M1 FINANCE REVIEW 2021 - Stock Market Investing Made Easy!

hey everybody welcome back to whiteboard finance my name is Marco and I'm here to help you master your money and build your wealth in today's video we're going to be reviewing m1 finance going into 2020 and why I think it's one of the best Robo advisors and traditional brokerages it's kind of like a hybrid for beginners to start investing okay we're going to talk about what it is we're going to talk about its unique pie and slice portfolio system we're going to talk about pros and cons of the platform we're going to talk about a live demo and I'm also gonna give it the Marko's score at the end of that demo and for those of you that are looking for a little bit longer format that really want to decide if this is for you or not I've actually taken the time to create about a 25 minute free training going through all the nuances of m1 finance from starting your portfolio to picking your first investments so if you want to take part of that free training check out the link in the description below so without further ado let's get right into explaining what m1 finance is so what is m1 finance m1 finance you may have heard of it I personally use m1 finance as my brokerage for my own retirement account my SEP IRA to be exact and again I'm putting my money where my mouth is and I have first hand user experience so I can review m1 finance objectively in an unbiased way I'm not getting paid to review this I'm just trying to give you all your options out there so m1 finance is a robo-advisor and traditional adviser kind of mixed into one so it's a traditional brokerage model with the robo-advisor aspect meaning that you can still choose your own investments except that they automate it so it's kind of like a mix between like a vanguard and a betterment and in my opinion this is the best of both worlds especially for beginners who want to start investing so what they do is they give you a weighted portfolio so when I say portfolio think of a pie and within that pie which I'm going to go into but just for a quick example you have different slices so picture these four different slices this could be Amazon stock Apple stock it could be a vanguard ETF there's a million different things that you can invest in with m1 finance and I'll go into that later so you can add different weights to these slices meaning that if you want 99 percent of your portfolio to be invest an Amazon stock and 1% in bonds and when Finance is automatically going to weight that and invest your money accordingly so it's really a nice hands-off approach to investing the best thing about this is that there's absolutely no fees it is 100% free to use and you know only need about $100 to start okay now they also offer a debit card which I believe earns about 1% cash back on all purchases they also have a checking account which is all digital it's FDIC insured and that gives you 1.5% annual percentage yield and they also have a lending arm so say for example if you have a minimum of $10,000 in your m1 finance trading account you can actually put that on margin and borrow from yourself paying m1 finance at the time of this recording three point five percent or three point two five percent so say you need a car loan or you know say you need thirty five hundred bucks you can take that out of your ten thousand it'll stay in the margin account and you can actually pay interest on that thirty five hundred dollars that you borrowed that's not the point of this video the point of this video is to talk to you about the different ways you can invest with m1 finance but that is another nice little added bonus okay so m1 finances biggest selling point is that they simplify investing to the point where anyone can use it it's very simple they do this by creating what we call pies so think of you can have any number of pies in your portfolio I like to keep my SEP IRA which you'll see here at the live demo just in one pie and all the slices within those pies are just individual securities that you're investing in those could be ETFs index funds stocks you know funds anything anything in there the only thing that m1 finance does not have is mutual funds okay so the nice thing is is that they don't attack on additional fees okay so if you're investing in a Vanguard ETF or the expense ratio is you know point zero eight percent for example m1 is not going to tack on on top of that you're only gonna be paying what the expense ratio is of the fun that you're investing in so if that sounds kind of high level let's just simplify this so pretend this is your first pie okay we'll call this Marcos pie Marko's pie smiley face and I want to invest in four stocks to start off with I would never recommend investing in four individual stocks but just for the sake of simplicity let's use Microsoft MSFT let's use Amazon AMZN let's use Apple AAPL and then let's also use Tesla because that's all the rage these days so what you can do within this pie is that you can actually add weights to what individual asset you want to purchase so as you can see here these are four individual slices so each one of these slices is 25% 25% 25% 25% I can weight this portfolio however I want as long as it adds up to 100% so say I want 97% Apple and 1% Microsoft 1% Amazon 1% Tesla what m1 finance is and allow you to do is say for example you have a thousand dollars to invest okay and they go into Marcos