M1 Finance Review 2021 | Pros + Cons | My M1 Finance Portfolio Revealed

all right everybody i'm logan alec i'm a cpa and in this video i am reviewing the m1 finance investing platform for the year 2021. you can use this platform on both desktop as well as mobile through their app i personally started using m1 finance way back in december 2018 i started depositing a hundred dollars a day into a mix of small cap and mid cap ets because i thought my portfolio at fidelity where most of my stocks are was underweight in small caps and mid caps my m1 finance now has about 45 000 in it today i originally had four etfs in there vbk vot ijr and spsm but the vanguard ets were blowing the other two out of the water in terms of returns so i decided to dump the other two actually at a loss believe it or not and transfer those funds to my chase student best account that i'll probably talk about in another video but basically i've been using m1 finance for over two years now and i feel pretty confident in reviewing this platform by the way if you're interested in signing up for m1 finance i'd appreciate it if use my referral link below in the description because you will get a bonus if you do so i'll get a bonus as well it's definitely a win-win for both of us and it's a great way to support the channel but let's get into the review here first thing you need to know about m1 finance is that there is a free version and there is a paid version if all you want to do is automate your investing the free version gets the job done you can create your pies i'll explain what pies are in a minute you can link up your bank account and you're good to go to start automating your investing through m1 finance the paid version is called m1 plus it costs 125 a year i do use m1 plus and i will tell you white later in this video but just for now just note the free version is all you need if you're just looking to do set it and forget it investing through m1 finance and really that's what m1 finance is all about set it and forget it investing because here is how m1 finance works for each account you have you create what m1 finance calls a pie your pie consists of various investments etfs or stocks if you don't know what an etf is watch my investing for a video the link at the top of the screen so you tell m1 finance hey i want my pi to consist of you know 10 percent or whatever percentage you want this is just an example i want my pi to consist of 10 of the stock 25 of that stock 20 percent of that etf 40 of that etf and 5 percent of that etf over there that's just an example i typically don't mix stocks and etfs in the same pie you can certainly do that if you want but that is just an example each pie can have a maximum of 100 securities in them or it's m1 finance calls them slices in each pie and what your pie is essentially doing is telling everyone finance okay i'm going to finance whenever i deposit money into my m1 finance account i want you to allocate that money based on the percentages in my pie so for example in my pie here it's 50 vot vanguard mid cap growth etf and 50 vbk vanguard small cap growth etf whenever i say deposit 100 into this account m1 finance will allocate that hundred dollars in such a way so as to get the value of eot to be 50 my account and and vbk to be 50 of my account right or as close as they can without having to sell so when you make your first deposit into m1 finance and your first deposit has to be at least 100 subsequent deposits can be little as little as 25 but you can't actually tell m1 finance to automate uh you're investing until you have a cash balance of at least 25 in your account anyway when you make your first deposit into m1 finance for a hundred dollars actually or let's use a thousand dollars okay that's probably a little easier um let's say you have a pie similar to mine and you deposit a thousand dollars into it and one finance is going to in that case purchase 500 worth of vot and 500 worth of vbk let's say your vot goes up to 550 your vbk goes down to 450 just to make the math easy and then you deposit another hundred dollars in that case m1 finance would allocate that 100 entirely to vbk to make what you have in vbk equal to what you have in vot because you you told m1 finance you want this portfolio to be 50 vot and 50 vbk now notice that i have not referred at all to the actual etf price of vbk or vot and that's because it doesn't matter when you set up pi is an m1 finance m1 finance buys fractional shares of the stocks and etfs you selected for you so as to get your allocation in your account as close as possible to the percentages you allocate in your pie so if you think oh man i can buy tesla stock right 700 bucks right now well yes you can just put it in an m1 finance pie so that's m1 finance pies in a nutshell takeaway if you're looking to day trade m1 finance is not the platform for you m1 finance is for people who want to be able to customize their investment portfolio through the use of pies by the way it's super simple to create a new account with a new pine m1 finance okay you simply click the top right click add account boom new account for you you can create a whole new pie in that one even if you already have you know your old pie another account so