M1 Finance History

M1 Finance was founded in 2015 with its headquarters in Chicago. This is an American financial service that reimagines personal finance management with an intriguing blend of tools to help investors access financial instruments such as stocks and ETFs. The app is available on both Android and iOS devices and can be used for automated investing with expansive portfolio customization options.

Beginners can also access over 80 pre-built portfolios called “pies” which are displayed intuitively in a pie chart making M1 Finance stand out for its offer of automated investing services as well as self-directed investing. Simply put, you can use their app for both hands-on investing as well as automated investing with strategies such as dollar-cost averaging. Customization of the automated trading feature allows traders and investors to set up their portfolios based on personal preferences, diversification goals, and risk appetite.

The platform does not charge any fees on portfolio management which is a plus especially for beginner investors looking to get their feet wet with a couple of conservative assets. With more than 6,000 stocks and ETF (exchange-traded funds), M1 Finance offers an intelligent investment tool for those looking to build long-term wealth in their life.

How to set up an M1 Finance Account

Signing up for an M1 Finance account is easy. As long as you are above 18 years old with a U.S mailing address, the platform will allow you to either set up a basic account or a pro account.

1. The first step is to provide your details such as name, date of birth, and Social Security number. You will also need to create a username and password.
2. Next, verify your identifying information and answer all the required questions.
3. Then, you can choose to connect your bank account manually or instantly via PC or mobile phone. M1 Finance uses Plaid to connect to your bank account, thereby protecting your information by not storing it with M1 Finance’s servers.
4. After completing this step, you will be required to transfer a minimum of $100 from your connected checking account before you can start investing.

Types of Accounts on M1 Finance

You can set up various types of accounts on M1 Finance. The platform supports individual as well as joint taxable brokerage accounts. You can also set up individual retirement accounts (IRAs) or access custodial trust accounts with additional paperwork.

With M1 Finance, you either set up long-term or short-term investments for a taxable brokerage account. You can also use M1 Fianance’s concierge service to roll over your IRA, set up a SEP IRA as well as set up Trust Accounts.

M1 Finance Supported Funding Methods

With your account set up, you can fund the account to start investing with a couple of supported funding methods. The platform’s main funding method is through your bank account, and you can fund your account by transferring funds from an institution or rolling over an old 401 K from a previous employer. With your bank connected to your account, M1 Finance allows you to fund your account from the following sources:

• Checking account
• Savings account
• IRA
• Roth IRA
• SEP IRA

You can also fund your M1 Finance account with a credit card or debit card. However, there is no option to fund your account with PayPal.

Minimum Account Balance

There is no minimum balance required to open an M1 Finance account, but there are exceptions for certain investment accounts.

These types of accounts may require that you have a cash value of at least $100 in your checking or savings account before opening the account. Also, opening a retirement account requires a minimum deposit of $500. After making your first deposit, the platform allows you to deposit any amount greater than $10.

M1 Fees and Pricing Structure

There is no fee for opening a basic account, and M1 Finance follows the zero trading commission on stocks and ETFs that has become the industry standard for most online brokerage apps.

According to their site, M1 Finance neither charges a markup fee on trade and portfolio management nor commission on executed trades. Even though there is a $100 minimum account balance requirement, and while retirement accounts come with a $500 minimum balance requirement, there are no international debit card fees on the M1 Plus account.

You can however expect to pay interest on margin loans of up to 3.5% for the basic account and 2% for the plus account. There is also an international debit card fee ranging from 0.8% to 1% on purchases made through the basic account.

Beginner Friendliness

M1 Finance is an ideal investment app for beginners as it comes with a combination of self-directed as well as automated trading and investing. With zero fees for portfolio management, M1 Finance offers the best tool for those looking to get started in their investment journey.

M1 Finance claims that its platform is built on a proprietary trading and investment system that automates each customer’s trading activity giving investors the chance to sit back and watch their wealth grow. The app is also built with an automatic aggregator that executes morning trades automatically starting from 9:30 am EST. In case you have missed out on the morning session, you can upgrade to the M1 Plus account for an annual charge of $125 to benefit from an additional noon trade aggregation session among other perks. You can also use the app’s self-directed side to trade individual securities and ETF shares that are presented in a pie chart.

Safety and Trustworthiness

When it comes to safety, M1 Finance boasts of an A- Better Business Bureau rating suggesting that the app has a good reputation for safety, reliability, and trustworthiness among its users.

M1 Finance is also a registered financial brokerage firm with a license from US’s SEC (securities and exchange commission) and FINRA (Financial Industry Regulatory Authority). M1 Finance also takes account security seriously as the platform is designed to meet industry security standards and uses advanced security protocols to protect users’ sensitive information. The platform supports security features such as two-factor authentication and 4096-bit military-grade encryption that keeps data secure while it is transferred or stored throughout the platform.

Also, as a member of the Securities Investor Protection Corporation (SIPC) investor funds are insured by up to $500,000. However, SIPC does not protect investors’ funds from market-related losses.

M1 Fractional Shares

For investors with limited funds, M1 Finance offers fractional share investing, which means that investors can buy a piece of a company rather than having to buy an entire share. Fractional shares also come in handy for investors who want to dollar-cost average their investment over time as you can invest as little as $100 in a fractional share. This makes M1 finance ideal for both beginners and experienced investors.

Dynamic Rebalancing

Dynamic portfolio rebalancing is another unique feature that comes with M1 Finance. This feature automatically adjusts the user’s portfolio allocations when their selected asset allocation has gone out of whack. For example, if you have scheduled automatic trades on your weighted portfolio and one asset in your portfolio goes up in price, the dynamic rebalancing tool will buy less of the asset whose price is going up to make sure the allocation for the other assets is guaranteed. This not only helps you maintain a precise balance of assets in your portfolio but also prevents you from buying too much of an asset at higher prices.

Pre-Made Expert Pies

For investors looking to diversify their portfolio while following expert investors, M1 Finance offers access to more than 80 pre-made expert pies that give you a sneak peek into the assets held by expert investors. This allows new users to model their investments according to tried and tested principles. You can also create your pie by selecting the individual assets or ETF’s you want to invest in.