M1 Finance, launched in 2015 by Brian Barnes, has emerged as a contender in the competitive investment firm landscape. With pre-made customized portfolios or M1 Pies, investors can select from scores of premade M1 expert pies from diverse categories. Each M1 pie investment strategy is offered in several risk-adjusted options. If you want a diversified investment portfolio with fee-free rebalancing, M1 might be worth a look.
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M1 Pies Tutorial – Transcript
Find out which M1 Expert Pies are best for your age, strategy and risk tolerance level.
00:02 Hi, Barbara Friedberg here, former portfolio manager and university investments instructor, Here, to talk to you about investing in very simple, pre-made investment portfolios through the M1 Finance Platform.
00:23 This video is for you if you would like a diversified portfolio in one of several themes, but if you don’t want to do the work yourself of picking and choosing the funds, the ETFs and rebalancing them yourself, M1 Finance will do that for you, for no charge. Disclosures, I have an account with M1 Finance and you’re also going to see a picture of that account. Another disclosure, if you do sign up for M1 Finance through a link provided below, our company will get a small commission which helps to fund this channel.
01:07 So let’s get started. A quick overview of M1. They’re a unique investment platform and in my decades of investing have never seen one exactly like this.
01:20 They offer over 6,000 stocks and ETFs. You can invest in on your own. They have themed stock collections. They have no commission trading or management fees and they will rebalance your portfolio.
01:37 For you today, we are going to the investment screen and we will show you their premade portfolios. But before we go like to give you a quick view of the types of accounts you can have at M1.
01:57 You’ll see here individual, joint, custodial, and three types of retirement accounts. Of course, you can do a rollover IRA as well. And you can open a crypto or a trust account.
02:09 So let’s take a visit to my account. I invested a total of $6,000 several years ago. The account is now valued at $7,338.
02:22 I am invested in a moderate asset allocation with two different pies or portfolios. So let’s take a look. The investment pies are simply mixes of various investment funds.
02:51 Now my personal portfolio is comprised of one, Global Dividend Pie. And you’ll see next where you get these pies and the funds included in them. I have 50% invested in a global dividend pie. The performance since I’ve invested has gone up about 40%. This expert pie, as they call it, has five slices and those slices are actually a fancy way of saying funds.
03:35 So within this pie, the global dividend stocks and bonds have a Vanguard Dividend Appreciation Stock Fund, an iShares International Dividend Stock Fund, a Wisdom Tree Emerging Markets High Dividend Fund and a Mid-Cap Dividend Fund. These are the percentages, and there’s also a small allocation to an All Cap Wisdom Tree Dividend Fund.
04:14 In my own portfolio, I have one more expert pie. So let’s take a look at that one. This M1 Pie is a 60/40 Just Stocks and Bonds portfolio. This is simply a 60% stock and 40% bond expert portfolio or pie. Here’s a little description of it. It gives access to investors to the world’s two major asset classes, stocks and bonds. And in this pie, there are only two funds, And here’s a secret: I believe you can get good diversification with just two funds.
05:00 I have selected a moderate investment risk level of 60% total world stock ETF, 40% bond total bond market ETFs. You can see the performance since I purchased the M1 Pie. It’s about 17.38%. This Just Stocks and Bonds 60/40 portfolio has lower performance than the Global Dividend Portfolio because the Global dividend Portfolio was an all stock funds pie. Stocks and stocks typically have higher returns. Since there are 40% in bond you would expect that this slice of the pie would have lower overall long-term returns.
05:45 So, enough talk about me, let’s look at the other available M1 pies and you can see what’s available. And what you can invest in. We have a General Investing M1 pie, and this is a perfectly diversified investment portfolio with a variety of stocks and bonds offered in various risk levels. This is great for someone if you want a portfolio based on your risk tolerance and you just want various risk-adjusted options from conservative to moderate to an ultra aggressive pie or portfolio.
Automatically invest for retirement with a tax-advantaged brokerage account. Custom-build your portfolio or choose a pre-made Expert Pie based on your long-term goals.
06:35 And as we said below, aggressive is going to hold greater amounts of stock investments and conservative will hold greater amounts of bonds.
