A COMPREHENSIVE REVIEW ON M1 FINANCE INVESTING PLATFORM
Posted by Alberto Reyes Reviews | June 11, 2019 |
Is M1 Finance a good investing platform for beginners and advance investors?
One may wonder what are the best investment platforms on the market now? which is the right for me? Some investing platforms have monthly fees, some don’t. Some have trading or broker fees, some don’t? Are there any hidden fees or a catch? Will I get any good features, compound interest and substantial value to my capital in the long term? Is the platform safe to invest and reliable? Are there any good options? Will their customer service be available when I need it?
Those are common questions and concerns among beginner and advance investors when looking for a well performing investing platform.
As a good rule of thumb when looking for the best goods and services, is to research online for reliable information to make the best decision. Taking in consideration good and bad reviews of at least 5 different products/ services to compare them in options, performance, quality and prices. In this case, investing platforms services and products are a critical tool to growth, profit and invest our money safely and efficiently. One must take this choice seriously and responsibly.
Currently there are several investment platforms in the market. The list goes as follow: Acorns, Robinhood, Vault, M1 Finance, Betterment, and Wealthfront, among the most used investment platforms. These investments platforms offer low, medium, high or free trades fees, with multiple features and options. The choice gets complicated and decisions are hard to make. I fumbled myself to make the right choice and wisely decided to research deep, to make the best choice like many of us do.
As we research and investigate, more questions arise: Are these platforms worth using? Should I use my personal bank options or a reputable broker firm? Will I get ripped off? Is my money safe? Are these Investment platforms regulated by U.S. Securities and Exchange Commission (SEC)?
One should definitely ask these important questions before putting thousands of dollars in someone’s else hands!
Here is how M1 Finance presents to investors.
M1 Finance Quick Summary
If you want a simplified new investment platform, M1 Finance is one of your best options. Their platform investing goal is designed to be easy on beginners, but customizable for advanced investors. M1 Finance offers a good variety of features and options that suit short and long term capital needs and goals.
Pros
1. Worry free – automatized investment platform for beginner and advance investors
2. Account types include Individual, Join, Retirement, (Traditional, ROTH, SEP IRA accounts, and Trust accounts).
3. A combined rob-advisor/ investment brokerage with no trading fees, and no account fees.
4. $0 minimum investment to review platform, (a minimum of $100 to start investing)
5. Roll over your 401K retirement plan into a new account of your choice
Cons
1. No tax-loss harvesting, a feature among other robo advisor’s platforms
2. No mutual funds investing access
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Click below to start investing with M1 Finance platform
It's Free, Get StartedTo better understand what M1 Finance has to offer check the video below.
The M1 Finance Investment Process
I. Create a free account
M1 Finance platform let users create an account to review the platform without a required opening fee. You may create and customize an investment portfolio before any accounts or money is transferred into your M1 Finance account.
II. Customize a Portfolio
An investment Portfolio is made of pies with funds or stock slices. Pies are the basic section of M1 portfolios.
You can choose professionally customized M1 pies which are designed and organized by the M1 Finance team (These are fixed pies). The following are several suggested investment strategies that M1 Finance offers:
1. General Investing
2. Plan for Retirement
3. Responsible Investing
4. Income Earners
5. Hedge Fund Followers
6. Just Stocks & Bonds
7. Other Strategies (Domestic or Global Growth or Domestic or Global Value)
M1 Finance was built with advanced and multi-purpose goals in mind for the novice or expert investors.
M1 Finance allows beginner and advance users to customize pies by using any combination of securities (stocks, bonds, ETFs, and indexes). These investing funds come from NYSE or NASDAQ stock exchanges. The result of these pie combinations are dozens of choices with your preferred stocks, bonds, ETFs and indexes. You won’t be restricted to fixed pies, but create your own design.
M1 Finance really committed hard work to outperform other investing platforms. It gives investors many choices, features, free management cost, and offers fixed or interactive customization of portfolios. The competition stays behind with this flexible, well performing, very valuable yet easy to use and free of charge investing platform.
To create a custom pie, you can search for stocks, bonds, ETFs or indexes using a wide category of choices. You can easily find your funds by company name, ticker symbol, total assets value, dividend yield, expense, gain or P/E ratio.
You can also browse fund categories, including stocks, bonds, commodities, currency, and alternatives. Each asset category is further broken down by geographical location, industry, and sector.
After choosing the pie that better suit your needs, you then select the percentage of each pie to be added to your main portfolio.
Your portfolio can include many different pies, and each pie can contain many funds. This gives you technically dozens of choices to build a specific Portfolio.
III. Choose the type of account
M1 Finance offers the following account options (only available to current U.S. residents with a valid U.S address):
1. Individual or Join accounts
2. Traditional, Roth and SEP IRA accounts
3. Trust accounts
4. Brokerage accounts for companies, LLCs, or enterprises
5. Rollover an existing retirement plan 401k, 403b, previous IRA into a new IRA account.
IV. Complete your new user profile
To finalize your account, you must provide your name, address, date of birth, SSN and bank information. If your information cannot be electronically validated, you must submit a copy by email or US mail of your Driver License, and a proof of address with a utility service or bank statement. Once this is validated by M1 Finance your account will be active, you can fund your account and start investing. All U.S. financial institutions must collect this information as part of financial and government regulations.
