M1 Finance Review: Best For Financial Freedom?LAST UPDATED: July 12, 2023 | By Conrad Golly
In this M1 Finance review, we will discuss what M1 Finance is and what it is best used for. In the following section, I will take a balanced look at the pros and cons as well.
I will review their platform, how it functions, and its user experience. The most important factor for our investments is naturally commissions and fees. Fortunately, there aren’t that many with M1 Finance. The rest of the review will deal with customer service, research and analysis, and their savings and retirement planning options.
Finally, the most important question to me personally is whether M1 Finance is suited to achieve Financial Freedom. I will pay especially close attention to their features enabling us to be financially free.
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What is M1 Finance?
M1 Finance is a low-cost investment and stockbroker that provides investment services for the digital age. They offer a compelling platform to put your assets to work and monitor the results.
Besides their regular investment account, M1 Finance also offers a lot of different options to put your money to work. For instance, there is the M1 Finance Spend account which acts like a simple bank and savings account. In addition to that, there is M1 Finance Borrow that lets you borrow up to 35% of your portfolio’s value at very low interest rates.
Overall M1 Finance offers an extensive suite of products that should help accelerate your journey towards financial freedom.
What M1 Finance is best for
M1 Finance is best for long-term investors who do not plan on trading frequently and mostly rely on investing in mutual or index funds and collect resulting dividends.
M1 Finance is also very useful for tracking and monitoring your progress towards your financial investment goals. The simplicity and elegance that M1 Finance offers digitally savvy investors seems unparalleled in the Investment space; or in other words: M1 Finance makes investing look sexy again.
M1 Finance Review: The Pros & Cons
In the following section, we will look at the pros and cons of M1 Finance. Even though I am heavily invested in the platform itself and personally use them to manage my assets I will try to keep an objective view on their upsides and downsides.
To give a balanced perspective I have conducted additional research beyond my own personal experience and have collected my thoughts and most wide-spread opinions about the platform here.
However, in this M1 Finance review, I will not go into too much detail with regard to the broker’s safety and security measures. If you’d like to read more about that please check out my article about M1 Finance’s safety.
Platform & Features
The platform itself is very sleek and simple designed and allows investors to focus on what matters most: the growth of our investments.
M1 Finance Invest
The main dashboard gives you an overview of your portfolio. In addition to the gains and returns made since inception, you will also see your portfolio’s value over time which can be especially helpful when assessing your progress towards your investment goals.
Next to this line graph, you will find your investment pie which illustrates the exact allocations of your funds. You can add or subtract to your pie at any time by clicking the buy-sell button or rebalance your portfolio without additional costs. At the bottom of the dashboard, you see the slices of your pie that you are currently invested in as well as the actual and target allocations.
What might seem odd at first is that M1 Finance will only allow you to trade once or twice a day depending on your membership status. The two trade windows that you have available are in the morning and in the afternoon. Only Gold-Members will be able to access the afternoon trade window. However, as long-term investors, one trade per day should be plenty enough. If you are are a high-frequency day trader the M1 Finance platform is definitely not for you. In this case, I’d recommend taking a look at Robinhood.
One of the most compelling features that M1 Finance offers is the auto-investing feature. This feature will allow you to set up automatic transfers to your investment account and have those transfers automatically invested in your portfolio pie.
You can set these up for any amount you like starting at $1 and have them transferred on a weekly, bi-weekly, or monthly basis on the date of your choosing. If you then toggle the auto-invest switch on your dashboard those funds will be automatically reinvested in your pie.
The same feature is available for withdrawing funds. You could set, for instance, a minimum cash balance that will be deposited to your bank account weekly, bi-weekly, or monthly. These automatic features make it extremely easy to keep on track with your investing goals or to live off your investments and your investment income eventually.
