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$100 ($500 for IRAs)
0% (cryptocurrencies are commission-free, but Apex Crypto takes 1% fee on transactions); $10/month M1 Plus
- Low minimum deposit
- Access to more than 80 professional portfolios
- Fractional shares and individual stock or ETF orders available; cryptocurrency trading
- Automated investing available at no additional fee for standard accounts
- Investment options are limited to stocks, ETFs, and cryptocurrencies; no tax-loss harvesting
- Only M1 Plus members can trade crypto 24/7
- Trading window limits your control over investment transactions
- No human advisor support
- Promotion: New M1 Finance users who open a brokerage account can earn up to $500 if they invest at least $75 in their account within 14 days of opening (offer ends December 31, 2023)
About M1 Finance
M1 Finance is an attractive option for investors interested in balancing investing, cash management, and borrowing all under one roof. A drawback, however, is that it doesn’t offer human advisor support, nor does it provide tax-loss harvesting. Instead, M1 Finance has a tax minimization feature aimed at reducing investors’ owed amount in taxes.
At the end of the day, M1 Finance is best for investors who already have an M1 Finance bank account, loan, or credit card and are willing to upgrade to an M1 Plus account. The M1 Plus membership gets you better loan rates, more cash back, more account flexibility, and other benefits for banking and investing.
M1 Finance: Overall Rating
M1 Finance Pros and Cons
M1 Finance doesn’t provide tax-loss harvesting. Instead, it has a tax minimization feature aimed at reducing investors’ owed amount in taxes. This feature reduces your taxes by selling investment securities with the lowest tax burden first. This includes short-term capital loss (from biggest to smallest loss) and long-term capital loss (from biggest to smallest).
Tax-loss harvesting is the process of selling securities like stocks or ETFs at a loss to offset capital gains in other areas in your portfolio. This then reduces capital gains taxes created by the sale of other investments.
Is M1 Finance Trustworthy?
The Better Business Bureau has given M1 Finance a B+ rating. BBB ratings range from A+ to F, so this suggests that the investment app interacts well with its customers. The BBB cites that M1 Finance’s rating stems from the number of complaints filed against the business.
The bureau primarily rates companies on customer interaction and complaint history, but it also considers factors such as type of business, time in business, advertising issues, and licensing or government actions. The BBB also states that its ratings don’t predict whether a company will be reliable or perform well, so read customer reviews and talk to friends or family who have used M1 Finance.
The company’s record seems to be clear of any major scandals or lawsuits.
Ways to Invest with M1 Finance
Individual and Joint Brokerage Accounts
M1 Finance is a hybrid investment app that offers a combination of self-directed trading and automated investing. The app uses pie-based models that let you choose which stocks, ETFs, or portfolios you want to invest in and what percentage of your money you’d like to allocate toward each investment. It also offers more than 80 professionally created portfolios.
M1 Finance offers ETFs and trust ETFs, including the Invesco QQQ trust ETF (QQQ), Vanguard Russell 2000 ETF (VTWO), SPDR S&P 500 ETF (SPY), iShares S&P 500 ETF (IVV), and Vanguard S&P 500 ETF (VOO).
According to its website, M1 Finance uses a proprietary trading system to automate each customer’s trading activity. This could be a great feature for investors who prefer to sit back and watch their money grow without managing all the nooks and crannies of investing.
In addition, the investment app says it aggregates and executes all trades during a morning trade window that begins at 9:30 a.m. ET. You can access afternoon trading hours if you upgrade to M1 Plus.
On the self-directed side of things, the M1 app lets you buy or sell individual securities or slices of your pie portfolio. M1 Finance additionally offers fractional shares, auto-invest settings, portfolio rebalancing, and tax-minimization features.
M1 Plus Accounts
Traders who upgrade to an M1 Plus account can take advantage of afternoon trade windows that make it possible to invest whenever they want. You’ll need to pay $10 per month (or $95 annually) to upgrade to M1 Finance’s Plus account. But you’ll get a three-month free trial starting your day of enrollment.
M1 Plus accounts come with additional perks such as higher-yield savings on an M1 High Yield Savings Account (5.00% APY), more cash back rewards with Owner’s Reward Card, a 1.5% loan discount, smart transfers, and other banking perks. Traders also get access to on-demand Trade Crypto as well as access to custodial accounts.
M1 Finance offers the following retirement savings accounts:
- Traditional IRAs: Individual retirement savings accounts funded by pre-tax dollars, which means you won’t pay taxes until you start withdrawing funds at 59 1/2. The 2023 contribution limit is $6,500 if you’re under 50, and $7,500 if you’re 50 or older.
- Roth IRAs: Individual retirement savings accounts funded by post-tax dollars. The money in your account grows tax-free. If you withdraw funds before you’re 59 1/2 you’ll be charged a 10% penalty fee. The same 2023 contribution limits apply to these accounts.
- SEP IRAs: A retirement savings account for individuals that are self-employed or small business owners. The funds in your account grow tax-deferred. In 2023, the contribution limits are 25% annual salary or $66,000, whichever is less.
- Rollover IRAs: You can transfer funds from a previous employer’s 401(k) or 403(b) into a M1 traditional IRA or Roth IRA. M1 Finance gives you a bonus for rollovers starting at $250 when you transfer at least $50,000 to a new M1 Finance IRA.