like i was saying m1 finance is for people who want to customize their investment portfolio through pies and then basically make recurring deposits or a one-time deposit uh or both right into their m1 finance account or account and m1 finance does all the investing work for you without you even have to think about it you just have to keep dumping money into their platform now speaking of recurring transfers you can set up a recurring transfer to be taken out of your checking account and put into your m1 finance account on a weekly basis bi-weekly basis monthly basis you can even set them up on a daily basis like i do or at least daily through monday through friday by setting up five weekly deposits one to hit on monday one hit on tuesday one hit on wednesday one day on thursday one hit on friday so ultimately customization and automation are the biggest pros of m1 finance you can customize exactly what you want to invest in and automate those investments from your bank account seamlessly however with this customization and this automation you give up timing you cannot time your trades throughout the day for free accounts m1 finance has one trading window and that begins at 9 30 a.m eastern time when the market opens and will run until all orders have been completed you can't tell m1 finance okay pull the trigger on my buy order right now i want you to buy right now no that's not how m1 finance works there's none of that there's no limit orders and one finance will execute your order when it executes your order in my opinion the whole point of m finance is for you to be able to set and forget you're investing not to obsess over it and m1 finance does this very well that's that's why i've kept this account for them for over two years and i still make recurring daily deposits into this account also in terms of dividends one thing to note that m1 finance automatically reinvest your dividends into their underlying securities well it's not exactly automatic how it works is that the dividends are added to your cash balance for that particular account and assuming you have auto invest turned on in that account right then when your cash balance in that account that's the combined dividends and other deposits you've made reaches the minimum threshold you've set your cash will be automatically uh invested subject to the minimum threshold so let's talk about automatic investing real quick so if you're in your m1 finance account and you have auto invest turned on that m1 finance will auto invest the cash balance in your account again like i said comprised of the deposits you've made into the account as well as dividends you've received in your account now once your cash balance hits 25 plus whatever amount you've set as your minimum cash balance m1 finance will auto invest that cash so for example in my case my minimum cash balance is zero dollars so that means that when the cash balance of my account hits at least 25 and when finance will automatically invest my cash balance into my pie if i put 100 here as the minimum that means that m1 finance will automatically invest the excess of my cash balance over 100 once my cash balance hits 125 basically 25 is the minimum auto invest for m1 finance all right let's talk about one more thing here before i want to talk about m1 plus which is the paid version of m1 finance but first let's talk about m1 borrow so with m1 borrow you can actually borrow up to 35 of your account value at an interest rate that's right now only 3.5 percent that's really low you can basically do with the click of a button by the way only taxable accounts qualify for m1 borrow so if you have a roth ira or traditional ira one finance you can't borrow against that but you can borrow against your taxable accounts there now because i'm an m1 plus member i can borrow against 35 percent of my taxable portfolio at 2 interest instead of 3.5 right which you get if you're using the free version that's pretty cool because you can use this money for whatever you want right oftentimes other margin accounts and other brokerages you can only use margin to buy stocks in your account with m1 borrow you can take that money and spend it on whatever you want i typically invest it right because two percent it's it's such a low interest rate and i can invest that in other things and get a higher return than two percent this is not a recommendation by the way please keep in mind that investing has inherent risks and borrowing to invest amplifies that risk so unless you have a very stable financial footing right now borrowing to invest in this way is not something i would necessarily recommend other benefits of m1 plus that's the paid version of m1 finance is that instead of only the morning trading window m1 finance gives you an afternoon trading window that you can use if you choose or you can use both if you have more than twenty five thousand dollars in your portfolio also if you have m1 plus then you automatically have m1 spend which is basically m1 finance's checking account free checking account gives you one percent interest as of right now one percent cash back on qualifying debit card purchases um basically i use m1 plus for the very low two percent interest rate right in which i i can borrow against