- So in this video here,
we're going to be doing a short review of the M1
Finance investing platform. Now I already have done
a review of this app on my channel, but that was
a close to 20-minute review, and so maybe you don't have 20 minutes and you're looking to make a decision on whether or not the M1 Finance
app is or is not for you. So we're gonna make sure this
video is a lot more concise and we're gonna get straight
into the main points here of what makes M1 Finance
unique and what ultimately makes this a brilliant investing platform. Now most people out there, when they think of these free investing
platforms, think of Robinhood because they are ultimately
the most well-known commission-free trading platform. They kind of pioneered this new industry of the commission-free stockbroker, but now there are a number of
different worthy competitors, M1 finance being one of them,
and we're gonna focus on what M1 Finance offers the investor that is above and beyond what
you will find with Robinhood and other free stock
trading apps out there. And at the end of this
video, if you do decide that you want to sign up
for an M1 Finance account, I do have a link down in
the description below. It is an affiliate link, you
guys don't have to use it if you don't want to. But that being said, let's
get right into the review here and talk about the five biggest things you need to know about M1 Finance. Now a lot of these features
and benefits offered by M1 Finance are a bit
difficult to explain, so I'm going to be using
my crafts that I made here to better explain what
M1 Finance is offering. And number one, we're starting
off with fractional shares. M1 Finance is unique
because it's allowing you to buy fractional shares of stocks like Amazon or General
Electric, for example, rather than having to buy
whole shares of these stocks, but you might not understand
why exactly this is necessary. But the reason behind this
is a stock like Amazon trades for around $1500 per share while a stock like General Electric trades for just $10 per share. So this becomes a problem for investors if you're looking to invest a small amount of money in Amazon, you would
ordinarily have to spend at least enough to buy one
whole share of that stock. But M1 Finance allows you to own and purchase a fraction of a
share of a stock like Amazon as little as one
ten-thousandth of a share. So instead of buying an entire
share of a stock like Amazon, you can buy a fraction
of a share free of charge through M1 Finance as
little as one ten-thousandth of a share, and this is
ultimately going to make it easier to get into high-barrier
stocks like Amazon and allow you to build
a more well-diversified and balanced portfolio. The second thing you have to understand about M1 Finance is that
they are offering you what is called pie-based investing. So your portfolio is an
investment pie with an M1 Finance. So for example, we're looking
at this small portfolio I've created and we have some
of my money in Amazon stock, some of it's in Microsoft and Apple, and then the Vanguard S&P 500 fund and as you can see, 50% of
my money is in Vanguard, 30% is Amazon, 10% is
Microsoft, and 10% is Apple, and again, thanks to
those fractional shares, I'm allowed to own a
fraction of a share of Amazon and a fraction of a share
of Microsoft and Apple, allowing me to have this
well-diversified portfolio here of tech stocks at a
dollar value of just $100. Now if you are not interested
in building your own portfolio from scratch, which a
lot of people aren't, you can take advantage of
these M1 finance expert pies as you can see here. There are multiple different categories. There are general investing,
specific plans for retirement, there are income earners,
there are hedge fund followers, or there's also allocations
of just stocks and bonds if you wanna keep it simple. So let's go ahead and
open hedge fund followers just to give you guys an example. You can replicate the
strategies of Berkshire Hathaway or Icahn Capital, for example, without paying any fees to M1 Finance. That is one of the most
brilliant parts of this platform is everything you're seeing
here being offered to you is being offered fee-free from M1 Finance. They do not charge any fees. And this is great, too,
for retirement investors because they have specific
plans for retirement where you can do a target-date fund, where you simply put in the
year you are looking to retire and you can invest in a
portfolio specifically designed for that retirement goal. So for example, a 2060
retirement, you could choose between a 2060 aggressive, conservative, or moderate portfolio, and
each one of these will share with you details about the holdings as well as the performance
of each of these funds. So through M1 Finance, you can invest in one of these expert pies. They have over 80 of these, all kinds of different types of investments, or you can simply build your
own portfolio from scratch containing up to 100
individual stocks or ETFs. Okay, so the third thing
we need to understand here about M1 Finance is that they are offering what I would call a portfolio-level drip or dividend reinvestment plan. Now a lot of people may have
no idea what a drip even is, so let's start off by
explaining what that is. Well stocks like Apple, for
