M1 Finance Review: Investing Made Simple

This post may contain affiliate links, please read our disclaimer for more info.

Today I'm going to explore what M1 Finance is and help you work out if you should invest your money with them.

m1 finance

Here is what I'm going to cover in this article.

What Is M1 Finance?

M1 Finance is a hybrid between a traditional stock broker and a robo-advisor.

M1 Finance allows you to easily invest in stocks and ETFs without personally managing your investments.

First, you select your investments and your allocations, then you automate the entire portfolio!

M1 Finance has become the go to app for passive stock market investing.

The app focuses on low-cost passive investing, with additional features such as dynamic portfolio re-balancing and investing pies.

Main Benefits of M1 Finance

What's great about M1 Finance is that you can keep making contributions to your portfolio manually or through a scheduled bank deposit setup.

Free, Automated Investing

This helps you invest consistently over time. Consequently, reducing the volatility of your portfolio. This strategy is known as dollar-cost averaging.

M1 Finance will invest any additional funds you invest amounting to more than $10.

No Brokerage Fees Or Commissions

M1 Finance does NOT charge brokerage fees or commissions on any of your transactions.

There is also no minimum deposit to launch an account; however, you cannot begin investing until your account has reached a balance of over $100. The app will then invest any additional funds amounting to more than $10.

The Pie

With M1 Finance, you can build a custom portfolio of stocks and ETFs—or choose from 80 of their “expert portfolios.

You can pick from over 6,000 securities listed on the NASDAQ, NYSE and BATS when designing your custom portfolio.

Your portfolio may consist of multiple pies. Perhaps, you might have a pie favoured towards growth stocks, and one for dividend/defensive stocks and so on.

Fractional Shares

M1 Finance allows you to buy fractional shares instead of an entire single share.

Meaning you can choose specific stocks and ETFs that you want to add.

Fractional shares are great if you want to buy Amazon or Alphabet stock and don't have the $1,000+ needed to buy a single share.

The smallest fractional share you can buy on M1 Finance is 1/10,000th of a single share!

Dynamic Re-balancing

I couldn't write an M1 Finance review without mentioning this awesome feature!

M1 Finance has a feature called Dynamic Re-balancing.

The app will buy the asset class that is underweight or “cheap” and sell the class that is overweight or “expensive”.

Therefore, the app effectively buys low, and sells high automatically!

Whenever you make a deposit of $10 or more, M1 Finance will put those funds towards the most underweight stocks that make up your pies. 

It will also sell the most overweight shares you own when you decide to sell off some shares.

M1 Borrow

M1’s flexible portfolio line of credit lets you borrow up to 35 percent of your portfolio1 and pay back on your schedule.

As M1 Finance says, it is “The simplest, lowest cost way to borrow money.”

Main Drawbacks of M1 Finance

M1 is certainly a great Robo-advisory platform but is not without its drawbacks.

Unfortunately, you must be either a US citizen or permanent resident, over the age of 18—to apply to open an account with M1 Finance.

No Mutual Funds Or OTC Stocks

Unfortunately, you cannot purchase mutual funds, or penny stocks that are traded over-the-counter on M1 Finance.

But why would you need them when the app already has 80 pre-made portfolios right?

Not Suitable For Day Traders

M1 Finance is not suitable for day traders.

All trades within M1 Finance are completed within a window. The window begins at 9 am CT time, every day the NYSE market is open, and runs until all of your orders are complete.

No Tax-Loss Harvesting

Many other robo-advisers are known to have tax-loss harvesting, including Betterment and Wealthfront.

Tax loss harvesting is the selling of securities at a loss, effectively offsetting any capital gains tax liability.

Tax-loss harvesting is typically employed by those who want to limit their short-term capital gains tax liability.

M1 Finance does not have this feature, unfortunately.

Is M1 Finance Right For You?

M1 Finance is a suitable app for many people. It enables you to automate your investing and features dynamic re-balancing whilst charging zero commissions on all trades.

I personally enjoy the process of researching and analyzing stocks before making a purchase.

This app is more suitable for you if you want to build wealth—without dedicating your life to the markets.

I hope you enjoyed this M1 Finance review and have obtained a clearer image of the app and its capabilities.

Overall, the M1 Finance app is a great way to invest your money and build wealth—passively!