How can M1 Finance benefit your future?
Updated: Apr 8, 2020
Do you want to miss out on the power of compound interest because you don’t have a large amount of available funds?
M1 Finance is a fantastic broker for someone who likes to pick their own stock, but doesn’t want to regularly log in to make trades and might not have enough money to buy whole shares.
This investment platform is completely free to use, except for the possible fees for buying shares in particular funds. The main idea is you pick all the stocks, funds, and ETFs you want to own, then you select what percentage each will have in your portfolio, and every time you make a deposit, M1 will divide the deposit so that the amount of money you have in each stock is balanced according to your desires, as much as possible. They even have custom options where they will pick stocks for you, if you don’t want to decide.
The M1 Pie
As an example, let’s say that I decide to make my custom pie (wheel) on M1 the FAANG stocks, so suppose I put each of them at 20%. If I start with a $100 investment, M1 would invest $20 towards each stock. But then, let’s say that after a few weeks, I invest another $100, but the stocks have shifted so that AMZN is now 22% of my portfolio and FB is now 18%. At that point, the deposit would be divided with a little more going towards FB and less towards AMZN, making the new percent division as close as possible to the 20% each that was initially desired.
Free investment platform - There are no transaction or account fees.
Hands-off investing - You can set up your pie and automatic deposits and you don't have to touch it for months, if you want to.
Custom pies with different percentages of different stocks/ETFs - Pick your own or use a pre-designed pie.
One time and scheduled transfers - Set up transfers from your bank to M1.
Automated investing based on a ratio you get to decide - The computer adjusts the investment to keep the balance as close to your desired distribution as possible.
Re-balance your pie whenever you choose - There is an option to re-balance the pie, which will sell the excess you have in some stocks and buy the ones you want more of.
Dividend reinvestment in increments of $10 - Cash accrual is reinvested after hitting $10.
It connects to Personal Capital.
Charts to monitor progress - These aren’t as good at Robinhood, but they are readable.
Retirement, single, and joint accounts available - I use a joint account.
Allows you to borrow money - I don’t recommend this.
Online checking account and debit card available - I don’t use this.
Paid version with upgrades - I don’t use this.
No limit orders or timed trading - This is best for dollar cost averaging.
Trades are executed the next business day - You can’t really time the trade.
You can’t change a stock without re-balancing the others - If I want to sell one stock, then M1 will automatically buy/sell partial shares of the other stocks to bring it towards the desired balance.
All investments are subject to risk - Always use caution when investing and don’t use money you can’t afford to lose.
All in all, I think this is a fantastic investment platform. I was very happy when I found it and I have been using it for quite some time now. I love how easy and hands-off it is without any brokerage fees. Again, I’m not a financial advisor, so take my opinion with a grain of salt; I’ve only been investing on my own since April 2017, but I love it and I enjoy sharing what I’ve learned.
Take a look at your finances. If you are out of debt and have an emergency fund, I’d recommend looking into this resource. It’s a great way to add some diversity to your portfolio and toss a few hundred dollars for some free compounding. If you sign up using this link, then you and I will both receive $10 (after you transfer money into the account)! Hard to beat that on a free account.