M1 Finance Review - Pros, Cons, Features, & FAQ (2024) (2024)

Financially reviewed by Patrick Flood, CFA.

M1 Finance is an investing platform that has surged in popularity recently. Here I'll review everything you need to know about it.

Disclosure: Some of the links on this page are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality, ad-free content on this site and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. Read more here.

M1 Finance Pros and Cons Summary

What is M1 Finance?

M1 Finance is somewhat of a hybrid between newer “robo-advisors” and traditional brokerages. It has the technology, simplicity, and attraction of the former, with the customization and control of the latter, giving you the best of both worlds. M1 doesn't really do any robo-advising; it is a self-directed platform. M1 is for long-term, buy-and-hold investing, and has zero commissions.

While other robo-advisors usually ask you a series of questions to determine risk tolerance and goals, M1 gives you complete control over your portfolio construction. The former usually comes at the cost of limited investment options and additional fees.

M1 Finance gives you complete control over the customization of your portfolio, essentially allowing you to create your own ETF's (Exchange Traded Fund; just collections of stocks) in a pie format, consistent with Modern Portfolio Theory. M1 is particularly attractive to beginner and dividend investors.

M1 Finance also has other lesser known modules besides “Invest” all under a single user account umbrella:

• M1 Borrow: a collateralized loan in the form of a portfolio line of credit that uses margin, with one of the lowest rates on the market.
• M1 Plus: premium access to a second trading window, a rate reduction on M1 Borrow, and an interest-bearing savings account.

We'll explore each of these in detail later on in this post. Below is an overview video of M1 Finance if you're interested:

Just remember this is not investing advice and all investing involves risk.

Who is M1 Finance Ideal For?

M1 Finance is ideal for:

• Sophisticated investors
• Beginner investors
• DIY investors
• Dividend investors
• Frugal investors
• Medium- to long-term investors
• Passive investors who want to be hands-off
• Active investors who want complete customization

M1 is not ideal for:

• Day traders
• Those who need an adviser; M1 is self-directed.
• Those looking for a 529 account.
• Options contracts, FOREX, or crypto traders.

M1 Finance Account Types

M1 Finance allows for the following account types:

• Taxable
• Joint
• Traditional IRA
• Roth IRA
• Rollover IRA
• SEP IRA
• Trusts
• Custodial (M1 Plus members)

At the time of writing, M1 Finance does not offer the following accounts:

• SIMPLE IRA
• 401(k)
• Solo 401(k)
• 529
• Non-Profit
• HSA

M1 Finance Features

Let's explore the features of M1 Finance.

Pie-Based Interface

Perhaps the most popular and most unique feature of M1 Finance is its use of “pies” – portfolios that you can customize and assemble with individual securities, ETF's, and/or ETN's. You set the percentage allocations inside the pie. You can also create multiple pies and have pies within pies; I call them “sub-pies.”

The pie is the basis of the portfolio. You can customize yours as you see fit. For example, you could choose to have 50% of your pie in 30 different individual stocks and the other 50% in 3 different bond funds. Asset allocation is up to you. Whereas traditional brokers are showing you charting tools and technical indicators, M1 uses a visually intuitive pie-based interface to prioritize asset allocation and securities choices.

Creating pies is simple. You just choose your investments – individual stocks, ETF's, and/or ETN's – and specify the weight of each slice to where they add up to 100%, and save it. You can add, remove, or edit slices in the future whenever you want. M1 offers pretty much any stock or ETF you can think of as long as it's traded on any of the major exchanges.

Custom pies can be shared with other users via a hyperlink. Those users can easily choose to invest in your pie inside their portfolio. This brings a neat social aspect to investing. For example, I've created a number of popular “lazy portfolio” pies here.

The pie-based interface is intuitive and easy to navigate, making it particularly attractive to beginner investors. It also provides a nice visual representation of your portfolio, showing you each slice.

Expert Pies

Don't feel like creating your own pie? M1 Finance offers Expert Pies created by the staff that you can passively invest in and be completely hands-off. Or you can combine Expert Pies with your own pie(s). The possibilities are endless.

Expert Pies include:

• General investing pies for broad market exposure based on risk tolerance (Conservative, Moderate, Aggressive, etc.).
• Target date pies to invest for retirement.
• Responsible investing – referred to as ESG (Environmental, Social, and Governance) – invest in socially responsible companies that align with your personal values.
• Income pies for those looking for an alternative to a traditional savings account.
• Hedge fund followers – these pies mimic the holdings and strategies of top hedge funds.
• and more.

M1 employs typical investing methodology to select funds for its Expert Pies – looking at things like ETF fees, volume, size, and tracking error. When M1 updates an Expert Pie, the change will automatically reflect in your portfolio.

