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M1 Finance Pros and Cons

Pros And Cons Of M1 Finance

M1 Review, Tutorial, and Video

M1 Finance, a unique investment and money app, with features for a wide range of investors. M1 might be best for you – or not. Read the Pros And Cons Of M1 Finance to find out the answer to these questions:

  • What is M1 Finance?
  • Should beginners use M1 Finance?
  • Is M1 better than Fidelity or Schwab?
  • What are the advantages and disadvantages of M1 Finance?
  • What is a model portfolio, or Pie?
  • Who shouldn’t use M1 Finance

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.

I am committed to telling the truth about investment apps and products that are promoted to the public and to explain not only the beneficial features but the negative ones as well. Following is an M1 finance Review along with the Pros And Cons Of M1 YouTube video. We focus on an honest appraisal of the app and provide you with enough information to decide whether to invest or not.

M1 Finance Affiliate Relationship

An affiliate relationship is important to understand. Every website that is promoting a specific company is required by law to have an FTC statement which says that the publisher receives a commission from the company if you sign up for M1 Finance through a link on the website or video description. Our company and every other company with an affiliate contract will receive a commission for signing up for M1. This regulation applies to all affiliate relationships, not just M1.

Our company only represents firms that we stand behind. We reject more affiliate offers than we accept. But on this website as well as across the internet you will find that companies which pay an affiliate commission might receive more publicity than equally good companies that don’t have an affiliate program. So, keep that in mind when you are researching investment apps.

Use this knowledge to critically evaluate everything you read on the internet.

 

M1 Features

What is M1 Finance?

M1 Finance is an investment platform first. There are over 6,000 stocks and ETFs that you can buy and sell, commission-free. The M1 app offers basic stock and ETF research, but nothing fancy. The M1 App also provides margin lending, a cash back Visa credit card and a high yield cash account.

M1 Model Portfolios or Pies

One of my favorite features are the M1 model portfolios or Pies. You can buy or sell these groups of investments, or M1 pies, commission-free. Additionally, there are no management fees, except a small monthly charge for accounts worth less than $10,000. There’s one click rebalancing, back to your pre-decided asset allocation or percentage of stocks or investments.

M1 Pies - Global dividend and Just stocks and bonds 60/40

I have a small account with two M1 pies, or model portfolios. One is a global dividend portfolio, and the other is a 60% stock and 40% bond portfolio. I started out with $6,000 and over time it has grown to $8,575.

The Global Dividend Pie is designed for those seeking dividend income and growth. The M1website shows the portfolio’s objective and performance over various periods of time as well as the funds within the Pie. The Global Dividend Pie is one of the “Income Earners” and you receive exposure to dividend paying companies from across the globe.

M1 Pie - Income earners

Each model portfolio includes between two and 12 individual funds. All ETFs within each M1 Pie are low-fee.

The list of M1 model portfolios or Pies includes:

  • General Investing – Includes five diversified stock and bond ETFS and can serve as a complete investment portfolio. The seven choices range from ultra conservative to ultra aggressive, and are appropriate for all types of investors.
  • Plan for Retirement – Similar to target date funds, the ten choices provide those within ten years of retirement risk adjusted complete investment portfolios that contain both stock and bond ETFs.
  • Responsible Investing – Sustainable investors can choose from two SRI (socially responsible investment) all-equity portfolios. One stock portfolio is geared towards global investors and the other has a U.S. focus.
  • Income Earners – The five stock and/or bond portfolios include U.S. and international options with a range of potential dividend yields.
  • Just Stocks and Bonds – This is the simplest way to target a stock and bond portfolio with just two funds in each Pie. The choices range from 90% stock , 10% bond to a conservative 90% bond, 10% stock portfolio.
  • Other Strategies – This model portfolio category includes six portfolio choices from an aggressive ARK ETF Pie, to Cannabis, and four U.S. and International Growth or Value choices.

The fund’s within the Pies are low-fee and include reputable fund families such as Vanguard, I Shares, and Wisdom Tree.

You could invest in the ETFs on your own from any of the model portfolios if you prefer. Although it’s easier to choose a model portfolio and let M1 Finance rebalance it for you.

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.

Research Investments at M1

The research categories at M1 include:

  • News
  • Stock screener
  • ETF screener
  • Crypto
  • Model portfolios

You can research the 3,700 stocks with a variety of screening metrics including market cap, PE ratio, dividend yield and sector. ETF investors can screen for funds by assets, dividend yield, expense ratio and categories.

Those seeking crypto exposure can buy and sell Bitcoin, Ethereum and Litecoin. Serious crypto investors will likely prefer a platform devoted to digital currency investing.

Are these your best screeners? No. Those seeking in-depth screening and 3rd party research will prefer another investment platform. Fidelity, in our opinion, provides the best stock, ETF, mutual fund and bond screeners, along with 3rd party research.