Complementary to the auto-investing feature above is the ability to invest in fractional shares. This effectively means that you will never have idle funds sitting around not working for you. All of the funds that you have automatically deposited to your investment account will be invested in the next trade window. M1 Finance makes this possible by pooling investor funds and thus minimizing the amount of money that would otherwise he simply be waiting for its turn.
M1 Finance Spend
M1 Finance Spend is a free checking and savings account. This account also incurs multiple times the interest that you would earn with a regular bank account. For instance, currently, you would be getting 1% APY when keeping funds in the account for more than 15 days.
Furthermore, you also get 1% cashback when you use your M1 Finance debit card. Some of the most enticing benefits include instant transfers to your M1 Finance investor account, faster access to your Borrow line of credit, and the simple fact that you have all of your finances in one place.
M1 Finance Borrow
M1 Finance Borrow is a revolutionary product by M1 Finance that allows you to borrow up to 35% of your portfolio value if you have more than $10,000 invested. You will have instant access to this line of credit without a credit check and you’ll be able to pay back the amount you borrow at any time.
You might consider making use of this feature to hold onto your equity while still accessing the cash and liquidity to cover your needs in day to day life. For instance, it could make sense to use M1 Finance borrow to leverage your portfolio or to use the line of credit to refinance other higher-interest loans.
Other than that, the most enticing fact about this feature is that you will be able to borrow against your own investments and this means being control of how much you actually can to borrow (when have you ever been able to determine your creditworthiness?). Furthermore, you can get a line of credit starting and only 2% APY.
All of the above features combined make M1 Finance a powerful investment platform and a one-stop-shop investment product. Not only is their online platform smooth and easy to use but their critically acclaimed mobile app makes banking and investing a real pleasure.
Commissions & Fees
Commissions and fees with M1 Finance are simple and straightforward. To put it blandly: there are none. When you invest with M1 Finance you will never be charged any commissions for trades that you make or any fees for depositing or withdrawing funds.
The only fees that you might incur are if you request additional services such as paper copies, account maintenance, wire transfers, and other miscellaneous bank fees.
Let’s go through these one by one. If you request paper copies from M1 Finance you might be charged a small fee, e.g. a paper statement would cost you around $5. Chances are that if you invested in M1 Finance you do not need a paper copy of your digital records.
Another fee that you might be charged is related to account maintenance. If your account has less than $20 in it and no activity for 90+ days you might be charged a $20 inactivity fee. Some of the other fees that may apply to you are related to IRA accounts and mutual fund sales. For example, there is a $25 IRA conversion fee or a $100 IRA termination fee. However, these fees are still extremely modest compared to other traditional brokers.
With regards to your M1 Finance spend account you will have a wire transfer fee of $25 and some other negligible bank fees for extra services.
All in all, since M1 Finance charges no basic fees for trading or investing the only fees you will be stuck with are the actual expense ratios of the index funds you are investing in. What a sweet deal!
First of all, it’s important to point out that I have never had to contact customer service during the whole time that I’ve been using their platform; and this is actually a plus to me.
Almost everything can be changed or amended online without the need to contact a customer service representative. You will be able to manage your entire account, deposit and withdraw funds, and set up automatic transfers all from the comfort of your home and within your M1 Finance account.
Even when it comes to creating your line of credit there will be no customer service agents involved and the approval processes occurs 100% automatically once you meet the account threshold of $10,000. Automated credit lines? Sounds like the future!
However if for some reason you do need to contact customer service and speak to a human being there is always an option for that. The easiest way to get in touch with M1 Finance is to visit their contact us section and to submit a support request. You can choose your issue from the drop down menu then shoot them a message and usually you will receive an answer within 24-hours.
Research & Analysis
M1 Finance also offers an extensive research and analysis platform that will enable you to track and monitor current events as well as research and analyze individual stocks and funds.
The most useful feature on the M1 Finances research platform is probably the ability to create pies composed of various stocks and index funds and monitor their performance independently.
