M1 Finance Review: An Overview

Founded in 2016, M1 Finance aims to reinvent portfolio management. Since its inception, the corporation has had headquarters in Chicago, Illinois; however, in 2020, the central office relocated from the River North region to the Loop region. Like M1 Finance, which began with roughly $1 billion in customer assets, it has expanded over the last seven years to handle over $5 billion.

M1 Finance provides interesting options for automatic investment, broad portfolio customization, and spending and borrowing options. It allows you to develop your own investment strategy or select from more than sixty pre-built investment portfolios, or "pies." This flexible portfolio platform should be used by seasoned investors who want to automate their investment plans while considering their particular preferences, risk tolerance, and diversification goals.

This article will take a closer look at the robo-advisory of M1 Finance to help you determine whether the M1 Finance platform is the best for your investment portfolio's needs.

Account Setup

Starting with the M1 Finance platform is a simple procedure. After entering your login and password, you will be asked to begin M1's onboarding process, during which you will learn how the application works and react to some general questions related to your investment background. During the development stage, you can select from already developed pies or build an investment portfolio that matches your requirements.

To begin, you must first create an account. M1 handles trust accounts, brokerage accounts, custodial accounts (such as M1 Plus), Traditional IRAs, SEP IRAs, and Roth IRAs. The minimum amount required to start an account is almost $100, with IRAs requiring $500. You can begin investing after setting up the portfolio, selecting your account, and adding your financial information.

Goal Setting

M1 Finance automates portfolio management for investors. Therefore, financial calculators and goal-setting are purposefully omitted. M1 Finance platform doesn't offer financial advisory services. Thus, it provides no access to human advisors.

Investors who prefer financial advisors or are looking for goal-setting tools may find the absence of hand-holding uncomfortable. For seasoned investors, focusing on portfolio management leads to a more efficient investing procedure focused on building wealth.

Account Services

M1 offers several account options to give you greater authority over your money. It is simple to transfer funds into and out of the M1 platform, and you may schedule automated transfers into your investment accounts weekly, monthly, or biweekly. You can also make individual transactions, giving you greater flexibility. You can accumulate your holdings in only one broker by transferring funds from retirement or other brokerage accounts into M1. Apart from these options, you can use margin accounts to get up to 40% of the balance in the account once it exceeds $10,000.

Some features will differ depending on whether you are an M1 Plus or M1 Basic member. M1 Plus members pay a lower 6.95% interest rate on margin loans, whereas M1 Basic members pay an 8.50% interest rate. Both categories include savings or checking accounts, but with an M1 Plus subscription, you will have more cashback opportunities, ATM payments, and payment options. Only the M1 Plus category offers credit card products. The credit card eliminates annual fees and offers appealing cash back options.

Cash Management

M1 provides a credit card alternative, a cash flow distribution, and a digital banking feature as part of the platform in addition to the portfolio administration product:

M1 Spend allows you to easily integrate your investments and savings or checking accounts. A debit card can be used to make payments, transfer funds, and set up automatic deposits. FDIC insures all withdrawals up to $250,000. Moreover, M1 Plus members get the check-sending feature, a 1% cashback, and a 1% interest rate.

M1 Finance offers a special credit card known as the Owners Rewards Card for M1 Plus users. Members who use the M1 platform to make transactions related to companies they've invested in can receive a maximum of 10% cash back without any yearly fee.

Portfolio Customization and Management

M1 Finance excels in several domains, including the wide customization options offered by Custom Pies for your portfolio. You can use the screening tool on the site's Research page to look for several publicly traded ETFs, individual stocks, and real estate investment trusts (REITs). Adding these choices to an established or new investment portfolio only requires a few clicks.

M1 monitors and updates your investment portfolio when you invest new cash, ensuring you stay within your set goal allocation after your pies are established. The primary method for accomplishing this is to distribute new funds to the underweight components of your investment portfolio than the initial approach you have set. Furthermore, a distinct feature of the platform allows you to click one time and accomplish a full portfolio rebalance at your own pace.

M1 Finance Pros and Cons

Pros

• Offers extensive customization options in portfolio management
• Low-interest margin loans are available with $5,000 invested.
• Borrowing and spending options upgraded portfolio management.
• No fees for trading or maintaining a cash management account

Cons

• No recovery of tax losses
• Financial planning and advisors are not available.
• Fewer financial calculators, resources, and goal-setting tools
• External accounts cannot be combined for investment management purposes.

Is M1 Finance Safe?

Yes, the M1 Finance platform is safe as it is accredited by the Financial Industry Regulatory Authority (FINRA). Additionally, it is insured from losses by the Securities Investor Protection Corporation (SPIC), which protects customer-held cash and stocks. Lincoln Savings Bank, which provides coverage up to $250,000, administers most M1 Checking accounts. The company also features top-notch security, including two-factor authentication and 4096-bit military-grade encryption.