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How to Automate Your Investment Portfolio Using the M1 Finance Pie Approach

M1 Finance Pie Approach

There is a large segment of the population that neither wants to pay thousands of dollars to a faceless investment manager or wants to play an active role in trading the markets. This is why in the 2020s we have seen the rise of automated investment.

Otherwise known as robo-advisors, these investment platforms come with tailormade portfolios; many of them utilizing artificial intelligence. All you have to do is select your goals and your risk tolerance. Make a deposit and the platform will handle all your investments on your behalf.

The M1 Finance “Pie” strategy is a unique investment approach. Let’s take a look at how Central Oregonians can use it to their advantage.

You can also check out this great M1 Finance review for more information on this automated investment platform.

What is the Pie Approach?

M1 Finance helps you to create your portfolio using a pie. Think of a normal pie chart. This is your portfolio. Each slice of that pie is a different asset.

This method of displaying your investments makes it simple for you to get a snapshot of your portfolio and to balance it according to your risk tolerance.

The M1 Finance platform gives you the following types of asset to invest in:

  • Bonds.
  • Stocks.
  • ETFs.

While the platform does not support mutual funds, these asset classes offer more than enough for the majority of novice investors.

Whenever you invest in a certain asset class, the pie will automatically rebalance itself to meet your target allocations. The platform will do this on your behalf, so if you invest in stocks but your target allocation for bonds is 20%, your pie will always be rebalanced to take this into account.

Go Fully Automated with Expert Pies

What makes M1 stand out as one of the best robo-advisors available to Oregonians today is that investors who know nothing about the markets can still make smart investments. M1 offers what it calls “Expert Pies” to its newer investors.

These are created by humans using quantitative analysis to determine the best ETFs, bonds, and stocks for each pie.

Some of the expert pies you can choose from include:

  • General investing.
  • Retirement investing.
  • Responsible investing.

Take a look at these pies and determine whether their allocations are for you. You are not locked in if you choose one of these portfolios. You can take their template and customize it according to your needs.

However, these portfolios are so well-curated that most investment guides would agree with their current layouts. Only customize if you are confident in your skills.

The Costs of Pie Investing

For most M1 investors, a basic investment account is more than enough. There are no monthly fees, no minimum balances, no trading fees, and a 0.00% management fee.

When comparing M1 Finance and other platforms, it is one of the most cost-effective ways to invest.

M1 Finance makes its money by offering checking accounts, lines of credit, and an upgraded system known as M1 Plus. These are highly specific services and are not essential for most investors.

When you do decide to invest, take note that these are the minimum investment amounts for each type of account:

  • $100 for a standard investment account.
  • $500 for a retirement investment account.

You will only be prompted to meet this minimum when you decide to invest.

What is the Best Way to Diversify My Portfolio?

This has always been a source of some conflict. The old financial advice on stocks goes that you should subtract your current age from 100 to determine how much of your portfolio should be in stocks.

For example, if you are aged 40 now, you should invest 60% of your money in stocks. The older you are the more conservative your investments should become.

There is no right or wrong answer when it comes to the exact percentage allocation. Many investors will go deeper than stocks vs. bonds. They may decide to split their portfolios into stocks and high dividend stocks.

Alternatively, you can diversify by taking some risks on penny stocks, as opposed to investing in mega-cap stocks.

It can get confusing quickly, which is why M1 Finance’s automated investing system is perfect for the investor who wants to manage their portfolios without the hassle.

Can I Alter My Portfolio at Any Time?

The markets change all the time. Smart investors have the tools to pivot when needed. Unlike other robo-advisors, you are never going to be locked into any investment. You are free to change your portfolios whenever you want with M1 Finance. There are no penalties for doing so.

Although saving and investing are automated with M1 Finance, you still have full agency over your investments.

This level of control is crucial, particularly if you want to use some spare money to invest in a hot individual stock later. Check out M1 for free and get a feel for what they offer. It could be the investing platform for you.

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