No Trade Commissions or Fees

With M1 Finance, there are no commissions, management fees, or transaction fees. You invest for free. Simple as that.

There are of course miscellaneous fees for things like paper statements, account inactivity, account transfers, etc. that are outlined here.

Fractional Shares

M1 Finance supports the buying and selling of fractional shares. If the share price is $100 and you only have $50 to invest, you can buy 0.5 shares. This allows you to maintain your target allocations in your pies without having to worry about whole shares, which is particularly important for young investors with less capital, and especially with stocks like Google where the share price is close to $1,000.

Another subtle but significant benefit of fractional shares is you won't have cash sitting idly in your account missing out on growth – you can invest everything you have.

Dynamic Rebalancing

Dynamic Rebalancing is of the most important features of M1 Finance.

Rebalancing your portfolio is necessary from time to time as your allocations among assets stray over time. Let's say you have a 60/40 asset allocation of stocks to bonds and after 6 months, your stocks have increased in value more than your bonds to where your allocation has become 65/35. With a traditional brokerage, rebalancing would require some time and effort – manually calculating the number of shares you need to buy and sell on each side relative to the value of your portfolio to get back to your target allocation of 60/40, and incurring transaction fees in doing so, as well as capital gains taxes if it's a taxable account.

Dynamic rebalancing with M1 simply refers to how new deposits are allocated to buy orders based on your specified target allocations. That is, underweight assets are automatically bought with new deposits to bring them back to your target allocation. This means your new deposits will be doing the rebalancing for you. This is especially significant in a taxable account, because it means you can rebalance without doing any actual selling of your securities, thereby avoiding capital gains taxes.

Built-in Tax Efficiency

M1 Finance utilizes built-in “tax minimization” when you sell by prioritizing tax lots in the following order:

1. Losses to offset gains.
2. Lots that have long-term capital gains.
3. Lots that have short-term capital gains.

This is another subtle but significant feature that saves you money over the long term.

Dividend Activity Dashboard

M1 Finance is extremely popular among dividend investors, and for good reason, with its customized pie interface, zero fees, and automatic reinvestment.

When securities you own pay you a dividend, you'll see it reflected in both your performance summary and a separate detailed dividend activity section:

Auto-Invest

With M1's auto-invest feature, you can automatically invest new deposits if your cash balance meets a threshold that you specify. For example, you can set the auto-invest feature to invest your any excess cash balance over $500. This can be as low as $25. You can also turn auto-invest off to make buy orders yourself.

Recurring Deposits

Similarly, you can set up automatically recurring deposits from your bank account to your M1 Invest account to take advantage of automatic investing. This allows you to grow your portfolio behind the scenes without lifting a finger.

Mobile App

Consistent with modern investing platforms, M1 Finance has a sleek, intuitive mobile app that covers all their modules, available for both iPhone and Android.

Dark Mode

One of the newer features is “dark mode” – easier on the eyes in the mobile app:

Research Tools

M1 Finance offers some basic research and filtering tools for stocks and funds. There's also a section that aggregates recent market news.

M1 Finance Blog

M1 Finance has a blog where they regularly post useful tips and investing advice. You can find it here.

Solid Clearing Firm

Apex Clearing Corporation is the clearing firm and custodial bank for M1 Finance. They have long been a leader in the industry.

Security

All data transferred and stored in M1 Finance is protected with military-grade 4096-bit encryption. Two-factor authentication is available for account security.

Dividend Investing with M1 Finance

As I noted, M1 Finance is extremely popular with young investors, the FIRE (Financial Independence, Retire Early) community, and dividend investors. M1 allows for automatic deposits, DRIP (dividend reinvestment), and filtering to find stocks and ETF's within a specific dividend yield range. I created my own version of a dividend pie for M1 here.

M1 Borrow

One of the most attractive features of M1 Finance is their margin loan, known as M1 Borrow. A margin loan is simply a loan where the investments in your taxable portfolio are the collateral.

With most brokerages, margin loans are just for the purpose of adding leverage to your portfolio by buying more securities, increasing your exposure. With M1, however, you can use the loan for whatever you want:

• Buy more securities (portfolio leverage).
• A home improvement project.
• Refinance higher-interest debt from student loans, credit cards, auto loans, etc.
• Finance a major purchase like a new appliance.
• Cover unforeseen expenses in lieu of an emergency fund.
• etc.

You can access a line of credit of up to 40% of your portfolio's value quickly and easily. For a $10,000 account, you can borrow up to $4,000. There are no denials, no loan officers, no paperwork, and no credit check; you automatically qualify if your taxable account has an invested balance of at least $2,000.

