I’ve been an M1 (formerly M1 Finance) customer since 2022, after moving my IRA from Vanguard. Since making the switch, I can confidently say that M1 is an excellent all-in-one investment platform, standing out for its unique combination of low-cost automated investing and customizable options.
In this comprehensive M1 review, I’ll share my experience using the platform, discuss its pros and cons, and explain how it compares to competitors.
Verdict: M1 is a top choice for long-term investors. It provides automated investing and rebalancing at no extra management fee. Key features include ready-made model portfolios and a variety of account types.
My experience: In 2022, I moved my IRA to M1, allocating 100% of my portfolio to the 2050 Moderate portfolio customization. As a hands-off investor, I appreciate that there's no management fees on top of the ETFs, and I'm pleased to report that my returns have surpassed those of the comparable Vanguard Target Retirement Fund without additional risk (so far).
How it compares: Unlike Robinhood, which caters to active traders, M1 is designed for long-term investors. It offers pre-built portfolios similar to Betterment and Wealthfront but without the management fees.
- Diverse account types: taxable, IRA, trust, custodial and crypto.
- Can invest in stocks, ETFs and crypto.
- High-yield cash account (M1 Earn).
- Access to margin and personal loans.
- Commission-free trades.
- Trading only occurs once per day.
- No automated tax loss harvesting.
- Advisory services and financial planning are not provided.
How Does M1 Work?
M1 offers the best of many worlds, but at its core is a concept called “pies.”
Pies are M1’s term for portfolio asset allocation.
There are two types of pies:
- Model Pies. These pies, formally known as Model Portfolios, allow you to invest in done-for-you portfolios that align with various financial goals and risk tolerances, such as retirement or dividend income.
- Customized Pies. These pies give intermediate and advanced investors the ability to create a customized investment portfolio composed of stocks and ETFs that can be automatically rebalanced with a single click.
We’ll cover pies in more detail below.
But first, let’s go over the basics of M1, which offers multiple types of investment accounts, including:
- Individual Investing.
- Joint Investing.
- Retirement accounts (including traditional, Roth, SEP IRAs, and the rollover of existing 401k accounts).
- Trust accounts.
- Custodial accounts.
- Crypto accounts (taxable only).
The primary benefit of M1 is that it doesn’t charge any asset management fees. In comparison, many investment services, like Betterment, Wealthfront, and some types of mutual funds, charge a 0.25% fee or more for offerings similar to M1’s Model Pies.
Keep in mind that some of the investments within a Pie, such as ETFs, do have their own expense ratios. However, these are typically on the very low end, at around 0.10%.
Beyond investing, M1 also offers:
- M1 Earn: A high-yield cash account that pays a high APY with $3.75 million in FIDC insurance.
- M1 Borrow: The ability to borrow up to 50% of your portfolio’s value at a favorable interest rate (with a minimum required balance of $2,000).
- Owner’s Rewards Card: A credit card that offers cash-back from companies you own stock in, with the ability to automatically invest any rewards you earn.
M1 Pie Investing Strategy Explained
With the M1 pie investment strategy, you choose between a Model Portfolio or a Custom Pie.
M1 Model Portfolios
Model Portfolios offer traditional asset allocations, such as retirement and general investment portfolios, to reach short-term, medium-term, and long-term financial goals.
However, there are also some more advanced investment options, such as the “ARK ETFs Equal-Weighted” pie, which brings together several of ARKs ETFs.
Here are some of the Model Pies available on the platform:
- General Investing: You can set this up to reflect your own risk tolerance and create a diversified portfolio to protect yourself.
- Plan for Retirement: You can use this for setting up a target retirement date (see the next section for more details).
- Socially Responsible Investing: This is a good pick for those who put a high emphasis on being a socially responsible investor.
- Income Earning: This is an option for those who focus on dividends and income.
- Industries and Sectors: This option lets you invest in specific industries that interest you.
M1 Target Date Funds
Under the “Plan for Retirement” Model Pies, M1 offers a wide range of target date retirement funds for all ages. For those investing for retirement, there’s a lot to like about what the M1 platform offers in this area.
While I’m somewhat nitpicking here, one of my complaints about Vanguard’s Target Retirement Fund, as well as many of the similar funds offered by other large investment institutions, is that they’re fairly cookie-cutter.
For example, the current breakdown of Vanguard’s 2050 fund is:
M1, on the other hand, has 16 different ETFs in their 2050 Moderate fund:
Looking back at the five-year returns of the different target date funds M1 offers, this has resulted in better gains:
Fund | Five-Year Return as of March 18, 2024 |
Vanguard Target Retirement 2050 | 29.99% |
M1 2050 Conservative | 47.13% |
M1 2050 Moderate | 53.91% |
M1 2050 Aggressive | 56.47% |
M1 Custom Pies
With a Custom Pie, you can develop your own investment portfolio and choose how big you want each slice to be. This is a nice feature for more hands-on investors looking to follow a specific strategy, such as a three-fund portfolio, which is a popular asset allocation strategy that consists of:
- A total U.S. stock market index fund.
