M1 Finance: Invest In One Fund For Easy Diversification

M1 Finance is an American financial services company that offers a robo-advisory investment platform with brokerage accounts, digital checking accounts, and lines of credit. It is a fee-free platform that combines investing, cash management, and borrowing in one place. M1 Finance offers a range of investment options, including stocks, exchange-traded funds (ETFs), fractional shares, and cryptocurrencies. It also provides margin lending, automatic rebalancing services, and cash management services, including debit cards. One of the key features of M1 Finance is its Pie investment model, which allows investors to visualise their portfolio as a pie, with each Slice representing different securities. This provides a high level of customisation and automation for investors.

No management fees or commissions

M1 Finance offers a unique value proposition to its customers by charging no management fees or commissions on self-directed brokerage accounts. This is in stark contrast to traditional brokerages, which often levy various fees and commissions, making investing a costly endeavour.

M1 Finance's business model is centred around keeping costs low for its customers. By forgoing management fees and commissions, M1 Finance makes investing more accessible to a wider range of individuals, particularly those who are price-conscious or are just starting with investing. This approach has contributed to M1 Finance's growing popularity, especially among medium- to long-term investors.

While M1 Finance does not charge management fees or commissions on self-directed brokerage accounts, it is important to note that there may be other fees associated with using their platform. These include M1's platform fee, regulatory fees, account closure fees, and ADR fees, among others. It is always essential to review the complete list of fees before committing to any investment platform.

By eliminating management fees and commissions, M1 Finance empowers its users to retain more of their investment returns. This approach aligns with M1 Finance's goal of making investing simple, easy, and low-cost, as stated by CEO and Founder Brian Barnes.

In conclusion, M1 Finance's decision to forgo management fees and commissions on self-directed brokerage accounts sets it apart from traditional brokerages and makes it an attractive option for cost-conscious investors seeking a user-friendly platform.

Automated portfolio management

M1 Finance is an American financial services company that offers a robo-advisory investment platform with brokerage accounts, digital checking accounts, and lines of credit. It provides an electronic trading platform for the trade of financial assets, including common stocks, preferred stocks, fractional-share ownership, and exchange-traded funds.

M1 Finance's investment strategy involves micro-investing, allowing users to select a portfolio and have the platform automatically invest additional funds in pre-defined ratios using fractional share ownership. This makes it easier for individuals to build a diversified investment portfolio and start investing even with limited funds.

M1 Finance offers a high degree of customization and automation in its investment approach. It visualizes investment portfolios like a pie, with each slice representing different securities such as stocks, exchange-traded funds (ETFs), and crypto. Investors can create their own pie or select and fine-tune pre-built portfolios called Model Portfolios.

The platform's automated Dynamic Rebalancing feature ensures that cash inflows and outflows help maintain the target percentages of each investment slice. This process is similar to a robo-advisor but requires manual initiation of the rebalancing.

M1 Finance's automated portfolio management system provides several benefits to investors:

Customization and Automation:

M1 Finance allows investors to create their own investment pies or select from pre-built Model Portfolios. This combination of customization and automation gives investors the flexibility to tailor their portfolios to their specific needs and goals.

Dynamic Rebalancing:

The platform's Dynamic Rebalancing feature automatically adjusts the weight of each investment slice to maintain the desired allocation. This helps investors maintain a balanced portfolio over time without constant manual adjustments.

Fractional Shares:

M1 Finance offers fractional share ownership, allowing investors to purchase partial shares of stocks or other assets. This feature enables investors to diversify their portfolios and invest in assets that might otherwise be out of their price range.

Tax Minimization:

M1 Finance employs tax minimization strategies to reduce the amount of taxes owed by investors. It does this by selling investment securities with the lowest tax burden first, including short-term and long-term capital losses.

User-Friendly Interface:

The M1 Finance platform is designed to be easy to use, allowing investors to navigate easily between accounts and make changes to their investing choices at any time. This user-friendliness empowers investors, especially those who are new to investing, by providing them with a sense of control and knowledge about their money.

Long-Term Investment Focus:

M1 Finance is geared towards long-term investors rather than day traders. By offering limited trading windows, the platform encourages investors to focus on long-term financial goals rather than short-term market fluctuations.