M1 Borrow offers one of the lowest interest rates on the market. At the time of writing, this rate is 3.5% for basic accounts and a 1.5% rate discount (2% rate) for M1 Plus. Margin rates like this were previously only available to the ultra-rich. Here's how they stack up:

As with any type of loan, there are risks like interest rate changes, margin calls, and magnified losses if you're using the loan for portfolio leverage. You can read more about these risks here.

Brokerage products are offered by M1 Finance LLC, Member FINRA/ SIPC. Remember that margin (in this case, via M1 Borrow) is an additional risk, including the risk of losing more than you invest. M1 Borrow is available for margin accounts with $2,000 or more in equity. M1 Borrow is not available for retirement or custodial accounts. Rates may vary.

The video below explains M1 Borrow:

M1 Spend

M1 Spend is an optional and free money management module within the M1 Finance umbrella. It gets you access to high-yield savings.

This makes M1 Finance as a whole considerably more attractive in my opinion, allowing you to house all your personal finance tools in one place if you want to, and extends it from just an investing platform to a financial management platform.

Also keep your eye out for an M1 credit card soon.

There are 2 tiers for M1 Spend. M1 Plus is the premium version. Here's the breakdown:

No minimum balance to open account. No minimum balance to obtain APY (annual percentage yield). APY valid from account opening. Fees may reduce earnings. Rates may vary.

M1 also recently introduced “Smart Transfers” for M1 Plus members. All users can schedule regular deposits from a bank account or transfers from their Spend to Invest account based on a calendar. Smart Transfers adds the ability to transfer from Spend to Invest (or reverse) based on a cash threshold set by the user. For example, if you want to keep $1,000 in cash in your savings account, you can choose to have any excess cash over $1,000 automatically be transferred and invested, without having to lift a finger.

You can also chain a few Smart Transfers together. For example, once your IRA hits its annual contribution limit, all transfers will begin going to your taxable account. Conversely, you could choose a set amount to go to your taxable brokerage account as an emergency fund, and then have any excess go to your retirement account.

The video below explains M1 Spend:

Owner's Rewards Credit Card

M1 announced a credit card in July, 2021. It offers up to 10% cash back on certain brands in which you're invested. It may very well be worth it if you shop from certain brands often. I delved into the details in a separate post here.

M1 Plus

M1 Plus is the premium account option for M1 Finance. At the time of writing, it costs $125/year. As you can see in the comparison table above, in relation to M1 Spend, it gets you access to:

• Higher interest rate on savings.
• Smart Transfers.
• Owner's Rewards credit card $95 annual fee waived.

More importantly, M1 Plus gets you access to the following in relation to M1 Invest and M1 Borrow:

• Second afternoon trading window.
• 1.5% base rate reduction for M1 Borrow, resulting in a 2% interest rate loan.

This means that the M1 Plus pays for itself – in the interest you'd save – if you're borrowing over $8,333.

Here's that comparison:

M1 Plus is a $125 annual subscription offering products and services from M1 Spend LLC and M1 Finance LLC, both wholly-owned, separate but
affiliated subsidiaries of M1 Holdings Inc.

Founder and CEO Brian Barnes explains M1 Plus in the video below:

M1 Finance Referrals

Upon signing up for M1 Finance, you can share your referral link with friends and family; you'll both receive $10 when they sign up.

M1 Finance Signup Bonus

M1 occasionally offers signup and transfer bonuses.

M1 Finance currently has an account transfer promotion to earn up to $20,000 before March 31, 2024 as outlined below:

Learn More

M1 also currently has a promotion for up to $500 when initially funding an investment account before March 31, 2024:

Learn More

M1 Finance is for Long-Term Investing, Not Day Trading

M1 Finance themselves have made it explicitly clear from the start that the platform is not designed for – and would be a poor choice for – day trading. It is for long-term, buy-and-hold investing. I would argue that a beginner investor should forego the former in favor of the latter anyway. Trying to time the market tends to be more harmful than helpful.

I'll briefly explain the specific things that make M1 bad for day trading below.

M1 Finance Cons and Drawbacks

Cons and drawbacks of M1 Finance are few, but there are several worth mentioning.

No Money Market Account

M1 Finance doesn't offer a money market account option. I don't think this is a big deal, as you can use the interest bearing savings account that accompanies M1 Plus.

Customer Support Might Be Slow

I personally have had no problems with M1's customer support. I also admit that I haven't really needed any customer support, because I'm not a beginner investor. But I've seen anecdotes of M1's customer support being slow to respond for some people. I'd like to think they're aware of this potential issue and will fix it going forward.

Update – January 2021: M1 has recently massively beefed up their Support by hiring new staff to cover inbound requests and questions. Users have reported that response times have notably decreased.

