M1 Finance Review [2023]: Is This the Total Money Management Solution You Need?

Today, it’s common to see apps offering consumers the chance to easily invest their money and manage their finances. M1 Finance¹ looks to combine investing money and money management into one easy-to-use app, which allows you to manage your money in one place using a variety of tools.

If you’re looking for a complete money management solution, M1 Finance may be worth considering. Read our M1 Finance review to find out if this app could help you take control of your finances.

What is M1 Finance?

M1 Finance is a self-directed investing app and platform that can be used online or on Android or iOS. It was founded in 2015 and is based in Chicago. According to the M1 Finance website, at least 150,000 investors are using the app to manage their money. In addition to providing general investing services and guidance on how to invest money, M1 Finance also offers the ability to borrow at low rates.^{2 5}

M1 Finance is listed on FINRA’s BrokerCheck, and the company’s SEC registration was approved in 2016. As a result, M1 Finance is a legitimate brokerage firm with licenses in 53 U.S. states and territories.

How does M1 Finance work?

M1 Finance lets you choose your own investments for your brokerage account and use them to construct pies. It offers individual stocks and ETFs you can use to construct a customized portfolio. It’s also possible to choose from expert pies designed to help you reach different goals, ranging from earning passive income to long-term wealth-building.

M1 Finance offers you the ability to invest in individual stocks using fractional investing. As a result, if you don’t have enough money to buy a full share of a company, you can get fractional shares and add them to your portfolio. The same is true of an ETF, which trades like a stock on the exchange.

Although you can’t invest in real estate or individual bonds, you can get exposure to these asset classes through bond and real estate investment trust (REIT) ETFs, as M1 Finance offers both. It’s even possible to get access to mortgage-backed security ETFs through M1.

M1 Finance offers a unique pie investing approach. When you sign up, you create a custom pie based on your holdings. Each pie is made up of slices. Your portfolio pie is constructed based on how much of the pie you want each slice to take. Each individual stock or ETF is a slice of your pie. For example, you could choose to create a pie with two individual stocks, one emerging market ETF, one bond ETF, and one REIT ETF. That’s five different securities. You can decide to allocate your pie evenly, with 20% of your money going to each, or you can choose a different way to divide them.

M1 Finance also offers Expert Pies, which are curated securities portfolios pulled together by the M1 team. These portfolios typically have high historical performance. You can add Expert Pies to your pie as well.

Your M1 Finance portfolio is completely customizable. The only limit is that you can keep only up to 100 securities in your portfolio. The money you contribute to your M1 Finance portfolio is divided up according to the percentages you specify, and M1 uses dynamic rebalancing to automatically rebalance your portfolio allocations according to your targets.

M1 Finance products

M1 offers two main products, the Basic account and the M1 Plus account.¹¹ The Basic account is completely free and has no fees attached to it. The M1 Plus account has a monthly fee of $10, but it comes with more perks, including lower interest rates if you borrow against your account. M1 Plus members can also apply for the Owner's Rewards Card, which is a credit card that offers cash back on brands you have in your portfolio.^{4 3}

No matter which account you sign up for, however, M1 Finance offers the following products:

• M1 Invest: The ability to create a fully customized portfolio complete with dynamic rebalancing. There are no management or trading fees associated with M1 Invest.
• M1 Borrow: Once you have at least $5,000 in your portfolio (IRA funds excluded), it’s possible to borrow at low rates. Your portfolio line of credit allows you to borrow up to 35% of your non-IRA investment portfolio without worrying about traditional credit requirements. You can repay your margin account line of credit from your M1 portfolio or a bank account.

M1 Finance at-a-glance

	Basic	M1 Plus
Minimum investment required	$100 ($500 for an IRA)	$100 ($500 for an IRA)
Management fees	None	None
Annual fees	$0	$10 per month
Transaction fees	None	None
Account types available	Individual Joint IRA (Traditional, SEP, Roth) Trust	Individual Joint IRA (Traditional, SEP, Roth) Trust Custodial
Asset classes	Stocks Bonds Real estate ETFs Mutual funds	Stocks Bonds Real estate ETFs Mutual funds
Features	Dynamic rebalancing Portfolio line of credit Tax minimization12	Dynamic rebalancing Portfolio line of credit Tax minimization Cash back

Who can use M1 Finance?

Anyone who is at least 18 years old and a U.S. citizen or permanent resident can open an M1 Finance account. You do need a current U.S. mailing address to qualify.

M1 Finance is likely best for someone who is interested in complete money management with the help of an investment portfolio. For those who want a truly fee-free investment portfolio (you still have expense ratios with ETFs), M1 Finance may be a decent choice. On top of being able to manage a portfolio, you can also access a line of credit and other financial products. 