- A total international stock index fund.
- A total U.S. bond index fund.
One major benefit offered by M1 is the ease of portfolio rebalancing. At any time, you can rebalance to your original allocations with just the click of a button. Alternatively, you can take advantage of M1’s automatic rebalancing and have your portfolio rebalance at intervals you set.
Or, with M1’s Dynamic Rebalancing, your portfolio can automatically adjust when you make new contributions. For instance, if your Vanguard Total Bond Market Fund is underweight in your three-fund portfolio, your contribution will be directed towards that fund instead of being divided among all three.
Tax planning tip: This ease of rebalancing can be both a pro and a con. Rebalancing can result in short-term capital gains taxes if the asset was held for less than a year. Also, research is inconclusive about which rebalancing frequency (monthly, quarterly, annually, etc.) is best.
Another beneficial rebalancing option is dynamic rebalancing, which:
- Rebalances closer to your desired percentages when you add cash.
- Has withdrawals taken from winners to rebalance towards your original percentages.
M1 Cryptocurrency Trading
M1 allows users to trade a limited selection of cryptocurrencies, including Bitcoin and Ethereum.
M1 does not charge extra fees for buying or selling cryptocurrencies. However, Apex Crypto, the custodian M1 uses to execute trades, charges a 1% (or 100 basis points) fee on all crypto transactions.
M1 crypto assets are stored with Apex Crypto. Assets are generally held in cold storage.
Individual wallets and private keys are not currently supported by M1. Unfortunately, that means you can’t do direct transfers to or from an outside crypto wallet. The only option is to sell your crypto positions, incur potential capital gains taxes, and withdraw the proceeds to a linked bank account
Overall, while it may not be the most comprehensive option available in the crypto space, M1’s crypto offerings are a good choice for beginners or those looking for a simple way to buy and sell blue chip digital assets.
M1 Borrow Review
M1 allows users with $2,000 or more invested in a taxable account on the platform to borrow up to 50% of their account value.
Note that retirement account balances do not qualify you for the program.
You can use the funds you borrow for any purpose — buying a car, making a down payment on a home, paying for a wedding or any other personal finance goal.
And the terms are flexible: there’s no minimum payment and no timeline to pay the loan back. There’s also no credit check, which can be a huge benefit if you’re someone with limited or poor credit history.
But you need to understand that M1 Borrow’s rates are so low and its terms are so flexible because while it’s advertised as a line of credit it’s technically a margin account.
In the simplest possible terms, a margin account is a line of credit that uses your investment holdings as collateral for the loan. That’s why the amount you can borrow is linked to your account balance, and why there’s no set repayment schedule: the loan is secured by your investments, so the lender’s risk is very low.
Margin accounts are typically used for buying stock or other investment products. If you have $10,000 in your account and $3,500 of “margin” (as it’s referred to in investment jargon), then you can buy $13,500 worth of stock. If your shares go up in value, you get to keep the profit from all $13,500 worth of investment.
But stocks can also go down. And sometimes, they go down a lot. For this reason, margin accounts can be subject to “maintenance calls.”
A maintenance call occurs when the value of your investment account — not including the amount you borrowed — drops below a predefined threshold. With M1, that threshold is typically about 30%, although it varies depending on the perceived volatility of your investments.
When your account receives a maintenance call, it’s frozen until you either deposit more cash or sell some of your investment assets. And in some cases, your portfolio can be subject to forced sales — meaning the company can sell your assets in order to recoup its funds, even if those sales cause you to lose money.
M1 offers a tool for monitoring your account health and showing you how close you are to receiving a maintenance call as shown in the screenshot below):
Still, it goes without saying that you should be careful with M1 Borrow, as with all other debt products. While there are certainly responsible uses for it — especially given the low interest rate — make sure you have a plan to pay those funds back.
M1 Owner’s Rewards Card
A credit card is the latest addition to M1’s full suite of products.
The two features that stand out about this card are:
- The ability to earn up to 10% cash-back from companies you invest in, with a maximum of $200 a month. This feature isn’t available with every company, and the cash-back ranges from 1.5% to 10%. You’ll earn 1.5% cash-back everywhere else.
- The ability to automatically invest your cash-back rewards into the market, which is a nice feature for someone who typically ends up not maximizing their reward points.
With that said, it’s not the best rewards credit card around, as there are a number of 2% cash-back cards available without an annual fee. Still, it can make sense for those who like the simplicity of having all their financial accounts in one place, or for those who spend a lot of money at places they also invest in.
However, after reviewing the list of companies offering 10% cash-back, I found that the highest tier primarily consists of retailers and service providers that you might use for frequent, smaller purchases, such as fast food restaurants or streaming services, rather than broad categories like groceries, travel or dining.
M1 Cash Account
The M1 High-Yield Cash Account offers a competitive annual percentage yield (APY) of 5.00%.
This account integrates well with the M1 brokerage account, allowing you to move money between earning interest and investing.