To better understand your needs and goals, you must submit basic financial information such as: assets, income, liquidity goals and any previous investment plans. This personal financial information allows a better understanding of your financial standing and to comply with regulatory policies.
V. Account funding
The last step in creating your account is the funding. In this part you can link your existing bank account into your M1 Finance account, using a third-party company that provides secure identity verification for banks and other financial institutions. Most U.S. banks will be listed for you to connect your bank account to M1 platform in a secure and encrypted manner.
Once your bank account is added, you can start deposit transfers from and to your M1 platform as you feel necessary. M1 Finance platform is fairly quick transferring money between accounts, usually 1 business day.
To try and explore M1 finance, you do not have to deposit any money, just skip this step and search through. To see the full platform process and options you must invest the minimum amount of $100.
After the first deposit, M1 will purchase your chosen funds and pies in the right quantities and slices. A great advantage among other investing platforms is that, M1 Finance has the ability to buy fractional shares. M1 Finance will buy shares of a certain fund according to your pre-specified percentage of that share. This option greatly takes advantage of all your money in your portfolio.
While you can invest in this platform from your bank deposits, you may also transfer over any retirement or brokerage investment you may already have. Reach to M1 Finance team by message, email, or calling for this option, since more information and verification is needed for the transfer. The process time may vary depending on what you are transferring and how long the banks take to process the information.
Managing and setting up your M1 Finance Portfolio
Once your funds are available and you have chosen you M1 Portfolio, M1 platform services will use an algorithm process to create your accounts, set up investment pies, buy shares and get you set up in your investment portfolio.
M1 uses a predetermined algorithm process to set up your accounts, pies, deposits, withdraws, fund choices and any contributions you have set up your M1 portfolio.
Auto-reinvesting and rebalancing
Once a cash balance of any earnings from capital gains, deposits, withdraws, transfers or earned dividends is available in your M1 Finance account, you may set it up for re-investing or rebalancing. The minimum amount for reinvesting is $1 and up, (default on the platform is $10). You can set any desired amount for reinvesting. This amount will be reinvested equality across your portfolio on the next trading window.
The trading window is determined by the financial market and by M1 Finance team trading on a weekday basis at 9am central time. Financial markets are open only weekdays typically from 9am to 5 pm.
For rebalancing, you may add other stocks or funds or remove stocks or funds by setting its level to zero. M1 Finance will automatically purchase, sell or adjust your shares or slices to bring your desired asset target to 100%
The auto-rebalancing process is fully automated and usually takes a few hours. Any changes in your M1 portfolio will be visible to you for verification.
The M1 Finance brokerage team buys and sells your shares according to the time you set this action to begin. Whoever set an action first will get the transaction first. You may see this as, first come, first served.
In any trading transaction you make, M1 Finance team will use the best judgement to buy and sell your shares to minimize your tax liability. The strategy begins by selling shares that will have no taxable gain, secondly by getting long-term capital gains, and the last choice is with short-term capital gains. The idea behind this strategy is to efficiently get the most shares for your money while minimizing any taxable losses.
Investment Portfolio Management
After choosing your preferred investment pies and portfolio, the allocated amounts per slice, (stocks or funds) will be activated and start trading in the stock market. Variations in capital gains or losses will show as an increase or decrease on any cash level earned for that day or period. M1 Finance software platform trades your stocks and funds automatically, and keeps your stocks or funds allocations unchanged until you trigger an event to your portfolio.
When you deposit manually or automatically cash deposits to your account, this cash deposits are distributed equally throughout your pies and reinvested on the next trading window.
If you want to purchase other stocks and funds and wish to allocate a certain amount, then you must do so by choosing the percentage you want to allocate for these new stocks and funds. If you want the changes to take effect as soon as possible then initiate a rebalance command.
You may rebalance pie by pie or the whole portfolio. Rebalancing can take place anytime and as many times as you wish, but it takes effect only during market working hours which are, weekdays between 9 am to 5pm.
When you rebalance your pie or pies, any overweight positions will be sold and any remaining balance will be used to purchase underweight funds. Each rebalancing creates taxes that you may pay at the time of the transaction. M1 Finance automatically creates a document with tax information and emails it to you for your records and for filing taxes. These documents are also available in your account or at your request.
To remove stocks, funds or slices, use the (-) sign to bring the amount to zero or use the delete button to remove a pie from your portfolio. You may now choose another stock, fund, slice or pie to bring your total allocations to 100%. This makes your portfolio balanced and all your money will be invested. If this is not done properly, the system will give you a message to bring all your slices to a total of 100% for the system to function normally.
These changes start a series of transactions to sell and buy stocks in your portfolio, and any gains will be evenly distributed among all your slices in your pie.
M1 Finance clearly proves an advantage among other investment platforms by allowing flexibility in managing your portfolio with numerous options and resources.