It may also work well for someone who wants to take a hands-on approach to their retirement accounts. Self-employed individuals may want to open up a SEP IRA, and those with retirement accounts at work may want additional retirement savings like a Roth IRA. You do need to meet the account minimum of $500 to open an IRA, however. You can meet the account minimum by using rollover funds.

M1 Plus can work well for those who want to use their portfolio to access a line of credit at a lower rate.

On the other hand, M1 Finance isn’t likely to work well for an investor involved in frequent trading. Although it does allow you to invest in individual stocks, the trading window for the day is limited, so you can’t make a lot of trades during a day.⁶ For those interested in day trading, M1 Finance is unlikely to fit the bill.

How much can you earn with M1 Finance?

Because M1 Finance is a brokerage, how much you earn depends on the makeup of your portfolio. When you invest using M1 Finance, you buy a share of a stock or an ETF. The performance depends on how well the investment does over time, as well as any dividends you earn.

However, with investing, you realize gains only after you sell. So you might hold on to a stock for a long time, but you don’t receive money until you sell the asset. For example, if you bought one share of the SPDR S&P 500 ETF Trust (SPY) on Jan. 7, 2000, you would have paid $144.97. On Feb. 7, 2020, you could have sold that share for $332.20. You would have made $187.23. Now, imagine if you had bought 100 shares back then. Your gain would have been $18,723. That’s not bad for letting the money sit there for 20 years.

For many investors, earning money over time requires that you invest consistently and let your account grow before selling shares as needed down the road. With M1 Finance, it’s possible to set up automatic investments and grow your wealth over time. Your total return, though, depends on whether you sell investments at a gain or a loss, how well those investments do, and how often you sell investments for cash.

Other factors, such as taxes, expense ratios, annual fees, and other costs might impact how much you earn over time.

Maximizing your earnings with M1 Finance

Just about any time is a good time to start investing. Maximizing your earnings, though, takes discipline and planning.

• Invest regularly: One of the best ways to maximize earnings as an investor is to be consistent in making contributions.
• Let your money grow: Rather than selling shares and liquidating your investments frequently, give them time to grow, which lets compound returns work for you.
• Set a cash control threshold: With M1 Finance, you can set a cash control threshold, and once your cash account exceeds that amount, the excess is automatically invested in your portfolio. When you receive dividends, they are put into your account as cash. With a relatively low cash control threshold, you can automatically reinvest your dividends.
• Consider the M1 Plus upgrade: Even though M1 Plus has a monthly fee of $10, it comes with perks that may help you make up for it.

How to stay safe investing with M1 Finance

You cannot completely avoid risk when investing. There is always the chance that you’ll lose money. However, you can adjust your portfolio with M1 Finance, changing your pie so the slices that include bond ETFs are bigger, reducing your overall portfolio risk.⁹

Additionally, it’s worth noting that investments are covered by SIPC insurance, which protects your account up to $500,000 if the brokerage fails. However, you should be aware that SIPC insurance doesn’t protect you from market events.

When choosing investments and constructing your customizable portfolio, take into account your own personal goals for your money, your investment timeline, and your personal risk tolerance.

Common questions about M1 Finance

How to sign up for M1 Finance

As long as you are at least 18, have a U.S. mailing address, and are a U.S. citizen or permanent resident, you can sign up for M1 Finance. Start by providing an email address and setting up a password. Once you do that, you’re taken through the steps to set up an account.

• Provide your phone number and enter the access code provided via email
• Enter your name and address
• Offer other identifying information, including birthdate, employment, and citizenship status
• Answer questions that help M1 Finance build a risk profile
• Input your Social Security number

Once you’ve answered all the required questions, you can choose to connect your bank account manually or instantly. M1 Finance uses Plaid to connect to bank accounts. Plaid is token-based, so your information isn’t stored with M1 Finance. Depending on your bank’s login requirements, you might have to enter an authorization code. Once you’ve connected your account, you can make the required $100 initial deposit and begin investing.

Other investment apps to consider

If M1 Finance doesn’t sound like the best option for you, consider other options on our list of the best investment apps. Some potential possibilities include:

• Wealthfront: If you’re more interested in a robo-advisor, Wealthfront can be a good choice. Wealthfront offers a college planning option, as well as a cash account with a decent APY. However, you need at least $500 to start and you won’t have as many customization options as with M1.
• Robinhood: You can engage in day trading with Robinhood, without paying fees. However, you don’t have the same access to education and other banking options.

In the end, it’s important to choose an investment platform that aligns with your investment strategies and needs. Carefully consider your choices and choose what works best for you.