M1 FINANCE REVIEW 📈 My Favorite Investing Platform! #Best Education Page #Online Earning

- So in this video here we're going to be doing

a comprehensive review of the investing app,

or investing platform known as M1 Finance.

It is by far the most requested platform I've had,

in terms of people looking for me to review

an investing platform and talk about the pros and the cons,

and whether or not I think this is a good platform.

And the reason for that is because this platform

is extremely disruptive in my opinion,

as far as the services an
d features they are offering.

And the good thing is as these other investing accounts

out there are looking to compete with each other,

the offerings for the end user,

the individual retail investor like yourself,

are gonna get better and better.

And in my opinion, looking at the different

investing accounts out there, M1 Finance

has the best package to offer.

In terms of what they're offering the investor

and so that's what we're gonna get into in this video.

Explain what I like about M1 Finance,

who I recommend it to, and maybe who it's not so much for.

And just kinda get into more of an in depth dive here

on the M1 Finance investing platform.

Now if you are interested in opening up an account

with M1 Finance I do have a link down

in the description below, it is an affiliate link

and you do not have to use it, but if you do,

understand that it helps to support my channel here.

It helps to support my work and allows me

to make more videos like this.

So if you are interested in using that link,

it's down in the description below,

but you do not have to use it.

So moving on here, what I'm gonna do is as always

break this review up into a couple of different sections.

So if you're looking to skip ahead and check out one section

only of this review, there's gonna be a pinned comment

with all those timestamps below.

But first of all, let's go ahead

and talk about what is M1 Finance?

M1 Finance is a hybrid platform, it's a blend between

a traditional stockbroker as well as Robo-adviser

with the automated investing.

So really M1 Finance covers two different categories here,

it's similar to these Robo-advisors where they have plans

that you can invest in where you say,

okay I want to invest in a growth portfolio,

and they have prebuilt plans,

or pies that you can invest in.

Or if you want to be more active and you wanna pick stocks

you want to invest in you can say, okay,

I'm gonna set up my portfolio, I'm gonna set up my Pie

or my percentages and I'm going to allocate more money

into this investment plan.

So the way M1 Finance would work is you're gonna pick

the stocks or ETFs you want in your portfolio,

you're gonna set up your allocation in terms

of your percentages, and then you're gonna continue

to add more money into that account.

So let's go ahead and go over an example of this.

Let's say you wanted to build a portfolio where 20%

of your money was going in the Tesla stock,

10% was going into Apple, 10% was going into Walmart,

and the other 50% was going into the Vanguard 500 ETF.

Well traditionally you would run into a problem here.

That's the fact that all of these stocks

are going to be trading at a drastically

different share price, and in order

to get that correct balance there of your portfolio

and having those numbers where they should be,

you're gonna have to have a lot of money

to make sure that exactly 20% of your money is in Tesla.

Or 50% is in that Vanguard 500 ETF.

Well that is essentially the niche that M1 Finance

has fallen into, they're allowing you

to buy fractional shares up to 1/10,000th of a share

of each of these stocks, that way

you can have a well-balanced portfolio from the get-go.

Think about some of these stocks out there like Amazon

for example or Google that trade over $1,000 per share

if you wanted to have a 10% stake in a stock like Google,

you would need to have well over 10 or $15,000

in that portfolio because of the fact

that that share price is so high.

But with M1 Finance you can buy a fractional share

of Google or a fractional share of Amazon

and get that correct allocation you are looking for

with a much lower barrier to entry

in terms of the amount in your entire stock portfolio.

So that is essentially the process here,

you either start with a prebuilt M1 Finance portfolio,

or you build your own portfolio.

You can start with a very small amount of money

because they allow you to use fractional shares,

and then as you add money they are going to be automatically

buying low, so let's say for example, in your portfolio

your Tesla stock is going through the roof

and all of a sudden you're overweight in Tesla.

Well when you add more money to that portfolio

you're not going to be buying more Tesla stock,

you're gonna be buying more Apple stock

or buying more Walmart,or whatever it is

that you are low in at that point in time.

Now that exact same thing is true when you are selling

from that account they're gonna sell

what you're overweight in not underweight in.

