Home Investment M1 Finance Review in 2022

M1 Finance Review in 2022

by Amarachukwu
M1 Finance Review 

In our previous article, we explained how a co-signer works on a mortgage in 2022, click here to read it. Today, we’ll be reviewing M1 finance and how it works, keep reading!

M1 Finance is a platform with free and paid versions that help users automate their investments or directly trade if they would prepare, among other things. Regardless of what account you have, whether the free or paid version, M1 finance creates a pie (a pie chart) for you which consists of various kinds of investments. 

A user’s pie can have a maximum of one hundred slices of pie where each slice means the stock they have bought. For example, a user can instruct M1 Finance to create and divide their pie holding into three slices like 60% of ‘X’ ETF,  30% of ‘Y’ stocks, and 10 % of ‘Z’ stocks when a deposit is made into their M1 Finance account. 

Another example, if a user decides to allocate 100% of their deposit for a particular stock, M1 Finance would automatically purchase that stock with the whole funds the user deposited. 

M1 Finance is a really nice investment platform for users looking to manage their cash and balance their investments. If you think about it, M1 Finance’s pies are like ETFs except for this time, stocks in the user’s self-made “ETF” are personalized with their own unique top picks. 

Account types

The types of accounts present on the M1 Finance are Individual and joint brokerage account, Traditional account, Roth and rollover IRA, Trust account, SEP IRA, and Custodial accounts with M1 Plus membership. 

Creating these accounts is quite easy on the platform as their interface is pretty straightforward and easy to navigate. The M1 Finance app is available on both iOS and Android with an easy-to-understand user interface and a seamless user experience. 

Pros of M1 finance 

M1 Finance Review 

You may wonder what makes M1 stand out from several other trading platforms to be getting so much hype. We wondered too and took the liberty to explore the platform, and these are some really nice features we experienced: 

 

  • Customization and automation are the biggest pros in M1 Finance. Users can optimize their M1 accounts to receive deposits from their bank accounts periodically and purchase values of particular stocks already set by the user. 
  • M1 Finance has a low minimum deposit. The minimum deposit for trade on M1 Finance is $100 which is relatively low. 
  • M1 Finance supports fractional shares. If $100 dollars is deposited for example to buy two different equal amounts of stocks, it doesn’t matter if a unit of any of the stocks is above $100. M1 finance determines how much 50% of $100 can afford and goes ahead to procure it for the user. 
  • M1 Finance helps users to compound their dividend profits. Assuming company XYZ pays a quarterly dividend of $50 and the M1 Finance user whose account was credited had already automated their trade, M1 Finance will proceed to execute a trade with auto-invest turned on. However, if dividends paid do not reach the threshold for execution the user has set up, then the trade will not be executed until it does. This feature is a personal favorite because compounding is every investor’s best friend. M1 Finance will save your dividends from sitting idle. 
  • Borrow to invest and pay later: M1 Borrow helps users to borrow and trade stocks. Users on the free version can borrow up to 35% of their portfolio with a very low-interest rate of 3.5%. If, for example, a user borrows $100 to trade at a time when they are financially incapacitated, they would pay back $103.5. This means they would pay the initial $100 borrowed plus the interest of $3.5. On the other hand, the paid version allows users to borrow up to 35%  of their account value but pay back an interest of only 2%. Debt can be paid back on the app or website. 
  • Users can earn 1% interest on the paid version. The paid version is called M1 Plus and costs $125 for a year. On M1 Plus, users can earn 1% interest on their cash balances. 
  • Investors trade with no trading commissions,, unlike several other brokerages. This makes M1 Finance stand out by a mile. 
  • Users have access to about eight professional portfolios 

Cons of M1 Finance 

  • Users cannot time their trades. M1 Finance platform has no limit order or market order, thus might buy a stock at a time that’s not favorable to your gains. Meaning a user cannot time their trade as M1 Finance buys at whatever window it buys. For free accounts, M1 Finance has one trading window all through one trading day. 
  • Buying individual stocks is quite difficult. Since stocks are bought as part of a pie, buying a stock not already included in the pie becomes difficult. To buy an individual pie, the user will have to create a whole new pie to execute this order. Also, if the user’s trading window has passed for the day, the trade will be executed when the market opens the next trading day. This is a huge con because users cannot leverage on dips in the market to buy at a lower price. When trades are executed the next day, stock prices may have gone up, being unfavorable to the user. 
  • Users have no control over many things. Users should be able to determine at what point they make an entry in a trade and also leverage on market highs and lows, right? Well, this is not the case on M1 Finance as this platform is designed in a way that all a user has to do is customize, set the automation and leave their portfolio on autopilot. 
  • Investment options are limited. Unlike other brokerages, M1 Finance only trades stocks and ETFs. No mutual funds, individual bonds, futures, cryptocurrencies, or options
  • There are no human financial advisors. Do you know what that means? It means you are pretty much on your own. Simply put, users should always ensure to do their own research before going on the platform to create trades. There are no advisors to guide users through on financial and investing advice hence, due diligence is always advised on the investor’s part. 
  • This platform was not really made with Day traders in mind as the majority of the trading tools they need are not present on M1 Finance. Users seeking more advanced screening, charting, research, and analysis will need a more purpose-specific platform for trading unlike M1 Finance which is also purpose-specific for long-term holders. 

Who is M1 Finance good for? 

  • M1 Finance is good for investors with intentions to buy stocks and hold their position later for a long time ranging from months to years. 
  • The platform is also good for investors who are not interested in losing money to commission payments. 
  • Investors who desire access to a handful of pre-made investment portfolios, which they can use as a template to make investment decisions. These portfolios are professionally crafted and have a variety of investment strategies users can learn and draw inspiration from. 
  • M1 Finance is good for investors looking for extremely low margin rates. 
  • Investors seek a broad range of account types and want a variety of alpha picks in their portfolio. 

Services on the M1 Finance platform. 

M1 Finance has a nice range of services which include: 

M1 Borrow lets users with a minimum account value of $10,000 access low-fee borrowing and use the money for any purpose.

M1 Finance Review 

M1 Spend

M1 Spend which is available to all M1 users, whether paid or free. The features, however are more robust with the M1 Plus plan. It has many benefits like 0.8% to 1% international ATM debit card fees and ATM fee reimbursement. 

To recap, M1 Finance is a really nice option for investors interested in balancing their investments, cash management, and borrowing to trade with plans of repayment. It is also a good platform to work towards long-term projects like a retirement investment plan. 

On the M1 Finance platform, all of a user’s holdings can be easily monitored and structured in ways that serve a specific purpose. 

For example, building a retirement plan where the user earns a relative amount monthly in retirement can be made possible on the platform. Users can create a pie for dividend stocks alone and set up automatic funding from their bank account without constantly tending to it. M1 Finance is sure to carry out the trades with incredible accuracy. 

 

Final Thoughts

M1 financing is best suited for intermediate investors because it will auto-manage their investments.

This robo investor is perfect for those who aren’t particularly naive in investment and just need a platform to manage their investment with all its antecedents and attendant benefits, thus, helping you make smart financial decisions.

The platform can also help new and intermediate investors refine their asset selection process so they can know what to invest in, and what not to.

What are you waiting for? Will you download the M1 financing app today?

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4 comments

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