pie if these are all 25 percent every time I deposit money and have Auto investing turned on two hundred fifty bucks is gonna go to Apple 250 is gonna go to Microsoft 250 is gonna go to Amazon and two fifty is gonna go to Tesla makes sense now what the cool thing about m1 finance what it does is it allows you to buy fractional shares and it also dynamically rebalances your portfolio on its own okay so fractional shares everyone knows that Amazon's share price right now is roughly twenty one hundred dollars per share at the time of this recording so you're probably wondering to yourself well if you're only depositing a thousand dollars how can you possibly buy you know this Amazon stock you can't afford it well I'm on Finance trades two times a day they have one block in the morning one block in the afternoon these fractional shares allow you to buy $250 or 25% of your initial investment whatever the equivalent that is of Amazon stock okay so it's pretty cool you're gonna get $250 worth of am it may not be a full-share it may be something like a fraction of it however you're still owning Amazon stock which is pretty cool now what is dynamic rebalancing so dynamic rebalancing is your gonna assign these target weights you want 25% of your portfolio Amazon you want 25% Microsoft etc etc so what happens if Microsoft has a poor earnings report and their stock tanks but Tesla is kind of shooting through the roof like it has over the past couple of weeks so m1 finance the algorithm is smart enough to know that hey Marco wants to keep a weighted balance of roughly 25 percent of his portfolio in each one of these stocks so it's gonna buy less of Tesla the next time you go to invest money it's gonna buy less of Tesla because this has a heavier weight in your pie and it's gonna buy more of Microsoft to keep that equilibrium does that make sense so this is pretty much my eyes in a nutshell so what we're gonna do is move on to the pros and cons of the platform before this review gets too long and then we're going to go into the live demo okay so now that we join me for the pros let's go over these real quick some of which I've already mentioned and if you do feel that m1 finance is the platform for you please use my affiliate code in the description below it comes at no additional cost to you and I do get a small kickback these reviews are 100% objective they're not paid by anyone I'm not getting paid to do this but I do choose to do these reviews for free so for my time and effort if you do decide to open up an m1 account please use the link below so let's get into the pros number one especially for beginners is that there's no fees so as your portfolio grows over time typical financial advisors they're gonna charge you 1% to 2% which is incredibly expensive especially in this day and age where most of this stuff can be done by a beginner ok you don't necessarily need a financial advisor unless you have heirs trustees you know your mega wealthy ultra wealthy but for the average middle-class person or lower class or upper-class you can do a lot of this stuff yourself so instead of paying these fees these are gone and as your portfolio grows over time you're going to be saving tens of thousands of dollars per year once your portfolio gets into the six and seven figures okay number two is fractional shares so pretend you're the 19 year old kid who's working a summer internship you know you got maybe like a couple hundred bucks in the bank you can still invest in companies that you truly believe in like let's call it Amazon for example whose shares are very expensive you can still invest in Amazon using em ones fractional shares okay that's a huge advantage to people that want to get skin in the game in the market the third is expert PI's so I didn't mention this in the previous section of the video talking about the PI's but M one actually already offers you pre-made expert PI's and you can choose to base your whole portfolio off that or you can choose a fraction of it to be just a slice within your portfolio the flexibility is incredible with M one so these expert PI's there they fit into many different categories you can have retirement you can have income you can have general investing and I'll show you that in a live demo but these expert PI's allow for huge diversity and diversification within your portfolio the fourth one we're looking at is dynamic rebalancing which we've already talked about it is a pro but it also is a double-edged sword it is a con as well so let me explain if you remember in my previous example with Microsoft dropping and Tesla increasing what if you have some like crappy penny stock in your portfolio and you're investing $1,000 a month well when the crappy penny stock tanks a majority of that thousand dollars is going to go to bring up that penny stock to your target weight that you have it's set as so instead of it going 250 250 250 250 into those four equal slices it may be eight hundred you know 50 50 50 or whatever the math is on that okay so you may want to be careful about having some dogs in your portfolio and you can always turn off auto investing off but I keep it on just because it's easy it's set it and forget it and then finally no minimum deposit so going back to the example of the young kid who has the summer internship doesn't have that much money he can still get skin in the game with a with no minimum deposit and I believe the minimum