And we're gonna also talk about this later on,

they're also going to sell what is going to be the most

tax-efficient based on the investments that you are holding.

So moving on here what are the actual investments

that you can buy with the M1 Finance app?

Well you can buy over 6,000 listed securities

that are both traded on the NASDAQ,

the New York Stock Exchange and then the BATS exchange.

And the BATS is just a global Stock Exchange,

so there are over 6,000 publicly traded investments

that you can invest in through the M1 Finance app.

This also includes ETFs and there are almost 2,000 ETFs

or exchange-traded funds that you can invest in

through M1 Finance.

So what that means of course is there are no penny stocks

on M1 Finance and there are no mutual funds.

So if you were looking to pick a penny stock

out there that trades on an over-the-counter exchange

and you wanted to allocate money into that

through the M1 Finance app,

you would not be able to do that.

The same thing is true with the mutual funds,

you cannot be allocating money into mutual funds

through the M1 Finance app.

But if you are using M1 Financed my guess,

is you're not a fan of mutual funds anyway.

You want to be a DIY or active investor

and you don't want to be paying someone

to manage your money.

So I don't think many people would be honestly interested

in buying mutual funds through M1 Finance.

And then like I said earlier you have two options

when it comes to investing in M1 Finance.

Number one you can build your own portfolio or Pie

and you can also have multiple different Pies

within your portfolio, and then option number two

if you don't want to be active with your investments

you can utilize the prebuilt pies, or portfolios,

that M1 Finance offers completely free.

And the main advantage here

that we're going to get into

is that when you're investing traditionally

with a Robo-advisor, if you're investing

and you are following their plans,

where they're allocating that money for you,

they're going to charge an annual fee.

And the best part about M1 Finance

is there are no fees, no fees to trade.

There are no annual management fees of any kind,

and M1 Finance says it's going to remain this way.

They're gonna make money by offering borrowing,

so if you want to buy on margin,

you can do that through M1 Finance.

That's pretty much how they're making money,

it's kinda similar to Robinhood where they have

the RobinHood Gold package for certain members,

but that free plan is always going to be that way.

Okay moving on now, what are the requirements

to have a M1 Finance account?

You have to be a United States investor, age 18 and up.

Now there is no minimum balance to open an account,

but if you want to begin investing

you have to have a $100 minimum balance.

And if this is a retirement account,

you have to have a $500 minimum balance to get started.

Moving on now, what are the fees associated with M1 Finance?

There are absolutely no fees, like we said,

commission free trading, there are no fees,

no limits on the amount of rebalancing

you are doing with your portfolio.

And there is no kind of management fee

like you would see with Wealthfront or Betterment.

So as you guys know, we covered a full review here

of Betterment, I'll link it up in the description below.

And M1 Finance is similar to Betterment

because they offer those prebuilt portfolios.

However M1 Finance has a 0% fee, they don't charge

anything for that, while Betterment has a 0.25% fee.

Now I will say this, Betterment is going to be more tailored

to your specific needs because they are using an algorithm.

They're actually asking you direct questions

about your goals, your objectives, your savings.

Everything like that, so they are gonna be more tailored

to you, and so for some people

that might be worth that 0.25% annual fee.

Okay, moving on now,

what are the pros of investing in M1 Finance?

First of all, it is a 100% free Robo-advisor,

or automated investing platform.

So if you're looking for an alternative

to Wealthfront or Betterment,

this might be an option you would consider looking into.

Second of all, you have 100% complete flexibility

with this account, if you invest

in Betterment or Wealthfront,

you don't have much flexibility

in terms of what you're actually investing in.

You're solely going to be investing in ETFs.

With M1 Finance you can pick exactly

what you're investing in, build your own portfolio,

build your own pies, and decide exactly

where your money is going to be going.

However that can be an issue for some people,

if you're completely new to the stock market and investing

that is a lot of power to be put in your hands,

and I just encourage you guys to educate yourself

before you start investing a lot of money

into some portfolio or plan, when you really

don't know much about what you're investing in.

Another pro is that M1 Finance offers

those fractional shares where you can buy

as little as 1/10,000th of a share.

And that significantly lowers the barriers

to entry for stocks like Berkshire Hathaway,

or Amazon, or Google, or some of these stocks

that trade at a very high share price.

