Finance and really like the easy to use pie charts. I have an individual account. I can easily choose my pies and plan for different goals. I have recently been trying to find out if I should join M1 plus once I have a $100,000 account. Is it worth the $125?

    Reply
    • Whether it’s worth it or not depends if you plan on investing more than once per day, trading on margin, and using the Spend Card to get 1% cash back. If you feel you could justify the fee with earnings then I’m sure it’s worth it.

      Reply
  7. Hi, Eric.
    Thanks for sharing the review of M1 Finance. Being a beginner, I would like to know if M1 Finance operates internationally and how they manage the tax liability of other countries. This platform seems to be authentic and I feel it is safe for investment in funds. 

    Thanks for the detailed info.
    Warm Regards,
    Gaurav Gaur

    Reply

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