M1 Finance Review 2022: Pros, Cons, & fees

Updated: 3rd Jan 2022
Written by Kim Pinnelli
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M1 Finance

M1 Finance is a FREE investing platform that packs a serious punch for investors. From tax optimization to automatic rebalancing, and everything in between, M1 Finance is one of the best brokerages for both beginners and long-term investors.

Fees: $0

Account Minimum: $100 ($500 for a sweet Retirement Account)

M1 Finance Review. Founded in 2015 by Brian Barnes, M1 Finance has emerged as a robust investment platform for everyday investors who are looking to avoid hefty fees. M1 Finance has attracted a legion of fans and currently has over 250,000 funded accounts.

The astronomical growth M1 Finance has experience did not happen for no good reason. The platform has an intuitive user interface and remarkable features, making it easier than ever to start investing today. While an M1 Finance portfolio is not perfect for every investor, it may be the ideal platform for you. Here is our full review of the M1 Finance platform for the year 2021.

What is M1 Finance?

M1 Finance is a Financial Technology (FinTech) company that makes it wildly easy for investors to start investing in the stock market. At its core, M1 Finance is both a long-term brokerage account and a Robo-advisor that provides tailored insight into your investments.

Whether you are on the market for a new brokerage account or a Roth IRA, M1 Finance is built with you in mind.

Related:Best Online Stock Brokers

How Does M1 Finance Work?

Like most Robo-Advisors, M1 Finance gives you ownership over your investment strategy, but provides action-oriented advice, empowering you to make the most of your money. As an investor, you will choose which “Pie” or “Pies” you would like to invest in. These “Pies” represent a collection of Stocks, ETFs, and other securities.

Fortunately, if you are a beginner, M1 Finance already has pre-built expert Pies that are designed by professionals.

These pies will allow to you diversify your capital into various industries and stocks, which reduces your downside risk and protects your wealth from market fluctuations.

Fret not, if you are a seasoned investor, you can create custom Pies, which can include individual securities of your choice.

How Does M1 Finance Invest Your Money?

The platform has several different “investment pies” that you can choose from to model your portfolio after. You can also set each pie to represent different percentages of your portfolio. This feature lets you quickly set up your portfolio in several different ways to serve different investing strategies.

M1 Finance Investment Pies:

  • General Investing – This category allows you to make a diversified portfolio based on your risk tolerance quickly.
  • Plan for Retirement – Ideal for retirement accounts, this category will help you build wealth and plan for retirement financially.
  • Responsible Investing – This category is ideal for people who want to deploy their capital into socially responsible industries/companies.
  • Income Earners – Ideal for investors who are focused on income and dividends.
  • Hedge Fund Follows – This category has several different hedge funds you can choose from to mimic. Personally, this is the most exciting investment opportunity. However, be careful because even the most successful hedge funds experience wild swings in their portfolios.
  • Classic Stocks & Bonds – This category is for people who simply want to invest in stocks and bonds. You can model your portfolio to have different proportions of the two investment vehicles.
  • Other Strategies – Miscellaneous investment opportunities, including cannabis, growth, value, domestic, and global.

Each expert pie that you can choose from within the platform will show you its performance in 1 quarter, 1-year, 3-year, and 5-year intervals. You can also see the dividend yield and risk level associated with each investment method.

As you can see, M1 Finance provides investors with a robust investment experience.

Hedge Fund Followers on M1 Finance

With pie chart investing, M1 Finance allows you to allocate specific percentages of the pie to different stocks, funds, and strategies. Within the funds, you can have your investment portfolio mimic that of significant hedge funds.

As we alluded to earlier in the review, this feature is truly unique and worth considering if you are feeling a bit riskier than usual.

M1 Finance can do this by reviewing 13F filings by hedge funds, which discloses the hedge fund’s holdings. M1 Finance automatically updates the portfolio when each new filling comes out. This will within 45 days at the end of each quarter.