my portfolio now if you have debt at a higher interest rate than that you can pay that off with this two percent money right obviously you run the numbers between two percent and three and a half percent taking into account the m1 plus hundred twenty twenty five dollars annual fee but bottom line i'm very happy with l1 plus i'm very happy with m1 finance in general let's just go over the pros and cons of m1 financial quickly pro number one m1 finance is free or at least it has a free version that gets the job done if all you want to do is to set it and forget it investing there's no fee to use the free version hence free and there are no trading commissions which is basically par for the course at this point in terms of online brokerage accounts pro number two customization m1 finance offers completely customizable portfolios or pies as m1 finance calls them if you watch my video on investing for beginners you know that i'm a big fan of etfs not putting all your eggs in one basket with m1 finance you can essentially create your own etf through its pies as i explained previously pro number three automation m1 finance makes it incredibly easy for you to automate your investing into the platform on a daily weekly bi-weekly monthly whatever basis you want to so you can spend less time on your investing and more time doing the things you love in life or making more money to put into your m1 finance pies pro number four you can set up iras and m1 finance so in addition to the taxable brokerage accounts that i spent most of this video talking about you can also set up a traditional ira or a roth ira or a sep ira at m1 finance con number one learning curve if you're used to robin hood or td td ameritrade or fidelity or most other online brokerages where you deposit your money you select the stock you want to buy you put the quantity you want to buy you set your limit price you press buy that ammon finance is gonna look new to you with the whole pie system and all that but i would urge you don't let that be a turn off it's really not that tricky you just have to kind of get used to the pie terminology and set up call number two timing you cannot time your trades in any specific manner whatsoever and when finance will execute your order when it executes your order during the next trading window and that's it call number three it's tricky to buy individual stocks let's say there's this dip in a stock and you want to take advantage of that dip and buy it on the dip because you think this dip is overblown you know it's not warranted you want to get in at a lower price if you're in robinhood or chase you invest or most other online brokerages what would you do you log into your account you assume you have cash in your account you buy the stock with m1 finance it's trickier to do that you would have to create a pie for that stock or add that stock to an existing pie kind of calculate what you want the percentage to be based on how much money you want to put into that stock and then what happens m1 finance will execute your trade not immediately but during the next trading window which if you if you have m1 plus could be in the afternoon or the morning but if you have the free version it will be the next day right when the stock market opens up at 9 30 a.m eastern time in that trading window at which point the stock you wanted to buy the dip for may have already bumped up or may have gone down even more right but my point is and this is kind of related to the timing issue here but you simply don't have as much control surrounding the specific execution of specific purchases at specific prices of specific securities as you do with a more traditional brokerage account platform but in return you get the customization and the automation client number four account types are limited like i mentioned previously as a pro you can set up iras and m1 finance and that's great but you can't set up say an hsa a coverdell esa a 529 or a solar 401 k which can all be great accounts if you'd like to learn more about my views and which accounts to prioritizing your investing be sure to check out my course called the money course link is in the description below alright everybody that is my 2021 review of the m1 finance investing platform let me know your thoughts on this platform in the comments if you have any thoughts on m1 finance and on the screen that follows you will see links to other cool videos namely the one on investing for beginners and also my video on seven investment terms you should know be sure to check those out and i will see you over there in those videos bye [Music] [Music] you

Channel: Logan Allec

Views: 23,281

Rating: 4.8627005 out of 5

Keywords: m1 finance, m1 finance investing, m1 finance platform, m1 finance review, m1 finance review 2021, investing software, investing, investing platform, m1 finance walkthrough, m1 finance pros, m1 finance cons, m1 finance pros and cons, how to use m1 finance, how m1 finance works, investing for beginners, free investing platform, free investing software, how to invest with m1 finance, investing applications, investing apps, apps for investing, m1 finance for investing, invest

Id: XNMhp9xeNq8

Length: 13min 34sec (814 seconds)

Published: Fri Feb 26 2021