The model portfolios or M1 Pies differentiate this investment platform. They’re similar to a robo advisor in that they’re pre-made portfolios. But unlike robo-portfolios where you complete a short questionnaire and then are presented with a recommended portfolio, at M1 you select your preferred model portfolio.

   

M1 margin and m1 high yield savings account

Other M1 Finance Features – Margin, High Yield Savings, Cash Back Credit Card

M1 Borrow offers low interest rate margin loans.

The M1 Finance High Yield Savings Account delivers high competitive interest rates on your excess cash.

These features are handy, but not particularly unique. Most investment platforms offer both margin borrowing and high yield cash accounts.

M1 credit card

The fee-free M1 Owners Rewards Card has some unique features. You’ll earn 10% cash back when shopping at specific merchants. Your rewards can automatically re-invest into your investment portfolio, further compounding your returns.

Is it a little gimmicky? Yeah, maybe. But if you’re a big shopper at the featured partners and you’re an M1 investor, you can maximize that card and it can work well for you.

How Much Does M1 Finance Cost?

The company has just removed all account management fees for everyone who has an account worth $10,000 or more.

If your account is worth less than $10,000, you will pay $3 a month.

Now, you have to decide if that’s worth it for you or not.

Next is where I get into the truth telling, the pros and the cons of M1.

M1 Finance Pros

There’s a lot to like about the M1 Investment app.

  • Fee-free investing in 6,000 stocks and ETFs. These are the most popular investments and should offer sufficient variety for most.
  • Over 60 model portfolios make creating a set it and forget it investment mix easy. For beginners and intermediate investors, it is a great way to dip your toe into the investment world.
  • The free rebalancing option is a plus. This feature is worthwhile for those who don’t want to buy and sell their stocks and funds periodically to maintain a diversified asset mix,
  • The low interest rate margin is handy for those who trade stocks and ETFs, and borrow within one platform.
  • The Visa card could be an asset, if you maximize the rewards and use them to reinvest into your 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.

M1 Cons

For certain investors, these M1 disadvantages could rule out the platform.

  • M1 has limited investment options. The platform lacks individual bonds, mutual funds, and options trading. There are 8,000 stocks on the NYSE and over 3,000 ETFs and M1 offers access to 6,000 stocks and ETFs. If you’re an advanced or sophisticated investor, M1 might not work for you.
  • There are limited trading windows, so frequent traders will need a different investment platform.
  • No financial advisors are available. Many of the larger investment firms, offer 24/7 customer service and financial advisor access.
  • No physical branches. These are convenient for those who like to drop in to deposit a check or ask a question.
  • No downloadable trading platform, limited screening and research capabilities. Better screeners and more sophisticated trading platforms are available at most large financial firms.

M1 Finance Pros, Cons, and Review Wrap Up

Who is M1 best for? Those who want model portfolios and automatic rebalancing will find a solid line up of choices. The model portfolios are typically well-designed and include predominantly low-fee index funds. The only exceptions might be the ARK portfolios which levy higher fund management fees and are more speculative. The “Plan for Retirement” model portfolios lack options for younger investors and are geared for those looking to retire in the next ten years or so.

Investors who want a solid high yield cash account and access to low interest rate margin will find what they need at M1.

Ultimately, if you want a wide range of investment assets, research, screeners along with sophisticated trading features you’re better off with a more complex investment platform.

M1 is a sound starter investment app. It’s great for beginners and intermediate investors who want a set-it-and-forget-it investment portfolio.

FAQ

Should beginners use M1 Finance?

M1 Finance is ideal for beginning investors. The model portfolios or M1 Pies can easily get you set up and investing in the right way. The automatic rebalancing saves beginners investment management details. The only drawback for beginners might be the $3.00 per month management fee for accounts worth less than $10,000.

Is M1 better than Fidelity or Schwab?

That depends on what you’re looking for. Fidelity, Schwab and larger financial firms offer a wider range of investments, 24/7 customer service, bank branches and robo-advisors. Although, M1 outshines the larger investment companies with its range of model portfolios and fee-free rebalancing. Only you can decide whether M1 or another firm is best for you.

What is an M1 Pie or model portfolio?

It is a package of pre-made investments that fit a specific theme. For example, you can invest in a dividend portfolio which includes high dividend companies. Or you can choose to invest in a Responsible Investing portfolio with access to socially responsible and sustainable companies. M1 provides access to more than 60 Pies or model portfolios spanning a range of investment styles, geographical regions and types of ETFs. The M1 Pies are ideal for those looking for a complete investment portfolio that is easy to buy (or sell) with a single click.

Who shouldn’t use M1?

Sophisticated traders and investors won’t be well served by this investment app. If you are a frequent trader, looking for options, or penny stocks, then you’ll need to look elsewhere. Bond investors shouldn’t use M1, unless they prefer bond ETFs, which are available on the platform.

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  believe is valuable.