M1 Finance Fees, funding and security promise
M1 Finance currently does not charge any fees to manage your investing portfolio, IRA and other accounts. The platform offers free account handling for individual investors. There are no opening or membership fees, monthly fees, trading commissions, deposits or withdraws fees.
The only current fees apply to specific transactions, closing the account or requesting specific financial statements. It is $100 to close the account. This is the standard when closing an investment account.
M1 Finance platform funding comes from the own company’s investors capital and transactions gains, contributing to third party loan contracts, loan or credit firms, investing with banks and brokerage corporations. As time goes by, popularity, great performance, platform flexibility and premium services get added, M1 Finance may offer more options or premium services in the future with a set fee.
M1 Finance includes all of the latest security features offered by commercial financial institutions, including:
· 256-bit SSL Military Grade Encryption: M1 platform uses 256-bit SSL data encryption. This is the highest encryption for highly secure online financial transactions.
· Third Party financial guardian: Your assets are being protected and managed by Apex Clearing, a third-party security company.
· M1 Finance cannot access your funds, investments or cash without your consent. You are the sole person that can withdraw, deposit, transfer and close your account. M1 Finance only charges for agreed fees to manage your account, sale or specified transactions fees.
· Regulation Policy: M1 Finance is a registered investment broker with FINRA, which oversights their transactions and management.
· SIPC Insured: Your account is protected by SIPC insurance protection. This insurance covers $500,000 per account in the event of loss or mishandling of your assets related to none voluntary actions. IRA, brokerage or direct investing accounts are separate accounts. Each one is protected individually up to $500,000 for securities and up to $250,000 for cash.
M1 Spend
M1 Finance has recently offered M1 Spend feature, a checking account that’s connected to your investment portfolio and built into the main M1 Finance platform.
M1 Spend works similar to any checking account from other banks. You can receive direct deposits and make transfers from other institutions. A Visa card will be issued to you for common transactions. This feature also lets you transfer your own funds between checking and investment accounts.
There are two types of M1 Spend accounts: M1 Standard (free) and M1 Plus (this option requires a $100 annual fee for the first year, and $125 for subsequent years). Check for current promotions on M1 Finance website.
M1 Standard checking offers no incentives except for being free and be able to transfer funds between your checking and investment accounts.
M1 Premium checking earns 1.5 APY and 1% cash back on purchases you make daily. If this is convenient for you feel free to open this account. As we all know there are other options to keep money on a bank with higher interest, such as savings accounts with higher APY. This is just an extra option for you. M1 Spend is FDIC-insured.
M1 Borrow
M1 Finance allows investors to borrow 35% of their account value at 4.25% annual interest from a self invested account. This personal loan has a very low interest rate, no credit check, there’s no minimum payment and has no timeline to pay the loan back. The loan interest may be subject to changes and Retirement Accounts do not qualify for this option.
This option to borrow from yourself and with a flexible payment plan, is a great advantage when extra cash is needed.
Final Review Summary for M1 Finance Platform
This is an investing product platform that is:
1. Very easy to use
2. Provides great features, is flexible and secure
3. Maximizes your investments by diversifying your portfolio
4. Let’s you choose from a variety of fund sources
5. Provides several investment pie strategies
6. Allows you to do fractional investments on bigger stocks that no other platforms have
7. It has a low $100 investment startup point. (Free to review and free to use)
8. Can be set for auto-deposits for convenience and flexibility
9. Very user friendly for beginners and customizable for advance users
10. M1 Spend. A checking account feature. M1 spend Plus, earns 1.5 APY and 1% cash back on purchases
11. M1 Borrow. Borrow money from your own M1 investment account on a simple interest loan
To further examine, review objectively and test M1 Finance Investment platform in the mobile app, I signed up and started using the app right away. After adding my personal information, bank funding source, and customizing two separate accounts and preferred pies, all seemed to be self-explanatory and easy to use. The app has informative graphs, financial and investment information, and tools to customize your preferences and portfolios. I found this investing platform to be legit, affordable, customizable to your needs and profitable.
I am pleased how well M1 Finance Investment platform was developed. I can see clearly the hard work and meticulous design that was put into the app and the website. It has lots of potential to grow your investments and retirement accounts. I highly recommend M1 Finance as a very promising investment tool and platform.
Visit M1 Finance website to read more about their investment platform, options and features, and get started investing on a portfolio of your choice.
Feel free to leave or ask any question about M1 Finance investment platform in my Post page. I will be gladly to answer your questions. Click here to direct you to my Post page.
M1 Finance
I hope this review of M1 Finance platform's options, features, con and pros, ease of use and other considerations, helped you in making a reasonable assessment in your next investment platform choice. If you think M1 finance is good for you, click on the link below.
It's Free, Get StartedAlberto
Reyes is the founder and editor of ARqubits, has a BS on ISS, and possess several
IT certifications. He is an IT Professional, a Real Estate Investor and Software
Developer™. He shares his life with his lovely family. He is an entrepreneur, and
for over 15+ he has worked on challenging fields, writes about many topics
including, technology, investments, behavior and startups. He is a Quora
writer, a business man, and a volunteer for several local community nonprofit organizations.
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