This feature allows you to mimic the performance of successful hedge funds, all without paying the hefty money management fees Hedge Funds command. This makes M1 Finance a desirable platform if you want your portfolio to mirror the returns of successful Hedge Funds.

But remember, even the best hedge funds experience wild swings within their portfolio.

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Portfolio Level ‘DRIP’ on M1 Finance

M1 Finance offers a portfolio level DRIP feature, where dividends are allocated proportionally to the way your portfolio is set up. This way, you can keep the same percentage of your portfolio allocated to a specific stock, industry, or fund.

Dividends will accumulate faster by using DRIP. This allows your investments to compound over time, giving you a bigger stake in the companies you invest in. It is important to note that dividends accumulated in your account are reinvested every time they pass the $10 threshold.

As you can see, these automatic features make it an excellent platform for ‘hands-off’ investors.

Automatic Tax Integration on M1 Finance

Believe it or not, a lot of people dismiss investing because they do not want the headache of filing their investments when tax season comes around. This is why having an automatic tax integration feature is excellent for beginners.

M1 Finance automatically integrates with popular tax platforms such as H&R Block and TurboTax. It will automatically input your investing information on your tax return. So, now you can invest worry-free knowing that your taxes will not be a problem.

If you do not file with either of those tax platforms, M1 Finance still makes things easy for you. Even if you do not submit your tax returns (on your own), M1 Finance will always provide you with every document you need to report.

These PDF documents are easy to print off, or you can save it to your computer. While the process will not be completely automated, they still make it simple. You can access all your information within your account settings.

From there, you will see a section with all your documents related to taxes. Then you can just transfer over all your buying and selling information when it is required on your tax return.

M1 Finance Free Retirement Account

This feature on M1 Finance is why it is one of the best investment apps around. Offering a free retirement account makes the app interesting enough on its own. If you are looking into setting up a retirement account, the first thing you need to review is the associated fees. If your brokerage account or wealth management plan is taking a 1.0% – 2.0% management fee, then you should look elsewhere. That is robbery!

Having a solid retirement plan will alleviate your financial stress. M1 Finance will help you create an award-winning retirement strategy.

Related: How to Invest in the S&P 500

Beginner Friendly Investing on the M1 Finance Platform

One of the main benefits of investing with M1 Finance is that it is straightforward and effortless. It will not scare off those who do not know what they are doing. Not to mention, there are no fees associated with using the platform. This way, you can set up an account and try things out for free.

The Robo advising features will do most of the heavy lifting for you. So no, you will not have to spend hours researching which companies to buy or reading up on economic data. You can set your portfolio pie based on your preferences and interests, set up automatic deposits, and forget about your account for a while.

Long Term Investing is Favored

The M1 Finance platform is an excellent option for long term investors who do not want to make daily changes to their portfolio. Their automation features take all of the work out of managing your long-term investment portfolio.

M1 Finance is one of the best investment apps around.

Their free-to-use DRIP feature allows income investors to make a “set it and forget it” portfolio that will automatically reinvest their dividends into additional stock. DRIP is short for a dividend reinvestment plan and is a way for income investors to get the most out of their investments.

Benefits of M1 Finance:

M1 Finance packs a serious punch. Here are a few of our favorite M1 Finance standout features.

  • Trade Fractional Shares
  • $0 Minimum Investment to Get Started
  • No Management Fees! Fee-Free Investing Experience
  • Intuitive User Interface. Makes investing easy and enjoyable.
  • Buy individual stocks, index funds, ETFs, invest in Pies, and more
  • Choose from over 80+ Expert Portfolios that are designed to reduce risk.
  • Robust Automated Features making it easier than ever to invest.
  • Easily Implement Dollar Cost Averaging
  • Portfolio Rebalancing on Steroids
  • DRIP Investing – Cha-Ching!

Yeah, we know. It is loaded with amazing features that bolster the overall investing experience.

M1 Finance Review: Downsides

Though we love M1 Finance, the platform is not for everyone. While it is excellent for a long term buy and hold investor and people who are planning for retirement, it is not a great platform for active stock traders. So, if you are interested in day trading, then this platform is not for you.

