M1 Finance Review: Free DIY Robo-Advisor (Up to $4,375 Transfer Bonus, 1-Year Free Trial of M1 Plus)
Limited-time transfer offer bump, now up to $4,375. Free 1 year trial of M1 Plus. My favorite option in the now-crowded “robo-advisor” category is technically not a registered advisor at all, it is M1 Finance. Here’s a quick rundown of what makes them different:
Fully customizable. You pick your own target asset allocation “pie”. (You can add ETFs or individual stocks.) You can simply copy one of the many model portfolios out there, or customize it as you like. You have full control! M1 handles the boring stuff, like rebalancing or dividing a $100 contribution across 8 different ETFs. Here is my pie which I named the My Money Blog Portfolio.
No commissions. Free stock/ETF trades with a low $100 minimum account size for taxable accounts and a $500 minimum for retirement accounts.
0.00% management fee! Most robo-advisors charge an annual management fee of 0.25% to 0.50% of assets (or force you to own something bad, like artificially low-interest cash).
Free dynamic rebalancing. M1 will rebalance your portfolio back to the target allocation for you automatically (for free) whenever you chose. All new deposits (and withdrawals) will be invested (or sold) dynamically to bring your portfolio back toward your target asset allocation. You don’t need to do any math or maintain any spreadsheets. You can also manually rebalance on-demand.
Fractional share ownership. For example, you can just set it to automatically invest $100 a month, and your full amount will be spread across multiple ETFs. Dollar-based transactions were one of the good things about buying a mutual fund, but it seems that ETFs are the future due to their lower costs and tax-efficient structure. Fractional shares solve this problem.
M1 Finance nearly checks off all the boxes of my brokerage wish list. They do all the managing for me, but according to my rules. But since I can choose the exact ETFs that they purchase, if I decide to stop their service down the line, I just end up with a brokerage account filled with ETFs that I can easily move elsewhere. I don’t have to sell anything. I suppose the only thing they could add would be to have the high availability of customer service of a huge company like Fidelity or Schwab. Otherwise, I really like their feature set and I contributed $1,000 of my Roth IRA contribution in order to try them out.
How do they make money? As commissions shrink, this is the business model for pretty much all online brokers now:
1) Interest on idle cash (can be minimized as you can auto-invest all idle cash in the investment account)
2) M1 Borrow (margin loan interest)
3) M1 Spending (debit card generates fees for them)
4) Payment for order flow (same as Robinhood and TD Ameritrade)
5) M1 Plus (premium subscription that gets you higher interest rates and debit card cash back).
Free 1-year trial of M1 Plus. Their paid premium subscription service costs $125/year but includes perks like earning 1% on your checking account. Right now, they are also offering a 12 month free trial, but you will be charged for the second year at the full price at the end, so mark your calendars.
Get a one-year free trial of M1 Plus
Unlock the full power of M1 and get extra rewards when you sign up for a free one-year trial of M1 Plus. Don’t wait, this limited-time promotion ends 1/31/2021.
M1 transfer bonus. Transfer an outside brokerage account or IRA to M1 and earn up to $4,375 plus some branded swag. Limited-time offer. Details here. Here are the bonus tiers:
Bottom line.M1 Finance is a new brokerage account that acts like a free, customizable robo-advisor with automatic rebalancing into a target portfolio. I deposited part of my annual Roth IRA contribution with them.
Disclosure: I am now an affiliate of M1 Finance, and may be compensated if you click through my referral link and open a new account.
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