You can have a better diversified portfolio

with M1 Finance by buying fractional shares.

So like I said, for example, if you wanted to buy

Google, or Amazon and you only had two or $3,000.

You would be very heavily weighted in those stocks

because the share price would take up

most of the amount of the money you have to invest.

But with M1 Finance, you could have a well-balanced

portfolio because you could say,

I only wanna invest $50 in Amazon, or $50 in Google stock.

Another pro for M1 Finance is the fact

that this takes the emotions out of your investments.

And what I mean by that is you build your portfolio,

you tell them what percentage of your portfolio

you want in each asset, and you continue to add money,

and you're really not thinking about this process.

And like we said before, M1 Finance is going to rebalance

your portfolio by buying what you are underweight in.

So let's say for example, one of your stocks goes way up

and another stock starts to fall.

You would be overweight in that stock that went up

and underweight in that stock that went down.

Well you would automatically be buying shares

of that stock that went down, also known as buying low.

And as I'm sure you guys know, the best strategy

when it comes to investing in the stock market,

is buying low and selling high.

Now as good as that sounds, it's often

a little bit more difficult to do that

because you're buying shares as that share price is falling

and you're averaging down.

So it's a little bit more difficult to do this

when you are doing it yourself, and buying shares low.

But when this is happening behind the scenes,

you're really not worrying about it

and it might be a little bit less

emotionally involved for you.

But again, like I said, make sure you know what it is

that you're investing in because if a stock is falling

at a rapid pace it's most likely falling for a reason,

and you wanna make sure you have long term confidence

in that investment, otherwise you're gonna wanna consider

why it is that stock is falling.

And if you may have possibly

made a very bad choice with your investment.

And again, that is kind of what I said earlier.

M1 Finance and apps like Robinhood

put a lot of power in your hands,

the ability to go out there and buy thousands

of different stocks, do your due diligence.

Learn about investing in the stock market

before you start dabbling around with individual stocks.

And like I said, as a beginner I would start off with ETFs,

and stocks, the Dow Jones Industrial Average

or other blue chip companies out there.

Another advantage to M1 Finance is that they do offer

retirement accounts, so if you wanna take advantage

of that tax savings, you can do so through M1 Finance.

And then finally, you can automate deposits

from your bank accounts, so let's say for example,

you've built your portfolio, you've funded the account

with $2,000 and then you want to invest $50 a week.

Well you can have that automatically go out of your account

and be invested in your M1 Finance account

without even doing anything, and the other advantage to that

is that by doing this, you are dollar-cost averaging,

regularly accumulating shares over a long period of time.

And as a result you're gonna be paying the market average

for those shares, so it really helps you to do two

of the best strategies out there.

Number one, that is buying low and selling high.

And number two, that is dollar-cost averaging

regularly accumulating shares over a long span of time.

Okay, moving on now, what are the cons

of investing in M1 Finance?

Well one of the major advantages of Wealthfront

and Betterment is that they offer tax loss harvesting,

and we talked about that in that review of Betterment.

So if you guys wanna jump over, check that out,

it's gonna have more details about tax loss harvesting.

But it's essentially a way for to cut down on your tax bill

and your exposure to capital gains.

But instead M1 Finance offers tax minimization,

where they're looking to lower the amount of taxes

and they're to sell your investments

in the most efficient way possible

when you're looking to withdraw from your account.

So the first investments they will sell are those

that you are overweight in that have no tax liability.

After that they will sell ones where you have long-term

capital gains tax, and then third and finally,

they sell ones where you're gonna be exposed

to short-term capital gains, the highest tax rate

you will pay as an investor.

But if you are looking to have that advantage

of tax loss harvesting,

or if you're looking to have direct indexing

through Wealthfront, you're not gonna have that available

to you through M1 Finance

and you're going to want to consider those alternatives.

Another con is that for obvious reasons

M1 Finance is not for day traders, or short-term traders.

But again, I don't think anybody who's interested

in day trading is looking at the M1 Finance platform,

it is simply not built for that.

Another con is the fact that there are no mutual funds

with M1 Finance, but like I said earlier,

I think M1 Finance is really geared towards

that do it yourself investor, and that type of investor

is not really interested in mutual funds,

or active money management.

