M1 Finance review: Investing app for automated and DIY trading
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- M1 Finance is an investing app offering both self-directed trading and automated investing.
- You won’t pay trading fees, but you’ll need at least $100 for investment accounts and $500 for IRAs.
- The app also offers fractional shares, custodial accounts, margin lending, and digital banking.
- Click here to open an account with M1 Finance.
Is M1 Finance right for you?
M1 Finance has options for both passive investors and active traders interested in taking the investment app route to building wealth over time. The investment app offers individual and joint brokerage accounts, automated accounts, IRAs, trust accounts, and more than 80 professionally created portfolios. In addition, M1 Finance provides fractional shares, margin lending, custodial accounts, and digital banking.
M1 Finance could be an attractive option for investors interested in balancing investing, cash management, and borrowing all under one roof. The app, which is available for both iOS and Android, offers a debit card that integrates directly into the platform and offers rewards and cash back on qualified purchases.
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One downside is that M1 Finance primarily offers stocks and ETFs. While the company offers both the option to automate your investment account and trade individual portfolio slices or investments on your own, it doesn’t provide other investments like mutual funds or options. Another drawback is that M1 Finance doesn’t offer human advisor access like Betterment and other popular automated advisors.
Bottom line: M1 Finance could be a good choice if you’re interested in buying or selling stocks and ETFs. Its automated account features make it a suitable fit for passive investors. But since M1 Finance also offers the option to place individual trades, it could also work for active traders.
| M1 Finance | |
| Editor’s rating | 4.3 out of 5 |
| Fees | 0% |
| Account minimum | $100 ($500 for IRAs) |
| Promotion | Deposit $1,000 and get a $30 bonus. |
| Open account |
M1 Finance pros and cons
Pros
- Low minimum deposit
- Access to more than 80 professional portfolios
- Fractional shares and individual stock or ETF orders available
- Automated investing available at no additional fee for standard accounts
Cons
- Investment options are limited to stocks and ETFs
- No human advisor support
- Trading window limits your control over investment transactions
- Limited customer service availability
How does M1 Finance compare?
| M1 Finance | Betterment | Wealthfront |
Min. Investment $100 ($500 for IRAs) | Min. Investment $0 or $100,000, depending on plan | Min. Investment $500 |
Fees 0% | Fees 0.25% (0.40% for premium plan) | Fees 0.25% |
Investment choices Stocks, ETFs | Investment choices Stock ETFs and bond ETFs | Investment choices ETFs |
| Open an account | Open an account | Open an account |
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Ways to invest with M1 Finance
DIY accounts or automated investing accounts
M1 Finance is a hybrid investment app that offers a combination of self-directed trading and automated investing. The app uses pie-based models that let you choose which stocks, ETFs, or portfolios you want to invest in and what percentage of your money you’d like to allocate toward each investment.
According to its website, M1 Finance uses a proprietary trading system to automate each customer’s trading activity. This could be a great feature for investors who prefer to sit back and watch their money grow without managing all the nooks and crannies of investing.
In addition, the investment app says it aggregates and executes all trades during a morning trade window that begins at 9:30 a.m. EST. But clients who upgrade to M1 Plus accounts can take advantage of an afternoon trade window that makes it possible to invest whenever they want. You’ll need to pay $125 per year to upgrade to M1 Finance’s Plus accounts, but these plans offer additional perks such as custodial investment accounts, smart transfers, 1.5% loan reductions, and banking perks.
On the self-directed side of things, the app also lets you buy or sell individual securities or slices of your pie portfolio. M1 Finance additionally offers fractional shares, auto-invest settings, portfolio rebalancing, and tax-minimization features.
Retirement accounts
You can set up traditional IRAs, Roth IRAs, or SEP IRAs at no additional cost. Each retirement account gives you the option to pick your own investments, select professional portfolios, purchase fractional shares, or automatically reinvest dividends.
M1 Finance also offers IRA transfers and 401(k) rollovers. You’ll need at least $500 to open a retirement account.
Custodial accounts
You can also open custodial or UTMA/UGMA investment accounts for minors, but you’ll need to be enrolled in the M1 Finance Plus account to do so. So at the least, you’ll have to pay $125 per year to invest in a custodial account. Once your child or dependent reaches their states age or majority (usually 18 or 21), M1 Finance will restrict all trading on the account.
The custodial account beneficiary has two options once they reach age of majority: withdraw the funds or transfer them to another taxable investment account. You can learn more about M1 Finance’s custodial account rules here.
Trust accounts
If you’re thinking of setting up a trust account, you’ll need at least $5,000 to get started. The investment app says it supports both revocable and irrevocable trusts that are authorized to invest in securities.
Another thing to note is that all trusts must be US domestic trusts in good legal standing.
Is M1 Finance trustworthy?
The Better Business Bureau has given M1 Finance an F rating. BBB ratings range from A+ to F, so this suggests that the investment app has fallen behind in some aspect of customer support.
The bureau primarily rates companies on customer interaction and complaint history, but it also considers factors such as type of business, time in business, advertising issues, and licensing or government actions. The BBB also states that its ratings don’t predict whether a company will be reliable or perform well, so it’s best to to do your own research before making a final decision.
In addition, it’s also worth pointing out that the BBB cites two reasons for M1 Finance’s rating: (a) failure to respond to two complaint(s) and (b) failure to resolve one complaint filed against the business.
The company’s record seems to be clear of any major scandals or lawsuits. It has closed 33 complaints in the last 33 months, according to the BBB.
What is M1 Finance?
M1 Finance is a money management investment app offering self-directed trading, automated investing, fractional shares, margin lending, IRAs, and more. The company is registered with both the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA).
The investment app also offers M1 Finance Plus for users who don’t mind paying $125 per year. This account includes access to custodial accounts, transfer perks, margin lending discounts, and checking account perks.
M1 Finance is headquartered in Chicago, Illinois. The investment app was established in 2015 by founder and CEO Brian Barnes.
Rickie Houston is a wealth-building reporter at Personal Finance Insider who covers investing, brokerage, and wealth-building products.
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