After a Yr of Using M1 Finance, Here’s What I Do & Don’t Love

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M1 Finance is an investment app that gives expert-built portfolios, recurring investments, dynamic rebalancing and the power to borrow against your taxable accounts, amongst many other features.

Its premium option gives access to custodial investment accounts on your kids, a high-yield checking account, crypto trading, margin loans, and a rewards bank card.

I’ve been an M1 Finance customer for greater than a 12 months and I believe it is a solid investing app for brand new investors.

There are quite a couple of things I like in regards to the app, and a few things I believe they might do higher. I jotted down a couple of notes on my experience using the app to share with you. Here’s my frank assessment of M1 Finance.

The Short Version

  • After using M1 Finance for my Roth IRA for greater than a 12 months, I’m more than happy with the app overall.
  • The investing pies, recurring investments, access to stocks and funds, dividend tracker, and fractional share investing are all excellent features.
  • Where M1 Finance could improve is the limited trade windows, dividend reinvestment and access to custodial accounts.

My Yr of Using M1 Finance

After researching and trying out greater than a dozen investing apps over time, I opened a Roth IRA with M1 Finance in 2021 to assist automate my investments and provides me access to my favorite index funds. The sign-up process was straightforward, and the mobile app walked me through all the things.

At first, I only wanted to take a position in a single index fund, but I used to be forced to decide on three investments to construct my “investing pie” once I began. It was a little bit of a hassle to regulate my asset allocation, but this was a superb strategy to initially diversify my account.

After that, I could transfer funds with a couple of clicks, and the app mechanically invested the cash in response to the pie I created. Over the past 12 months, I deposited funds periodically. Though the market isn’t doing great straight away (boo!), it’s easy to see my balance, asset allocation, and total return on investment throughout the app.

Overall, the app is straightforward to make use of; I can show my family and friends the right way to get arrange fairly quickly. The short access to 1000’s of investment selections is good, and editing my asset allocation in my investment pie is simpler than with some other app I’ve used. So, after greater than a 12 months I’m still a fan of the app, though there are a couple of things I’d wish to see improve.

Five M1 Features That I Love

M1 Finance keeps adding features, but listed below are a couple of of my favorites:

1. Investing Pies

The investment pies are an important visual representation of the assets in your portfolio. They make it really easy to see how my money is invested. I can quickly add or remove assets from the pie, after which M1 Finance will mechanically readjust my portfolio based on my pre-selected asset allocation.

After I created my initial pie M1 Finance desired to make me spend money on three funds (at a minimum). I get why they require this (for diversification), but on the time, attempting to create a single-fund pie was a pain. Nonetheless, since them M1 Finance has updated the feature, and it’s now insanely easy so as to add or remove a “slice” out of your pie.

Overall, it is a improbable feature that helps beginners to know their asset allocation.

Read more >>> Asset Allocation: Filling Your Portfolio with the Right Mix

2. Recurring Investments

M1 Finance makes automated investing easy. You possibly can arrange a recurring investment on a schedule. You possibly can select how much you need to deposit and choose the frequency, whether it’s weekly, bi-weekly, or monthly — or whatever you want.

Since I’m an enormous fan of dollar-cost averaging in my investments, that is one of the best set-it-and-forget-it approach.

And, since M1 Finance has you create a pie beforehand, it would mechanically invest your money where it must go.

For instance, should you set your pie to contain pie 60% in index funds, 30% in bonds, and 10% in stocks, M1 will split up your deposit accordingly. Overall, its an important feature and super easy to establish.

3. Access to Stocks and Funds

Unlike another robo-advisors and investing apps, M1 Finance gives you access to greater than just index funds. With 1000’s of stocks and lots of of funds available from all the highest corporations, M1 Finance is like combining all one of the best brokers right into a single app.

For instance, I’m a fan of Vanguard funds, but I also just like the zero-fee funds from Fidelity. With M1 Finance I can add whichever funds I like, plus I can pick stocks from a couple of of my favorite corporations, all throughout the same portfolio. I may even share those pies with family and friends who need to learn more about how I’m managing my money (dangerous, I do know). Overall, the choice is great, and there aren’t any trading fees.