to start investing is $100 and then the minimum after that is ten dollars so say for example you get some dividend back from your portfolio if you have auto invest on that ten bucks is automatically going to get distributed just like that thousand dollars was in our previous example so let's go into the cons of m1 finance there aren't that many but there are definitely some I need to talk about okay so right now m1 finance sounds like an awesome platform you're ready to invest again using the link below all joking aside it's how it's how I make a living you guys just help me out here but there are definitely some cons that we need to address so the first one is that there are no mutual funds so I mentioned this in the very beginning of the review there's ETFs there's index funds there's individual stocks there's a lot of different options to invest in however they do not have mutual funds and that's okay because with a lot of Vanguard ETFs they're pretty much the mutual fund equivalent just with maybe a slightly higher expense ratio so this one isn't even that big of a deal but just to be fair and balanced I do need to talk about that second the unintuitive desktop user interface so I take this with a grain of salt when you're first starting on the desktop it may be a little bit confusing as to how to buy stocks and add them to your portfolio but once you learn it once it is easy it's super cake it's you don't have to worry about it at first I was kind of confused as to you know how I'm adding slices and how I adding how I'm adding stocks to my portfolio this is something I needed to mention up front but once you get used to it it is super easy the third is that there is no tax loss harvesting so if you're used to like a betterment so first let me explain what tax loss harvesting is tax loss harvesting is if you're using a robo-advisor and not even you really need to use a variable advisor but most robot Robo advisors perform this they'll they'll take basically investments that are losing you money and knowing when to sell them that way you're optimizing your taxable capital gain or loss for that year ultimately saving you money in taxes it's basically asset allocation but when in terms of taxes okay and if that wasn't a good explanation just google it and then fourth you have manual rebalancing in taxes the reason I wanted to talk about this is because if you hit the rebalance button which I'm going to show you in the live demo it's going to automatically rebalance your portfolio to your target weights and that may cause a taxable event because they may sell the stocks that you have a capital gain on and it may actually sell stocks that you may have a capital loss on but it shouldn't it meets all those target weights that you're gonna set so say for example you bought Amazon at just for easy numbers thousand bucks and it went up to 1300 and it's out of weight in your portfolio for your target if you hit rebalance manually which I advise you do once a year anyway so things don't get out of whack too much it's gonna cause a taxable event because you're gonna have the capital gains you bought at a thousand it sells for 1300 you have a capital gain of 300 dollars which is a taxable event so if you don't hit the rebalance button and the the shares are underweight there is no tax and one Finance is automatically gonna rebalance if you sell the overweight slices are gonna get sold which is a taxable event which I just mentioned and then if you hit the rebalance button sales will be made which is a taxable event so I'll show you that in the demo it's gonna make a lot more sense here in a second so without further ado let's get right into it hey everybody thanks for joining me in the live demo real quick I'm just gonna fly through this platform you know I'm not gonna take too much time and go into every nuance again if you are looking for the free training or something that's more longer format check out the free training link down in the description below and also again if you feel like signing up for m1 Finance I hope this review helped please use my link in the description below again I will receive a small commission if you do that so very quickly let's fly through this when you sign up for your account you're basically give your information you're gonna link a bank account and you're gonna make your first transfer however what they want you to do is to create your first PI so this is my actual SEP IRA retirement account and I will be turning this into a weekly series where I actually pick different stocks that I want you guys to vote on and the stock with the most votes and the most compelling arguments from you I will actually purchase that at the end of the week so I'm gonna run a poll on the community settings of my youth to channel on a Monday and by Friday I will purchase those securities with the highest votes and the best logic behind them so I do want to get you guys involved with that being said I have basically 230 dollars a week going into this which is the equivalent of roughly a thousand dollars a month which is the equivalent of twelve thousand dollars a year so this is my PI again you can have as many pies as you want but this is my retirement account I only want one pi easy to manage very simple okay so these are all the individual slices within my PI so you can see here I have Vanguard real estate aye Vanguard dividend depreciation I have long