example, pay quarterly dividends and Apple pays a quarterly
dividend of $0.73 per share. So let's say, for example,
you owned a thousand shares of Apple, that means that
you would be collecting a quarterly dividend payment of $730. Now what do you wanna do
with that dividend payment? Some people collect it in
cash and they receive a check in the mail, but other people decide to reinvest that back into the stock. That way you can own more
Apple and ultimately experience more growth and earn more
dividends in the future, allowing you to earn compound interest. So if you took that $730 dividend payment and reinvested it back into
Apple stock that quarter, you would have an additional
4.2 shares of Apple, giving you a total of 1,004.2. This is what you call a stock-level drip or dividend reinvestment plan. Now let's go ahead and explain
what a portfolio-level drip would look like with M1 finance
and let's say, for example, you had a portfolio of
1,000 shares of AT&T and a thousand shares of Apple. Well in M1 finance, your
portfolio would look like this, where 85% of your money was
in Apple and 15% was in AT&T. The reason behind that is
Apple trades for around $170 per share, while AT&T trades
for around $30 per share. So when those 1,000
shares of Apple pay out that same $0.73 dividend, you're gonna have a $730 dividend payment being reinvested back into this portfolio. The difference being, $620.50
is going to go into Apple and $109.50 is going to go into AT&T because they're gonna put 15% of that dividend into
AT&T and 85% into Apple. This is the difference
between a stock-level dividend reinvestment plan and a portfolio-level dividend reinvestment plan, where those dividends are
going to be reinvested across the entire portfolio according to the allocations that you set. The fourth thing you have to understand about M1 Finance is that there are a lot of built-in automation features, and one of these is automated deposits on a regular basis, so if
you wanted to add $100 a week or $100 a month to your
M1 Finance account, you could easily do that. However, the other feature
that is interesting here for M1 Finance is the feature
of automated rebalancing, and this comes into effect when you are looking to add
more money to your portfolio to balance it out back
to where it should be. So let's say, for example,
you started off here with a portfolio of 50% Apple
stock and 50% Amazon stock. This is what it would look like on day one when you created that portfolio. But let's say 30 days later, you open up your M1 Finance account, you're looking to add more money to it, and you find that 46% of
your money is in Apple and 54% is in Amazon. This is because stocks do
not perform the same way at the same time and
you're going to experience this drift within your
portfolio and it's up to you to rebalance this portfolio in most cases. However, with M1 Finance,
as you contribute more money to this portfolio, you can
rebalance your portfolio, or you can simply log in and
click a button to rebalance. However, you don't want to be overdoing it with the rebalancing because
that could be causing short-term capital gains
within your account, but if you are rebalancing
by adding more money to it, you wouldn't have to worry. So if, for example, you
were to put another $100 into this account, you
would see more of this going into Apple and
less going into Amazon to get you back to that level of 50/50 and getting back to those baseline numbers you set up with your portfolio. And then number five, the fifth
thing worth mentioning here, is that M1 Finance offers
retirement accounts. We already saw those when
we opened up the app, when I showed you guys those expert pies. You can invest in these target date funds or pretty much any M1 Finance investment through a retirement account. And the reason why this is such a big deal is because they are the
only free brokerage account that I have come across that offers these retirement accounts
at this point in time. Now if you're looking to open
an account with M1 Finance, there is a $100 minimum balance to open a traditional
account or a joint account. And if you're looking to
open up a retirement account, it is going to be a $500 minimum balance. Now beyond that, there are no fees associated with M1 Finance. They don't charge any kind
of asset management fee. There are no other strings attached or hoops you have to jump through. It is a very simple, easy to
understand investing platform that is geared towards
the long-term investor. Now retirement accounts in
and of itself is a topic for a completely different video. I actually just recently did a video on how you can become
a tax-free millionaire by using a Roth IRA, which
is one of the accounts offered by M1 Finance so
I'm gonna link to that video down in the description below if you're looking to learn more. But anyways, guys, that's
gonna wrap up this video. Those are the five biggest things you need to know about M1 Finance. If you guys are interested in
opening an account with them, like I said, I have an affiliate link down in the description
below if you want to use it and help me out and support me for putting this video together. But thank you guys so much
for watching this video. I hope you enjoyed it and I will see you in the next video.