Read more >>> Investment Fees Matter… a Lot!

4. Dividend Tracker

While I haven’t built a sizeable-enough portfolio within the app to enjoy a hefty dividend payout (yet), it’s nice to have the ability to trace all of my dividends in a single place. On the app, I can click on my investment pie and swipe over to see the main points of my portfolio gains and losses.

The dividend section shows the cumulative dividend payouts for every investment. While I haven’t built a whole dividend portfolio yet, it’s nice to see that my investments create passive income, and its easy to trace performance over time.

Read more >>> The right way to Put money into Dividend Stocks

5. Fractional Share Investing

M1 Finance offers fractional share investing, which implies I can spend money on my favorite index fund or stock for as little as $1. With other investment apps, I’ve had to purchase whole shares. This made it difficult to plan my investments since share prices are ever-changing and sometimes cost lots of of dollars.

Fractional shares are also ideal for recurring investments; I can transfer small amounts of cash to make regular purchases as an alternative of sitting out of the market waiting for more funds to make a single larger purchase.

Note: While you’ll be able to invest as little as $1 at a time in individual stocks, the minimum Auto-Invest amount is $25.

Three Things I Don’t Love About M1 Finance

M1 Finance is a well-designed app, but there are a couple of things I don’t like about it:

1. Limited Trade Windows

While M1 Finance offers access to individual stocks and ETFs with no trade fees, you’ll be able to’t benefit from a drop available in the market in the course of the day because there are limited trade windows when M1 executes trades.

Free of charge users, there’s a single trade window at 9:30 am when the market opens. Which means should you buy a stock in spite of everything the trades execute and the window has closed, the trade won’t execute until 9:30 am the subsequent day. If the stock drops by 10% and recovers in the course of the day, you miss out on some serious gains.

You possibly can access a second trade window with an M1 Plus account (at 3 pm), but this continues to be very limited in comparison with other stock trading apps like Robinhood or Webull.

2. Dividend Reinvestment (DRIP) Isn’t Great

M1 Finance offers access to lots of of stocks and funds that pay out dividends. One of the crucial powerful investing strategies is to reinvest those dividends by buying more of the identical asset. And while most apps can reinvest the dividends mechanically, M1 Finance requires you to activate the “Auto-invest” feature.

This feature mechanically invests money balances in your M1 account into your pie, but there’s a minimum limit of $25. This implies dividends under $25 will sit in your account unless you manually place the trade. That is annoying, and I wish they’d allow me to activate dividend reinvestment with a single button.

3. You Need M1 Plus To Open a Custodial Account

I actually have 4 kids, and I need to assist them get a head start by opening a custodial account. Naturally, I checked into M1 to see if I could just open them through the app. Unfortunately, M1 Finance requires an M1 Plus account and limits it to 2 custodial accounts per customer, so it was a no-go.

These limits are obviously put in place to encourage users to upgrade their accounts to unlock this feature. I couldn’t justify the $125/12 months cost for under access to 2 accounts nonetheless, it is likely to be price paying for if you need to keep all of your accounts at a single broker. I ended up going with Fidelity, which doesn’t charge anything for unlimited custodial accounts.

The Bottom Line: M1 Finance Is Great for Beginners

M1 Finance is a well-designed app I like to recommend to family and friends to begin their investing journey. With the guided setup that helps users create a diversified portfolio, access to expert pies, recurring investments, and the power to take a position as little as $1, M1 is my go-to app. I’ll keep funding my Roth IRA passively, but I’ll use one other trading app for energetic investing.

Further reading:

M1 Invest Disclosure: This text just isn’t investment advice. All investing involves risk, including the danger of losing the cash you invest. Past performance doesn’t guarantee future results. Brokerage services and products offered by M1 Finance, LLC Member FINRA/SIPC, and an entirely owned subsidiary of M1 Holdings, Inc.
M1 Plus DIsclosure: M1 Plus is a $125 annual subscription offering services and products from M1 Spend LLC and M1 Finance LLC, each wholly-owned, separate but affiliated subsidiaries of M1 Holdings Inc.

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