When trying to decide whether you should add an index fund to your portfolio you will see a simple overview of the current price, expense ratio, and dividend yield. So, all of the factors you will likely need to make a decision. There will also be a short description of the fund’s methodology as well as its regional allocation and top holdings.
You can then decide to you watch this fund or add it to your portfolio. If you add a fund to your portfolio it will automatically be included in your pie where and you can determine the allocation you want to set for each fund. If you click the watch button the fund will be added to your watch list where you can keep track of each fund’s performance over time.
Although M1 Finance research offers a lot of possibilities it still appears fairly simplified compared to some of the more complex research methods that are available at Vanguard or Schwab. Keep in mind that heavy research and value investing are perhaps not best done on M1 Finance. M1 Finance excels at simplicity, low fees, and giving you an excellent overview and outlook on your current and future financial well-being.
Savings & Retirement
Next, we will look at how well M1 Finance is suited to aid you in savings and retirement planning.
As with most other brokers you also have the option with M1 Finance to add a retirement account. You can open a traditional, Roth, or SEP IRA or roll over an existing 401(k). These options allow you to comfortably use M1 Finance’s platform and harness its power for your savings and retirement goals.
However, compared to an asset management company such as Vanguard, M1 Finance does not offer a significant edge for retirement planning. If you’re looking to go the more traditional route and to retire at the age of 65 with a comfortable cushion of wealth then Vanguard might be better suited to your needs.
The most important factor to me personally when reviewing any broker is that of financial freedom. In other words: will M1 Finance help you achieve financial freedom?
This will be the overriding criterium I will use to conclude this M1 Finance review. There are three important stages when it comes to achieving financial freedom.
The first is the wealth accumulation stage (i.e. investing), the second is assessing your progress, and the third is living financially free.
In all of these three stages, M1 Finance can be a trustworthy companion to you. Thanks to its auto-investing feature you can simply deposit funds regularly into M1 Finance and have them invested in your portfolio pie. This makes staying on track with your investment goals incredibly easy it also makes it harder to stray from your monthly investment contributions because of unforeseen circumstances or emotional turmoil.
Monitoring your progress towards financial freedom is the next important step. M1 Finance on its own gives you a lot of tools to assess this progress such as analyzing your portfolio gains and returns over time. Having a clear picture of your total portfolio value over your investor lifetime will not only make sure that you are on track with your financial goals but will also enable you to perhaps accelerate your growth.
The third and last stage of financial freedom is to make use of the wealth you have accumulated over time. And here M1 Finance makes it especially easy for us to access our funds whenever needed by providing a flexible line of credit. This can allow you to simply make use of the credit line when you have expenses and payback when you have extra income. You will never even have to touch the principal: your equity.
Even if you do not want to use your line of credit you can instead (or additionally) set up a certain amount that is automatically deposited to your bank account every month. This is almost like having a fixed monthly income with the small difference that you will be the one deciding on how high that income will be. Did you ever get to determine your salary?
Verdict: M1 Finance Review
M1 Finance offers a compelling suite of investment products that can accelerate your financial growth. The investment platform is clean and simple to use allowing you to focus on what’s most important for your finances.
Besides, you will be able to combine investing and banking in one platform. This can be a pro or a con in my opinion as it also allows faster access to your investment funds when in need. However, the benefits outweigh the downside in my opinion. Being able to set up automatic deposits from your bank account to your investment portfolio and having those deposits automatically reinvested in your portfolio pie is a huge advantage you should make use of.
And if all of this is not enough to convince you to try M1 Finance, M1 Finance Borrow certainly should. Being able to borrow up to 35% of your portfolio value at an interest rate of only 2% APY is an unprecedented opportunity for wealth building. It will allow you to leave your principal completely untouched and compounding year after year while still accessing your investment funds. You could even make use of the credit line to leverage your portfolio to increase your overall returns
Conclusively, M1 Finance has been a valuable tool in my repertoire of wealth building and I am sure it will be the same for you.