Their strict trading window only allows trades to occur at 9 AM central time each day, and while that won’t matter for someone who is buying and holding stocks for years, it does matter for someone who makes money by trading stocks throughout the day.

While there are some great features on M1 Finance, and it is free to use, there are some things wish were included on the platform. Some of the main downsides of M1 Finance include:

  • Employee-Sponsored Retirement Plans Are Not Recognized – While it would be great for everything to be integrated into the M1 Finance platform. Unfortunately, they do not recognize other investments such as employer-sponsored retirement plans. Check our our Blooom review if you want to optimize your 401k.
  • Mutual Funds Are Not Supported – Mutual funds are one of the most popular investment vehicles and are unfortunately not supported on M1 Finance. Mutual funds can provide you with diversification, professional management, liquidity, and affordability.
  • Tax Loss Harvesting Is Not Available – Tax-loss harvesting, or TLH, is a common Robo Advising practice that is not included on M1 Finance.

Apart from these downsides, M1 Finance is a robust platform. They offer all of this free of charge, which makes the platform a great place to start investing for the future.

M1 Finance Spend Account

Aside from their investment platform, M1 Finance recently rolled out a Spend Account. This is an FDIC – insured Checking Account that allows you to schedule automatic deposits, transfer money, and spend money with a debit card.

They are even nice enough to cover ATM fees once per month! This account integrates easily with their investment platform and can be viewed from their intuitive dashboard.

M1 Finance Review: Borrow Feature

If you have more than $10,000 invested with M1 Finance, then you get access to their “smart borrowing.” This allows you to borrow money at some of the lowest rates currently available on the market (2.0% – 3.5%).

This loan could be used to leverage your portfolio, pay off debt, or assist you in any unforeseen circumstance.

M1 Plus Account

If you think the M1 Spend and Borrow features are a steal, then wait until you find out what M1 Plus has in store for you. M1 Plus is an FDIC – insured checking account that touts a 1.0% APY, 1.0% cash-back, and ATM fees covered four times per month. That’s right, four times per month!

If that is not enough, M1 Plus members also can borrow money at a 2.0% interest rate. However, an M1 Plus account commands an annual $125 fee.

But, if you plan on borrowing money and utilizing the M1 Checking Account, then the M1 Plus is well worth the annual fee.

Related: How to Invest $1,000

Who is M1 Finance Best For?

Nearly all types of investors can call M1 Finance their home; however, it is situated best for those who want to avoid paying hefty fees. Here is a quick list of who M1 Finance is best for.

  • Beginner Investors
  • Hands Off or Passive Investors
  • Long-Term Investors
  • Students – The fee-free investing experience allows students to save money on fees and still invest.

Does M1 Have any fees or commissions?

No (unless you sign up for an M1 Pluss Account)! This is why M1 Finance is one of the top investment apps and platforms around. The fee-free investing experience is hard to come by. Remember, fees cut into your profitability, which is never ideal for those planning for retirement or just starting out with investing.

Is M1 Finance Safe & Secure?

M1 Finance employs military grade security to protect your information. In fact, they use 4096 – bit encryption to protect and seal your personal identifiable information. Furthermore, they use two-factor authentication as an added layer of security across their platform.

Rest easy, M1 Finance is a registered broker with the Financial Industry Regulatory Authority (FINRA), and is insured with the Securities Investor Protection Corporation (SIPC).

Wrapping Up: M1 Finance Review

So, if you are a beginner who needs a little bit of help managing their money, a long-term investor, or someone who is planning for retirement, then setting up an M1 Finance portfolio makes sense. If need be, re-read our M1 Finance Review to make sure your questions are answered.

If they are not, hang out with us in the comments section. We love to answer questions!

With all the great ‘free’ and automatic features, there is a lot to like here. M1 Finance is an excellent choice if you are ready to take ownership of your finances and start investing in your future.

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