It can be confusing when you are trying to sort through all the different financial services products available online and match up their specific features with your unique needs as an investor. Some services are great for one aspect of managing your money, but are lacking in another way. One product that seems to consistently perform well in most areas is M1 Finance, and there’s an excellent chance that between it and its premium service M1 Plus most of your needs will be met.
What Does M1 Finance Do?
Let’s start with an overview of what M1 offers. It’s main claim to fame is being a no fee investing platform. That’s right – with both M1 Finance and M1 Plus, there are 0% in management fees, a proposition that sounds almost too good to be true in today’s world, but comes exactly as advertised.
Beyond having no fees, M1 offers investors a huge degree of flexibility. It operates as a robo-advisor service but also allows you flexibility to customize your portfolio, unlike platforms that require total automation or customization. The main way that M1 achieves this is through investment ‘pies’, where an asset class (such as stocks, bonds or ETFs) is the pie and individual investments (for instance, stocks in specific companies) are the slices that make up the pie.
This allows you to select pre-designed pies by M1’s in-house experts that are suited to certain investment goals, such as conservative asset growth. But you can also customize your pie slices by picking individual investments yourself, including fractional shares. Taken together, the features of M1 pies are terrific for investors looking to customize and diversity their portfolio.
Another advantage to using M1 Finance is the different kinds of investment account types available to you. One that’s worth considering is a Roth Individual Retirement Account (IRA). Unlike traditional retirement accounts, Roth IRAs are taxed pre-contribution, meaning that there are no taxes owing upon withdrawal. They also have a few other benefits, including longer timeframes to make contributions and withdrawals. Not all investors are thinking about retirement, but frankly there are many advantages to beginning to plan for it as soon as possible, ideally in your 20’s.
M1 Finance: Not Just Investing
The way that M1 is able to offer no fee investing is by charging fees on the other services that it offers. The best example of this is M1 Borrow, their credit program which allows you to borrow up to 35% of the value of your portfolio. This is a convenient feature that lets you keep your investment portfolio and your credit with the same provider. If you’re working hard to improve your credit score to take advantage of better rates from other lenders, you’ll probably appreciate M1’s reasonable rates. It costs 3.5% to borrow if you’re an M1 Finance user, or 2% if you upgrade to M1 Plus.
Another feature you may want to take advantage of is a checking account through M1 Spend. Like with M1 Borrow, M1 Plus clients get preferential rates when using M1 Spend. They get 1% interest on their account balance and 1% cash back, as well as increased ATM fee reimbursements. All of these make it easier to access your money and feel better about spending it when you’re trying to do fun things like eating out for cheap.
The good thing about trying M1 Finance is that it carries very little risk to you – with no investment management fees and reasonable, clearly communicated fees for other services such as M1 Borrow, you won’t be caught by surprise or come to regret your decision. Even the premium M1 Plus service only costs $125 per year, much less than many other premium online services these days, and a special offer currently available will let you have the first year for free.
The Final Call: Is M1 Finance Right For You?
Ultimately, the decision as to which investment platform to use is a personal one that requires careful consideration. After all, we are talking about one of your most valuable assets – your money, and its long term growth potential.
But if you are considering M1 Finance or the premium M1 Plus Service, the bottom line is that there is a very good chance it will meet most of your needs as an investor. You won’t pay fees to invest. You will have access to enhanced products such as a credit service and a checking account. And you will have the freedom to customize your portfolio if you want more control than their robo-advisor services will offer you.
The best part? Between the low-no-fee services and the offer of getting a year of M1 Plus for free, there’s virtually no risk to signing up. If you are looking for a platform that does a lot for a little, M1 Finance just may be your answer.