Each retirement account gives you the option to pick your own investments (stocks and ETFs), select professional portfolios, purchase fractional shares, or automatically reinvest dividends.
You can also open custodial or UTMA/UGMA investment accounts for minors, but you’ll need to be enrolled in the M1 Finance Plus account to do so. Once your child or dependent reaches their state’s age or majority (usually 18 or 21), M1 Finance will restrict all trading on the account.
The custodial account beneficiary has two options once they reach the age of majority: Withdraw the funds or transfer them to another taxable investment account.
The M1 Crypto account allows you to add commission-free cryptocurrencies to your investment portfolios. You can currently create your own customized “pies” (or portfolios) as long as you’ve funded your M1 Finance brokerage account. Eventually, the platform will be launching Expert Crypto Pies, so you’ll be able to invest with your own customized portfolio, utilize its expert-crafted portfolios, or trade with both.
M1 Finance currently supports the following assets:
- Bitcoin (BTC)
- Ether (ETH)
- Litecoin (LTC)
You can also invest in cryptocurrency-related ETFs and trusts, such as the ProShares Bitcoin Strategy ETF (BITO), Grayscale Ethereum Classic Trust ETF (ETCG), Grayscale Litecoin Trust ETF (LTCN), and more. Similarly, you can invest in a large selection of OTC securities like Adidas (ADDYY), Nintendo Co., Ltd. (NTDOY), and Tesco PLC.
Automated trading and asset allocation also apply here. You can set a percentage or allocation of each pie in your account, and then automate trading. This gives M1 Finance permission to rebalance your portfolio when you deposit funds.
When it comes to storage, M1 Finance uses an Apex Crypto custodial wallet. Only M1 Plus members will be able to trade 24/7, though.
If you’re thinking of setting up a trust account, you’ll need at least $5,000 to get started. The investment app says it supports both revocable and irrevocable trusts that are authorized to invest in securities. Trust accounts offer revocable trusts and irrevocable trusts.
Another thing to note is that all trusts must be US domestic trusts in good legal standing.
M1 Finance offers commission-free stocks, ETFs, and cryptocurrencies. All M1 Finance accounts allow users to buy and sell stocks and ETFs. Investors can also choose to trade fractional shares of stocks. But in order to access crypto trading, you’ll need to open a crypto account.
It’s also important to note for folks interested in environment, social, and governance (ESG) investing, that M1 Finance does offer pre-made responsible investing pies that focus on investing your money in ESG-focused ETFs.
M1 Finance Fees
M1 Finance requires a $100 minimum to open a standard individual or joint brokerage account, or a crypto account. M1 Finance IRAs require a $500 account minimum, and trust accounts require a $5,000 minimum.
If you want the benefits of an M1 Plus account or get access to custodial accounts, you’ll need to pay $10 per month (or an annual fee of $95).
M1 Finance Frequently Asked Questions (FAQs)
M1 Finance is a legitimate company that was founded in 2015 and headquartered in Chicago. It is an SEC-registered investment platform, as well as a member of the Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC).
M1 Finance doesn’t offer traditional tax-loss harvesting. Instead, M1 Invest Acccounts can access the tax minimization feature to reduce taxes on sold securities. M1 Finance reduces your taxes by selling investment securities with the lowest tax burden first. This includes short-term capital loss, long-term capital loss, and similar securities.
Several features make M1 Finance a great move for those just getting started in investing. These include its combination of self-directed trading, auto-investing features, and easily navigable and intuitive web and mobile platforms. However, IRAs require a $500 minimum to open, which is more than similar platforms like Betterment or Wealthfront.
Although M1 Finance has a solid selection of investment products and account types, you won’t be able to utilize tax-loss harvesting. In addition, it isn’t the best choice for those who want to trade assets like mutual funds, futures, or options trading.
Methodology: How We Reviewed M1 Finance
We examined M1 Finance using Personal Finance Insider’s rating methodology for investing platforms to compare account options, fees, ethics, and customer experience when reviewing investment apps.
Investment apps typically offer multiple assets, trading tools, and other resources. Some investing platforms are better for more advanced investors and active traders, while others may be better for beginners and passive investors. M1 Finance was evaluated with a focus on how it performs in each category.
How M1 Finance Compares
M1 Finance vs. Betterment
M1 Finance and Betterment Investing are both suitable choices for passive investors who want to utilize automated portfolio management. But fees, features, and account options differ for each platform.
If you’re solely interested in automated investing but don’t want to worry about minimum requirements to set up an account, Betterment could be right for you. However, M1 Finance is an ideal option for those who want access to both self-directed trading and automated investing.
A downside to M1 Finance is that you’ll need a minimum of $500 to open an IRA. You can access automated IRAs without any minimums at Betterment (i.e. if you use the Betterment digital plan).
M1 Finance vs. Wealthfront
M1 Finance and Wealthfront Investing have many commonalities.
Both offer ETFs and crypto exposure. However, M1 Finance is a better fit for self-directed traders who want access to stocks, ETFs, and cryptocurrencies. With Wealthfront, you’re more limited when it comes to crypto. It only offers crypto trusts, which give investors a more indirect approach to crypto exposure since you’re mainly investing in a trust that holds crypto.
Plus, you can only allocate up to 10% of your portfolio to crypto trusts at Wealthfront. But unlike M1 Finance, Wealthfront offers 529 plans.