term bonds these are the actual representations of the PI and then there's my target weight so my target weight is what I would like the slices to be at the number down here is what they actually are okay so I'm gonna actually introduce my little series in a different video so I'm going to spare you the time here but very quickly you can see here that you have a buy and sell button you have a rebalance button that's what I was talking about with the tax loss or excuse me the capital gains and the taxable events and then also you can edit your PI so you click Edit this is where you can actually edit the different percentages and you can see that slice getting bigger smaller you know you can add whatever you want so you want to add a new stock there you go you click Add and boom you can search from all these different securities so very quickly these are the different funds they offer these are all institutional grade funds these are all your PI's this is my retirement so that series is gonna be me trying to build a dividend income portfolio that pays me a thousand dollars a month passively in retirement and this may or may not be a Porsche 911 fund we'll see if I can afford it great if not no big deal these are the expert PI's I was telling you guys about you have general investing you're planning for retirement you have responsible investing income earners etc etc etc so if you click into income earners for example they give you all these different expert PI's with the number of holdings the dividend yield the performance over one three and five years and then you also have the risk level so if I click on global dividend this is their expert PI and you can actually look at exactly what this is investing in the different slices of this pie now if I really like this pie I click Add to basket there's global dividend add boom and now you can actually have this as a slice of your own pie if I wanted to add this expert pie as a slice within my own Marcos retirement pie you can do that easy peasy lemon squeezy so you have spend which is what I was talking about with the debit card which earns one percent cash back the checking account earns one-and-a-half percent annual percentage yield and then it's also FDIC insured you have borrow which is a minimum of 10 grand in your portfolio you can borrow up to 35 percent of your individual or joint point for portfolio excuse me at a rate of 3.5% or 3.25% for m1 plus then you have the research tab which I just showed you you have market news stocks funds etc etc and that's pretty much it they cannot get any easier than m1 finance and this is why I absolutely recommend it for beginners but let's go into the Marco score and see what score I ultimately gave this so if you can see the screen right now I reviewed betterment in the past I reviewed fund rise in the past now I'm doing m1 finance from a commissions and fees standpoint this is a no-brainer it is literally free that free actually means free in this case it's kind of crazy customer service I gave it a 7 because I did email them a few days ago to delete one of my individual accounts and it's been about three or four days now and that still has not happened so I want to give them the benefit of the doubt so I'm gonna give them a 7 in this regard ease of use couldn't be any easier once you figure out the actual platform and how to use it it's cake it really is super easy you guys tools and resources they give you a lot of good things with news categories descriptions charts and you also are able to invest whatever you want edit charts and then the investment options the only reason I gave this an 8 is because mutual funds are not able to be invested in with m1 finance asset allocation it's an 8 half very simple with the expert PI's a lot of diversification a lot of different things that you can invest in in a lot of different ways you can do that the flexibility of the slices and the weights and all that stuff and the dynamic rebalancing I decided to give this an 8 and a half so ultimately the Marco score is at a fifty one and a half putting it in second place fund rise is a completely different animal this is not stocks this is real estate so that doesn't really matter betterment did edge it out even though I think that betterment was my first review the main differences were that had tax loss harvesting and that the investment options were a little bit better and then the customer service really did edge it out however from a beginner's investing standpoint I actually like m1 finance better than betterment because betterment you can't really pick your own investments with m1 finance you can so I may need to revise a couple of these scores here so that's pretty much that you guys I know this was a longer review if you stuck until now please use the link in the descriptions below it really helps me when you do that and as always have a prosperous day [Music] you

Channel: Marko - WhiteBoard Finance

Views: 114,346

Rating: 4.962131 out of 5

Keywords: whiteboard finance, m1 finance review 2020, m1 finance app review, m1 finance ira review, m1 finance honest review, m1 finance, m1 finance tutorial, m1 finance dividend portfolio, m1 finance roth ira, m1 finance portfolio, m1 finance pies, M1 finance vs robinhood, m1 finance app, best investing app, best investing apps 2020, m1 finance review 2021

Id: nWXAMekob-w

Length: 21min 18sec (1278 seconds)

Published: Sun Feb 16 2020