Beyond it being a high-yield cash account, key features are:
- Initial deposit requirement of just $100.
- FDIC insurance up to $3.75 million through M1’s partner banks.
Another standout feature of the M1 High-Yield Cash Account is its Smart Transfers functionality, which automates the movement of funds based on rules you can set.
Examples include:
- Maximum balance transfers: Excess funds move automatically to the investment account.
- Minimum balance transfers: Funds transfer in when the account falls below a set threshold.
If you have a margin loan from M1, you can set a threshold to start paying off your loan once your balance exceeds a certain threshold.
M1 Platform Fee Schedule
Here’s what M1 does and does not charge for.
- They don’t charge trading fees.
- They do charge a $100 termination fee, which is fairly standard for self-directed brokerage accounts.
M1 Minimum Investment
M1 does not have a minimum account value to open an account. However, you’ll need at least $100 for your first deposit into a brokerage account.
If you’re setting up a retirement account, you’ll need to commit more for that initial investment. For that account type, you have to deposit at least $500.
M1 vs. Betterment
Betterment is a popular robo-advisor investment platform for hands-off investors. Here are some of the key differences.
M1 | Betterment | |
Accounts available: | Individual, joint, custodial, trust, taxable, Roth and traditional IRAs, and SEP IRAs. | Individual, joint, custodial, trust, taxable, Roth, traditional IRAs, and SEP IRAs. |
Account fees: | None. | Investing fees start at $4 per month. |
Minimum investment: | $100 | $0 |
Tax loss harvesting: | No. | Yes. |
401(k) plans: | No. | Available, but no Solo 401(k)s. |
Here are a couple of notes about how the two platforms compare and contrast.
- Betterment fees start at $4 per month. If you’re investing $250 or have a total of $20,000 in assets across all your Betterment accounts, you pay a 0.25% annual fee instead.
- Betterment offers investors automated tax loss harvesting, which is when certain investments are sold at a loss to reduce your tax liability. Keep in mind, tax loss harvesting only benefits someone investing in a taxable account.
M1 vs. Robinhood
Robinhood is the popular investment app that pioneered free stock trading.
Here are some of the key differences between Robinhood and M1:
M1 | Robinhood | |
Accounts available: | Individual, joint, taxable, Roth, traditional, and SEP IRAs. | Traditional and Roth IRAs, cash, and taxable brokerage accounts. |
Account fees: | None. | Free stock trades, optional $5 per month membership upgrade. |
Minimum investment: | $100 | $0 |
Here are a couple of notes about the differences between M1 and Robinhood.
- If you’ve maxed out your IRA and 401(k) match, Robinhood is good for beginning investors who just want to invest in one or two stocks. However, if you’re a more sophisticated investor, you’d be better off with M1, as Robinhood doesn’t offer portfolio rebalancing or goal-based investing.
- Robinhood has more options for the very active trader, including options trading, than M1. But Robinhood isn’t the best bet out there for people who want to trade a lot either, primarily because it doesn’t offer the fastest or best trade routing and execution. That means you might not always get the best price on your shares when you place market orders.
M1 Review: Is It a Good Option?
There are certain situations where I feel it makes sense for people to use the M1 platform.
Consider going with this investing platform if you are:
- Someone who understands and is committed to investing passively wants to park their IRA, 401(k) and 403(b) rollovers. I really like what M1 offers with their Model Portfolios.
- Someone who wants to learn about the market by buying individual shares of stock. My rule of thumb is that individual stocks are OK when you’re limiting your investment to 5% to 10% of your net worth. The market is fun, and you can learn a lot about finance and economics that will help you manage your money and investments. And some people even hit it big. However, this shouldn’t replace a responsible investing strategy based on a long-term, goal-based approach.
- Someone with a taxable stock portfolio who can benefit from a margin loan. Whether it’s to start a business or buy a car, M1 Borrow’s terms are extremely favorable. Just be careful of the tax consequences if you’re considering a transfer.
Overall, I like the company and the suite of products M1 puts into small investors’ hands. The interface is easy to set up and use; it gives you the option to customize your own investments or rely on their model recommendations; and you can even manage your account on the go with the M1 investing app (which is available for Android and iOS).
All of that, along with a low-cost structure, makes this a solid option.
If you think M1 is right for you, click here to open an account.
Disclaimers: The M1 Credit Card is not available for U.S. territory residents. The Owner’s Rewards Card by M1 is Powered by Deserve and issued by Celtic Bank. Review the Cardholder Agreement and Rewards Terms for important information about the Owner’s Rewards Card by M1.
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They promised me a bonus to transfer a IRA, I have never seen it. Their customer service keeps saying next month we’ll credit it. It has been 3 months and I have seen nothing. I like their idea but I think they have overpromised and can’t keep up.
Hey Marco,
Sorry to hear that. I didn’t apply for the IRA bonus promotion, however, did go through a promotion that promised a $10 bonus for making a deposit. It took only three days to hit my account.