So I don't really see that as a con.

But some people may say that

and I believe it is worth mentioning.

And then finally something else that some

would consider to be a con, is that you are fully invested

at all times with M1 Finance.

So any money going into that account above $10

is going to be invested across your portfolio.

So if you wanna keep cash on the side,

you have to keep that money outside

of your M1 Finance account.

They will not hold a cash balance within that account.

Okay, so finally, who would I recommend M1 Finance to?

And who is it not for?

This is for intermediate, or experienced investors,

you've been involved in the stock market

for maybe a year or two,

you know what it is that you're doing.

And you're looking to be investing in maybe some ETFs

as well as some individual stocks

and you wanna be more active with your selections.

But you also don't wanna worry

about rebalancing your portfolio, and being overweight,

or underweight in certain stocks.

And you wanna automate the process of dollar-cost averaging.

That is pretty much exactly what M1 Finance

is going to do for you and it's perfect

for this type of investor.

M1 Finance is also great for the cost-sensitive investor,

if you're somebody who's looking to cut down

on your fees that you're paying for a financial advisor,

or for a Robo-advisor, or for your mutual funds.

M1 Finance is honestly your best choice here,

having a 0% fee of any kind, no fees at all with M1 Finance.

Now you are doing a lot of the work yourself

in terms of building your portfolio,

or selecting that portfolio on your own.

But you could always go talk to a fee-only financial advisor

pay them for a consultation,

ask them what you should be doing with your money,

and then build that exactly with an M1 Finance.

That way you do have some sense, and some ideas

as to what you should be doing with your money,

and what your asset allocation should be.

So that way, instead of paying them a fee every single year,

you pay that one time fee, and then maybe once a year

you sit down again with that financial advisor,

that fee-only financial advisor,

and you have them take a look at your allocations

and determine if anything needs to be changed.

Based on your life events, or your goals, or objectives.

So that again is a great option here with M1 Finance

to get some financial advice from a third party

outside of M1 Finance and then build that portfolio

within M1 Finance and avoid any kind of management fee

or expense ration, or annual fees.

Now the one thing I do want to mention

is that when you are investing in ETF

there is an expense ratio, it is usually very inexpensive

if you look at the EFTs that Vanguard offers.

You do pay an expensive ratio and you are still

obviously going to pay that by investing in ETF

through M1 Finance, but that money

is not going to M1 Finance at all.

That remains with Vanguard,

or whoever is operating that ETF.

Okay, so who is M1 Finance not for?

I don't think it's great for beginners,

just because it puts a lot of power in your hands.

Now if you are a beginner, you could invest with M1 Finance,

but I just wanna make sure you are doing your due diligence

and making sure you know what it is

that you're investing in, and knowing

that you want to be involved in this stock

or this investment for the next couple of years.

Now if you go ahead and start a portfolio

and you invest in a low fee S&P 500 ETF

and maybe some blue chip stocks,

or if you use one of the prebuilt portfolios, not a problem.

I think you could do that as a beginner.

But if you were to do your own stock portfolio

without having much experience

and then start putting a massive amount of money

into your M1 Finance account,

that is where I would be concerned

just because a lot of the time, beginners don't necessarily

know what it is that they're looking for

when they're picking stocks, and so I would recommend

getting a little bit more experience under your belt

before automating this whole process of funneling money

into your investing account and buying stocks individually.

It's also not for day traders, as we discussed,

and short-term investors, it is just not built for that.

There are other platforms out there

for short-term investors and day traders.

Anyways guys that's gonna wrap up this video here

reviewing M1 Finance, if you guys are using this app

drop me a comment down below,

and let me know what you think of M1 Finance.

And like I said, if you guys are looking to open an account

with M1 Finance, I have a link for them

down in the description below, it's an affiliate link

but you of course do not have to use it.

I certainly appreciate it if you do,

'cause it does help me out and support my channel here,

and allows me to make more videos like this.

If you guys have any other accounts out there

you want me to review, let me know with a comment below.

But thank you guys so much for watching this video,

and I hope you have a great rest of your day.

If you are interested in learning more about investing

in the stock market, I've created a free course

just for you, the link is in the description below.

Here are a few other videos you might enjoy as well.

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