M1 Finance is an investment platform that combines elements of robo-advisory services and traditional brokerage accounts. It offers a unique blend of automated investing and customization options. Here’s an overview of M1 Finance’s products and services, cost structure, and what sets them apart from other competing companies.
Products and Services:
- Automated Investing: M1 Finance provides robo-advisory services that allow users to create a diversified investment portfolio based on their financial goals, risk tolerance, and time horizon. Users can select from pre-built investment portfolios or create their own custom portfolios.
- Fractional Shares: Similar to other platforms, M1 Finance offers fractional shares, enabling users to invest in a diversified portfolio even with small amounts of capital. This feature allows investors to own fractions of expensive shares, maximizing investment opportunities.
- Stock and ETF Trading: M1 Finance enables users to trade individual stocks and ETFs on its platform. Users can create their own portfolio of stocks and ETFs or choose from expert-curated portfolios.
- Borrowing and Lending: M1 Finance offers a feature called M1 Borrow, allowing users to borrow against their investment portfolio. Additionally, M1 Finance offers a cash management account with a high-interest rate.
Cost Structure: M1 Finance has a transparent and straightforward cost structure. Here are the key aspects:
- Account Fees: M1 Finance does not charge any trading or management fees for its basic investment accounts. This means users can trade stocks and ETFs without incurring any commissions. However, they offer a premium subscription called M1 Plus, which provides additional benefits for a monthly fee.
- M1 Plus: The M1 Plus subscription costs a monthly fee and offers benefits such as a lower borrowing rate, cashback rewards on debit card purchases, and a higher interest rate on the cash management account.
What Sets M1 Finance Apart:
- Customizable Portfolios: M1 Finance allows users to build custom portfolios by selecting individual stocks and ETFs. Users have control over their investment allocations and can create a portfolio that aligns with their specific investment preferences and strategies.
- Dynamic Rebalancing: M1 Finance automatically rebalances user portfolios to maintain the desired asset allocation over time. As users deposit or withdraw funds, the platform intelligently buys or sells securities to bring the portfolio back to the target allocation.
- Fractional Shares: M1 Finance supports fractional share investing, allowing users to invest in a diverse portfolio even with small amounts of money. This feature provides greater flexibility and allows users to maximize their investment potential.
- Borrowing and Cash Management: M1 Finance’s borrowing feature (M1 Borrow) enables users to borrow against their investment portfolios. The cash management account offers a high-interest rate, providing users with additional earning potential on uninvested cash.
- No Trading Fees: M1 Finance stands out for its zero-commission trading model. Users can buy and sell stocks and ETFs without incurring any trading fees, making it cost-effective for investors.
M1 Finance’s combination of customizable portfolios, fractional shares, dynamic rebalancing, borrowing options, and no trading fees sets it apart from other investment platforms. It appeals to investors seeking more control over their portfolios while still benefiting from automated investing features.