Investing used to be a pain for new investors. You had to set up an account with a brokerage firm, and every trade used to come with a fee.
Platforms like M1 have made investing much easier. You can customize your portfolio and automate your investments, streamlining how you keep track of your finances.
If you’re a new investor who wants to simplify how you manage your money, here’s what you need to know about M1.
Overview of M1
M1 was launched in 2015 as a hybrid investing and personal finance platform. The platform’s “Pie” system lets you automate your investments while maintaining control over the assets in your portfolio.
Through M1, you can invest in:
- Stocks
- Exchange-traded funds (ETFs)
- Crypto
- Model portfolios
- Custom portfolios with fractional shares
In addition to brokerage accounts, M1 offers retirement accounts, custodial accounts for minors, and a high-yield cash account. Qualifying investors can also take out a portfolio line of credit.
Based in Chicago, M1 operates as a FINRA-regulated broker-dealer and is a member of the Securities Investor Protection Corporation (SIPC), which means your investments are protected up to $500,000 if M1 were to fail as a brokerage.
Pros
- Automated investing through customizable portfolios
- Low account fees
- High-yield cash account
- Borrow against your portfolio
Cons
- No access to human financial advisors
- Limited to once-daily trade execution (twice daily if you have $25,000 or more in equity)
- No mutual funds or options trading
M1 Commissions and Fees
M1 charges a $3 monthly maintenance fee. The fee is waived if you have either:
- An M1 personal loan
- Assets valued at $10,000 for at least one day during a business cycle
There are no commissions on trades.* If there is no trading in your account for 90 days, you may be subject to a $50 fee. You’ll need a $100 initial deposit to open an account.
Retirement accounts require a slightly higher minimum deposit of $500. These accounts also come with a waivable $3 monthly fee.
M1 charges interest for users who borrow against their portfolio. Interest is calculated daily and billed monthly.
ACH transfers are free, but wire transfers come with fees. Expect to pay $25 for outgoing domestic wire transfers.
M1 Products
Brokerage accounts
M1 offers a standard brokerage account that allows you to invest through its customizable “Pie” system. Pies are a group of investments that include stocks, ETFs, and crypto. You can invest in a whole pie or a slice of a pie.
M1 supports fractional shares and allows you to create an automatic investment schedule. This makes investing in larger companies more accessible if you have a smaller budget, allowing you to build a portfolio over time.
There is a waivable $3 monthly platform fee, and the minimum deposit to get started is just $100. Trades are limited to one execution window per day unless you have $25,000 or more in equity.
M1 brokerage accounts are ideal for long-term, passive investors who want broad exposure to the market rather than active day traders.
Retirement accounts
M1 supports a range of retirement accounts, including traditional IRAs, Roth IRAs, and SEP IRAs. These accounts operate similarly to the standard brokerage option, using the same pie-based investing system to give you access to more than 6,000 different securities.
The minimum to open a retirement account is $500. You can open a new account or roll over an existing account. Once your account is funded, you can allocate your portfolio yourself or invest in a pre-built pie designed to help you reach your retirement goals.
Custodial accounts
M1 can also help you introduce your children to investing. Parents or legal guardians can open a custodial account for a minor and manage investments on their behalf.
Investments can be transferred to the child once they reach the age of majority in their state.
High-yield cash account
The M1 High-Yield Cash Account** earns 4.50% APY for the first three months, then 4.00% APY. M1 does not offer a debit card with this account. Instead, you can make withdrawals to an external bank account.
Any cash you hold in an M1 cash account is FDIC-insured up to $4.75 million through one of M1’s partner banks. There is a $100 minimum deposit to open a high-yield cash account, and you must have a taxable brokerage account with M1.
Portfolio line of credit
M1 allows you to take out a low-interest line of credit against your portfolio. If you have at least $2,000 in a taxable investment account, you can borrow up to 50% of your portfolio’s value.
Interest rates start at 6.25% APR. There are no restrictions on how funds can be used. Since the loan is backed by your portfolio, there’s no formal application or hard credit check.
M1 also offers marginal investing. Investing on margin can help you increase your portfolio’s value and give you access to liquidity without selling any of your assets. That being said, there’s more risk with marginal investing, and is a strategy best suited for experienced investors.
Who Should Use M1?
M1 is best for investors who prioritize long-term investing and want to use an automated platform with the option to customize their portfolios.
Pies take some of the guesswork out of investing, while slices give you more access to a diverse array of securities. Automation makes it easy to set recurring investments and take a passive approach while staying on track to reach your financial goals.
There are no management fees or trading fees, making it accessible for budget-conscious investors.
Who Shouldn’t Use M1?
M1 makes it easy to automate your investments, but it isn’t ideal for someone who prefers working with a human advisor. As well, if you want a hands-on approach to managing your portfolio, M1 isn’t ideal for you.
The platform doesn’t offer personalized advice or human guidance. All investments are automated or self-directed.
M1 also isn’t built for active traders. Trades are only executed once a day (twice if you have $25,000 in equity) by third-party market makers, so you won’t be able to execute immediate trades.
While the M1 dashboard makes it easy to manage multiple different types of accounts, it doesn’t come with the advanced tools that active traders typically rely on to make technical trades.
Alternatives to M1
M1 vs. Empower
Empower offers a more traditional wealth management experience with access to human financial advisors, tax optimization strategies, and estate planning ideal for high-net-worth individuals.
Empower charges a 0.89% wealth management fee for managed accounts, which is more expensive than the $3 per month platform fee to use M1.
You need at least $100,000 to meet Empower’s minimum investment requirements, but in exchange, you get access to personalized, professional guidance.
M1 vs. Webull
Webull is built for active traders who want access to advanced tools like real-time charting, extended trading hours, and options contracts.
It’s a mobile-first platform designed for frequent trading and technical analysis.
Both platforms offer zero-commission trading and no account minimums, but they differ in the type of investor they’re designed for.
Webull is best if you want to actively trade and analyze markets in real time, while M1 is ideal if you want to build a passive, long-term portfolio and automate your investments.
M1 vs. Betterment
Betterment fully manages your portfolio using algorithmic strategies. It offers features like automatic rebalancing, tax-loss harvesting, and access to financial planners. Betterment charges $4 per month for balances under $20,000 and 0.25% annually on balances above $20,000.
Both platforms support IRAs and offer high-yield cash accounts.
Betterment is ideal if you want a truly hands-off, managed solution, while M1 is better if you want some automation while retaining the ability to control your portfolio.
Bottom Line: Is M1 Worth It?
If you want an easy, affordable way to build and automate your investment portfolio, M1 has a lot to offer for beginner investors.
The $3 monthly platform fee is lower than what you’d pay for a managed portfolio elsewhere. It offers prebuilt groups of investments but still gives you control over your investments with the added convenience of automation.
While M1 is a good option for beginners, active investors might find it lacking. Evaluate your financial goals and determine how active you want to be in managing your portfolio to see if M1 is right for you.
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* M1 Finance, LLC does not charge commission, trading, or management fees for self-directed brokerage accounts. You may still be charged other fees such as M1’s platform fee, regulatory fees, account closure fees, or ADR fees. For a complete list of fees M1 may charge visit M1 Fee Schedule.
** M1 is not a bank and M1 High-Yield Cash Accounts are not a checking or savings account. M1 High-Yield Cash Accounts are an investment product offered by M1 Finance, LLC, an SEC registered broker-dealer, Member FINRA / SIPC. The purpose of High-Yield Cash Accounts are to earn interest on securities not actively invested. An open M1 Investment account is required to participate in the M1 High-Yield Cash Account.
View M1 disclosures.
