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M1 vs M1 Plus: Which is Right For You?

M1 vs M1 Plus: Which is Right For You?

With an almost endless choice of online investment platforms and tools to manage your finances, making direct comparisons between different services can sometimes feel like trying to go the wrong way on a moving escalator. It’s understandable for a regular retail investor to feel overwhelmed by the avalanche of information about how to manage one of their most precious resources – their money. Starting with two great products is one way to take the stress out of making comparisons, and fortunately that’s definitely the position anyone looking at M1 vs M1 Plus will find themselves in. 

Founded in 2015 by Brian Barnes under the parent company M1 Holdings, the Chicago-based M1 has three distinct products: a credit service called M1 Borrow, an investment service called M1 Invest, and a checking service called M1 Spend. While all three offerings are core to the company, it is perhaps best known for being a low fee (and in many cases no fee) robo-advisor that also gives investors the choice to customize their portfolio.

M1 users get access to quite a bit for $0 per year, but the company also offers a premium service called M1 Plus that’s only $125/year. Additionally, new users can try their first year of M1 Plus for free. Anyone who has explored the platform is likely wondering how M1 vs M1 Plus directly compare, and it is a reasonable question to ask before making the upgrade to the higher service level.

What Does M1 Offer?

The simple fact is that M1 offers a lot for the average investor with its regular service, also known as M1 Finance. The investment service is essentially free, with $0 in annual management fees. When it comes to deciding how to allocate your money, the choice is yours – or theirs, if you prefer. M1 offers pre-designed portfolios from their in-house experts that you can simply select and leave to grow, or you can use the ‘pie’ feature to customize your portfolio.

 M1 pies are a whole other subject, but basically they let you set a certain asset (such as stocks) as a slice of your investment pie, then pick individual investments to make-up that particular segment of your portfolio. While there is a lot of flexibility that comes from the ability to pick individual stocks, bonds or ETFs, and even fractional shares if you need to, one thing that won’t make its way into your pie is mutual funds – M1 does not offer them as an investment option. 

In addition to the flexibility to build pre-designed or customized portfolios, the credit (M1 Borrow) and checking (M1 Spend) services are features that users benefit from. These services generally come with fees (more on that in a minute) which is what allows the company to offer 0% management fees for the investment component.

So Why M1 Plus?

With that many choices through the ‘free’ service, you may be wondering what else there is to consider when looking at M1 vs M1 Plus. The reality is that while the free service is great, the premium service does offer a lot more for certain types of users.

For one thing, if you are planning to take advantage of the flexible credit program known as M1 Borrow, you’ll want to be aware of the difference in fees. M1 users pay 3.5% interest, while M1 Plus users only pay 2%. With the ability to borrow up to 35% of your portfolio value, that seemingly small difference could actually work out to be quite a lot. 

Those using M1 Spend for their banking will also notice savings in fees that have the potential to really add up. M1 Plus members get 1% cashback in addition to 1% interest, and may be eligible for the Owners Rewards Card which is a credit card that offers up 10% in cash back on products bought from companies that are invested in or affiliated with M1. An automation feature also allows cashback rewards to be added directly to your portfolio, helping it grow as you spend. Further, M1 Plus members have other options that make it more convenient (and cheaper) to spend their money, such as cashback privileges and ATM fee reimbursements.

M1 vs M1 Plus: The Bottom Line

It’s hard to lose when you’re comparing two stellar products that offer investors the flexibility to go with automation or customization in their portfolio. That said, M1 Plus definitely offers a lot of additional benefits for users that are making full use of the service. If you plan to leverage your portfolio to borrow, or even just for day-to-day checking services and spending, the difference in rates available to M1 Plus users should make the $125 annual fee easy to stomach. It’s on the low end of premium investment service costs, and it’s not hard to see how it could pay off many times over.

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