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What is M1Finance?

M1 Finance is an online trading platform/brokerage that is simple and easy to use, with no commissions or fees & a bunch of really great features that help you compound your money!

Why M1Finance Rocks

  • Pies
    • Everything in M1 Finance is set around the idea of a pie
    • A pie is just a way to set your target allocation
      • Think 5% of Apple and 3% of GM
    • When you set up automatic contributions/investments this is how M1 Finance calculates what to buy to maintain your target allocation
    • You can choose stocks, etfs, expert pies, or custom pies
      • You can even use pies within a pie
        • So one of your pie’s slices could be a pie containing many stocks/etfs
  • Fractional share investing
    • This is what allows you to put every penny to work
      • Which is very important especially if you don’t have a lot to invest
    • Easy to diversify even with not a lot of $$
    • Always be fully invested – don’t let cash sit idly by
    • This means that if you only have $10 to invest this week it will still be invested! You don’t have to wait until you have a couple $100 to buy 1 share of Apple stock, M1 Finance can use the $10 to purchase just a portion of a single share. This means that out of your $10, 5 cents could be invested in Boeing and 10 cents in Caterpillar. This puts all your money to use and allows it to compound quicker!
  • Choose any stock or ETF traded on major exchanges
    • Other platforms have not always allowed any company
  • Automation
    • Set it and forget it with recurring investments.  Determine a schedule for the amount of contribution and M1 Finance will automatically invest for you while maintaining a cash minimum that you’ve set.
    • This is key.  To really reap the rewards we’ve previously discussed you must continue to invest.  Setting it up automatically ensures this happens without you even thinking about it!  Also, manually having to contribute allows you to say no when you find another ‘use’ for the money.  Instead, when you set it up automatically you don’t even miss it!
    • Automatically rebalances when investing new deposits by purchasing the right amount of each slice to maintain your target allocation.
      • This ensures you buy more of some of your losers (that are on sale!) and sell some of your winners.
    • Tax efficiency when selling securities to automatically reduce the amount owed on taxes.
  • No Fees
    • M1 Finance has no management fees or commissions so all your money works for you!
  • Mobile apps
    • Easy to use platform on web and mobile

Their FAQ states that they do not currently support custodial accounts but they plan to support custodial accounts later in 2018.  There is a video where M1 Finance states that you can email support and they can help you setup a custodial account manually – that they just don’t offer it through the self-serve website.  According to the FAQ, it sounds like their plan is to add these to the website for self service soon.  Currently we are using joint accounts for our sons but there can be advantages and disadvantages for using various account types.

Interface / Ease of Use

Setting up and managing your slices is a piece of cake…see what I did there!?  But it really is simple and there are mobile apps that make it even easier.  First, you just start adding or removing slices (they need to add up to 100%).  These are what your deposits will automatically invest into when you contribute.  For example, when you invest $10 bucks, M1 Finance will automatically determine how to break up that $10 in order to reach your targeted allocation.  In some cases, you may be overweight on a position because it has gone up relative to the rest of your portfolio.  In this case it is possible that none of the $10 is invested into that position.

You can also include Pies within Pies.  So the first one below is actually a pie with its own set of stocks/ETFs that total to 100%.

It’s easy to view your entire portfolio and make updates as needed.

Check out these fractional share purchases from a deposit.  I mean, .68 cents to AMD, .69 cents to Activision Blizzard, and .68 cents to Bank of America…talk about diversification on a budget!

When you add in that you are getting all of the features above for completely free – there is just no reason not to sign up now.

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Read more about the incredible rewards that are possible by starting early and compounding with low/no fees.

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