In conclusion, M1 Finance's automated portfolio management system provides investors with a powerful tool for building wealth. It offers a high degree of customization and automation, dynamic rebalancing, fractional shares, tax minimization strategies, a user-friendly interface, and a focus on long-term investing. These features make it a popular choice for individuals seeking a hands-off approach to reaching their investment goals.

Pre-built Model portfolios

M1 Finance is an American financial services company that offers a robo-advisory investment platform with brokerage accounts, digital checking accounts, and lines of credit. M1 Finance allows investors to create a super-customized portfolio, which can be a bit overwhelming at first, but the process is straightforward.

M1 Finance offers pre-built Model portfolios, which are a collection of portfolios made up of stocks and ETFs that align with different investment goals ranging from general investing, retirement planning, to responsible investing. These portfolios are based on widely accepted investing strategies and are designed to perform well in most market conditions.

M1 Finance's pre-built Model portfolios can be used as a full portfolio or as a slice in your portfolio. These portfolios are created using a selection model that considers the fund's cost, volume, size, and tracking error. While these portfolios are meant to be used as a guide, they can be customized to fit your specific needs and investment goals.

The pre-built Model portfolios offered by M1 Finance provide a great starting point for beginners or investors who want a more hands-off approach to investing. With over 60 pre-built portfolios to choose from, investors can select the portfolios that align with their risk tolerance, investment goals, and time horizon.

By choosing a pre-built Model portfolio, investors can benefit from the expertise and knowledge of M1 Finance's investment strategies. These portfolios are designed to be well-diversified and to perform well over the long term, allowing investors to "set it and forget it." The dynamic rebalancing feature of M1 Finance also ensures that your portfolio stays on target and aligns with your original investment percentages.

Customisation and automation

M1 Finance is a powerful yet easy-to-use platform that can be customised to fit seamlessly into your entire financial life. It offers a unique investment approach, with "Slices" of different securities that make up a whole "Pie". Investors can create their own Pie or select and fine-tune pre-built portfolios called Model Portfolios, but in essence, there is a huge range of options for the investor who wants to create and automate their investment portfolio.

The M1 app lets you choose which stocks, exchange-traded funds (ETFs), or portfolios you want to invest in and what percentage of your money you'd like to allocate to each investment. You can also invest in M1's Model Portfolios, which are themed investment portfolios of stocks and ETFs aligned with different goals, such as socially responsible investing or retirement.

M1 Finance offers a high degree of customisation, allowing you to pick individual stocks or, for more novice investors, choose a Model Portfolio based on your risk tolerance. The ability to be flexible and invest in things you care about is a key advantage of the platform.

The platform also stands out for its automation features. Once you've set up your portfolio, M1 will manage it for you. You can set up an auto-invest schedule, and M1 will withdraw funds from your bank account and invest them automatically according to your portfolio. M1 will also rebalance your portfolio as needed to maintain your desired level of risk.

M1 Finance thus offers a high degree of customisation and automation, allowing you to create a portfolio that fits your unique financial goals and have it managed by a sophisticated automated system.

Tax-minimisation features

M1 Finance is a fee-free platform that combines investing, cash management, and borrowing. It does not offer tax-loss harvesting but has a tax minimization feature to reduce investors' owed taxes. When you request a withdrawal, M1 will sell securities in a specific order to help reduce the amount of tax you will owe.

M1 Finance's tax-minimization feature works by selling securities in the following order:

• Losses are sold first, as this reduces your gains.
• Long-term gains are sold next, as they are taxed at a lower rate.
• Finally, short-term gains are sold last because they are taxed at the highest rate.

Long-term investments held for more than a year have lower tax rates (0%, 15%, or 20% depending on your tax bracket). Investments held for less than a year can be taxed at as high as 37%. Therefore, short-term investments are only sold as a last resort.

M1 Finance's tax-minimization feature is particularly useful for investors who want to reduce their tax burden and maximize their after-tax investment returns. It is important to note that while M1 Finance's tax-minimization feature can help reduce taxes, it does not offer tax-loss harvesting, which is available on some other investment platforms.

Frequently asked questions