No Limit Orders

M1 uses market orders. There are no advanced order controls like limit orders that you'd see with traditional brokerages. Again, M1 is not designed for day trading; it is for long-term buy-and-hold investing. So I don't see the lack of order control as a major concern. Any price discrepancy on your initial buy order is negligible over 30 years.

No Options/FOREX/Crypto Trading

Again, M1 is not for trading. As such, they don't offer options contracts, FOREX, or cryptocurrency that you might see with a traditional brokerage. However, as of July, 2022, they announced they will be offering crypto soon.

One Trading Window

M1 has one trading window per day in the morning during which orders are executed. This means that with a basic account, an order you input in the afternoon will not execute until the following morning.

This is precisely what keeps M1's management fees low and keeps transaction fees nonexistent. I again maintain that trade timing should be of no concern to a long-term, buy-and-hold investor.

You can get a second afternoon trade window if you are a member of M1 Plus.

No Automatic Tax Loss Harvesting

Tax loss harvesting refers to selling securities at a loss before the end of the year in a taxable account to offset gains, thereby lowering tax liability. Some brokers offer an automatic feature for this. You have to do this manually if you want to in M1 Finance. This may be a feature they add in the future, but again, since it's built for long-term buy-and-hold investing, it's not as important anyway.

My Rebuttal to Common Complaints

Most complaints about M1 that I’ve seen fall in one of these categories: a fundamental lack of knowledge, characteristics that would apply to any broker, and/or things that M1 was very clearly never designed for, none of which are M1's fault.

I’ve also noticed a common theme where day traders join M1, realize it's not good for trading, and then blame the platform for their shortcomings of understanding. This is like buying a car, driving it into a lake, complaining that the car doesn't float, and then complaining to the world that the manufacturer didn't say the car doesn't float.

M1 makes it very clear that it's designed for long-term, buy-and-hold investing. Even if you didn't see or hear that fact anywhere, it should become obvious upon seeing the interface and learning how the trading window works, which can be done before ever putting a dime in.

I would even argue that M1 is easier for young, new investors to understand than traditional brokers. Thinking back to my early days on TradeKing (now Ally) and being presented with a bid-ask spread, different order types, some blank input fields, options like “immediate or cancel” and “good 'til canceled,” etc., I was pretty confused and definitely had to read up on what all that stuff meant before submitting my first real order.As with anything, at the end of the day, it's always up to the individual to do their own due diligence before joining any kind of website, app, etc., broker or otherwise, and especially before putting actual money into that thing they joined.

M1 Finance FAQ

M1 Finance Awards

M1 Finance won Best for Sophisticated Investors and Best for Socially Responsible Investing, and #2 overall in Investopedia's 2019 Best Robo-Advisor Awards.

M1 also made Investopedia's May 2020 list of “Best Roth IRA Accounts.”

M1 Finance Comparisons

See how M1 stacks up against the competition:

• M1 Finance vs. Vanguard
• M1 Finance vs. Betterment
• M1 Finance vs. Interactive Brokers
• M1 Finance vs. Webull
• M1 Finance vs. Robinhood
• M1 Finance vs. Fidelity
• M1 Finance vs. Stash
• M1 Finance vs. Acorns
• M1 Finance vs. TD Ameritrade
• M1 Finance vs. Schwab
• M1 Finance vs. Ally Invest
• M1 Finance vs. ETRADE
• M1 Finance vs. Folio Investing
• M1 Finance vs. Merrill Edge

M1 Finance Promotions and Discounts

M1 occasionally offers promotions and discounts.

M1 Finance currently has an account transfer promotion to earn up to $20,000 before March 31, 2024 as outlined below:

Learn More

M1 also currently has a promotion for up to $500 when initially funding an investment account before March 31, 2024:

Learn More

I'll try to keep this section updated with any current/future promotions.

Conclusion

I like that M1 has tried to remove every barrier to investing for young beginners and seasoned investors alike. Fees and complexity alone can be prohibitive for new investors with traditional brokerage platforms. M1 has inarguably made investing much more accessible than ever before. This has been CEO and Founder Brian Barnes's goal from the start. He believes that “everyone’s money should be working harder for them.” He maintains that investing should be simple, easy, and free. I can get behind that.

M1 Finance is great for medium- to long-term investors. It is not great for day traders. M1 makes investing quick, simple, easy, and free. M1 allows for as much or as little customization as you want, making it perfect for both seasoned and beginner investors. M1 has one of the cheapest margin rates around, and has powerful features that allow for automated, hands-off, set-and-forget passive investing, especially when it comes to low-cost, broad index funds.

Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.