06:45 Let’s take a look at the Moderate General Investing pie. We’ll take a look at the funds or slices in the pie and the asset allocations. There are ten funds including Bonds, International Stocks, a US S&P 500 ETF, Small Cap stocks, Intermediate Corporate Bonds, Treasuries and Munis Bonds. Obviously with the Munis you’ll want this in a taxable account because Munis are tax-exempt so you wouldn’t want this pie in an IRA. The portfolio is well diversified with stocks and bonds.
07:29 Next, we’ll check out the Ultra conservative option and you’ll see that this portfolio is bond heavy. You’ve only got 14% allocated to stock ETFs including a small cap, S&P 500 and developed markets international ETF. This ultra conservative option is clearly for someone who’s in retirement or who doesn’t want to take much risk.
On the other end is the ultra aggressive portfolio with five year returns of 34%. This pie has seven slices, predominantly stock market funds. There’s a small allocation to international bonds and the rest of the portfolio consists of stock funds. So this is for the aggressive investor.
08:56 Let’s go on to the other types of expert pies you can invest in.
09:08 The Retirement pies are similar to target date funds. First, consider when you expect to retire and then pick the fund that aligns with your retirement date. So if you’re looking to retire in 2030, then you’ve got three choices for different portfolios. The retirement portfolios are designed for older investors with fewer retirement date choices for younger individuals.
09:29 The conservative Retirement Fund, for those who are investing for 2030 will find a relatively conservative portfolio, or pie. The funds lean towards bonds with about about 50% in bond funds. They also include some commodities in this portfolio There’s also a small allocation to real estate. The rest of the funds include a diversified mix of various stock funds.
10:07 The Retirement Pies are great if you want a diversified portfolio and you’re looking to retire in 10 years or so.
10:16 On to our next category. We’ll go through a few more of these Pies and then we’ll wrap it up.
10:22 Socially responsible is a big theme today. A lot of people want to do SRI, sustainable investing. We have two choices. One choice is for those that want some international exposure and the other is for those interested in SRI investing in U.S. companies.
Nuveen is known for socially responsible investments. The US Socially Responsible pie includes five Nuveen stock funds. with low expense ratios. Next, the international choice, adds in international stock funds as well.
11:07 This next M1 expert Pie is great if you are an income-oriented investor or a more conservative investor and want an income portfolio. I have the global dividend pie, which we’ve already discussed. There are several other bond portfolios with long, medium, and short term foci.
11:32 Let’s glance at the medium term bond fund. That one has not performed well. When interest rates go up, bond values go down. And bond values have suffered a bit in this rising interest rate environment. But when interest rates start to decline, then your bond funds will go up and provide capital appreciation.
There are three slices or funds in the Income Earner bond fund: Intermediate-term treasuries, AMT-free intermediate munis (for a taxable account only), and intermediate-term corporates. The dividend is a nice 3.06%, with a low expense ratio of 0.11%. So if you’re in that group of older or income-seeking investors, then the Income Earner Pie might be for you.
12:46 In summary, the Income Earners Pies offer six different Pies or portfolios. The Long Term Bonds Pie has the highest dividend yield of 4.183% which is actually quite nice.
The Stocks and Bonds Pies we’ve already covered. These contain one stock and one bond fund in various asset allocations.
And now the other strategies which are appropriate if you’re looking for a more of a diversified type of investment portfolio.
13:19 ARK investments are focused on innovative technology. You’ll see that the funds that are included in this are on the more speculative side.
13:36 They have a little bit higher expense ratio. These are run by the Cathie Wood Arc Fund family and they include tech and robotics, innovation, genomic revolution and innovation.
13:51 And if you want to put a small amount of your portfolio in what are more speculative investments with the possibility of greater returns, you might choose a portfolio like this.
14:05 In the other strategies, we have a cannabis pie. We also have domestic growth, domestic value, global growth and global value pies. These are for people with interest in different types of investment strategies.
14:22 So, if you would like to invest in a pre-made portfolio with the opportunity to invest in crypto. You can invest in three coins or add in your own stock picks and ETF picks.
14:45 And whichever you choose in whatever asset allocation that you select, M1 will rebalance them for you.
And just one more selling point, they do have a promo. You can get up to $15,000 when you transfer your brokerage account to M1 by November 15th.
You can learn more about M1 expert pies on their website. So, if you are interested in investing in a brokerage company that offers pre-made investments in a variety of smartly crafted strategies, you might want to look at M1.
Sign up is super easy, transfer is very easy, and if you have any questions, feel free to link them in the comments below.
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Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t personally believe is valuable.
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