- The biggest excuse that most people have when it comes to not investing is that they don't have enough money. Jeff, I have to wait
until I have money saved before I can invest. Know what? That is wrong. I'm gonna show you why that's wrong. I'm gonna show you how
you can open an account with zero money and get
started for as little as $100. Let's find out how you
can do this right now. (upbeat music) What's going on y'all? So by far, one of the
most requested videos that you've been wanting me to do is to review different
investment platforms, different apps, but by
far the most requested of all of these is M1 Finance. Now M1 Finance, they are
an investment platform that allows you to buy stocks and ETFs. But that isn't a huge
shock or a huge surprise because there are already
investment platforms that allow this. You can buy stocks and ETFs
through Allied Financial, E-trade, TD Ameritrade. There are even investment
apps like Robin Hood that already allow this. So why M1 Finance? Why are you requesting me to review it and why am I even spending
my time talking about it? And the reason is this. So with M1 Finance, you can buy stocks and you can buy ETFs and there
are no transaction costs. I'm sorry, what did you say? That's right. There are no commissions. There are no transaction costs. There are no trading fees. There are even no account fees. You can open an account
with M1 Finance with nothing to get started. You can open an account with zero and then when you make your first trade, there are no costs involved. Now that's a bit of crazy town but that is why we are talking
about M1 Finance right now. So you have to realize that
I come from the old school of brokerage firms. When I first started
with my brokerage firm, to buy a stock, to sell
a stock, you had to pay a pretty good chunk. I can remember, this was an older client that had about 10 or
$20,000 worth of this share, of this stock and when
they wanted to sell it, even if I gave them a
discount on that commission, it was like several hundred dollars that they had to pay
just to sell this stock. Now this was like 10 years ago and maybe trading costs have come down but I tell you what, you're
not gonna open an account with any Wall Street firm
where you can place a trade and they're not gonna charge you anything. Like, I promise you. They're going to charge you something and it's gonna be a lot
more than what you think because that's how they make their money. So to have an investment
platform like M1 Finance that allows you to buy
a stock, to buy an ETF and to pay zero transaction
costs, like this is huge. And this is why I wanna do this video and just talk about M1 Finance and what are some of the benefits and who is it right for and
also who does it not work for. Because there are some pros and cons with this investment platform. Alright, so let's talk a little
bit about who is M1 Finance. So M1 Finance is an
investment advisory firm that originated back in 2016. So they are still a little
bit newer on the block. ♪ You got the right stuff ♪ ♪ Baby ♪ ♪ Love the way you turn me on ♪ But even though they started back in 2016, they already have over
100 million of assets under management. So that shows that they are growing and growing rapidly. As far as what types of
accounts can you open with them, so you can open up an individual account. You can open up a joint
account if have a spouse. You can open up a trust account. They also offer retirement
accounts with a traditional or a Roth IRA. So whether you wanna do it after
tax with a trading account, with an individual account
or you can set up a Roth IRA and you know how much I love the Roth IRA and if you don't, you can
check out my other video where I talk about how to
become a Roth IRA millionaire right now. So go ahead and check that out. Other than having zero trading
costs, zero trading fees, the other aspect that I
love about them is that you don't have to have any
money to open an account. M1 Finance will allow
you to open that account. Now they won't allow you to actually make your first investment until you have at least
$100 in a taxable account. So that would be your
individual, your joint, or your trust account. For the retirement accounts,
they want you to have at least $500 in the traditional or Roth before you make your first investment. Either way, that is not a
lot of money to get started. For anybody that wants to get started, they're not sure how to get started, if you could open an account with nothing and start trading as little as $100, it's like I said in the
beginning of this video, you don't have any excuse to not invest. It's 100 bucks. Come on, you can do it. Now another thing that I
like about M1 Finance is that they don't just sit on your cash. There are different investment platforms where if you open an account
and you deposit your cash, it just sits there until
you actually decide to make a trade. Now with M1 Finance, you're
going to select your stocks, you're gonna select your ETFs and you're gonna go ahead
and build that portfolio. And once you have more
than $10 sitting in cash, they're gonna go ahead and
place those trades for you. Now I'm gonna show how this looks like 'cause I opened an
account myself with $1000. I set up a few stocks and an ETF and when I deposit $1000 within a day or maybe it's two business days, they place those trades and
I already have ownership in those stocks, in those ETFs. So your money is going to work for you not just sitting in cash
making zero interest. Alright, so what sort of
investments do they have? As I mentioned in the
beginning of this video, you can buy stocks, you can buy ETFs so any stock that is traded on the NASDAQ or the New York Stock Exchange or BATS, you're gonna have access to all of those. So all the big players,
whether you wanna buy Amazon, you buy Google. If you wanna buy a Vanguard ETF, you can get access to all of those on the M1 Finance platform. Now what they're not going
to have are penny stocks or anything that's traded
on the pink sheets, anything that's less than a dollar. You're not gonna find those here so this is not the investment platform where you're trying to buy penny stocks which you probably shouldn't
be wasting your time anyway but that's for a whole other video. So the other thing that
they offer is what they call pies or investment pies. And I'll show you more of
this in the walk-through part of this video when I open the account. So the pies are basically ETF portfolios that they have built for you. So you go on up to aggressive
down to conservative. On average, I think you're looking at between seven to nine different ETFs. Most of these are all Vanguard ETFs. The average expense ratio
I think is like 0.07% and what I like about this is that this really compares to a Betterment or a Wealthfront where if you
really don't know what to buy, maybe you're not comfortable
picking the stocks. If you're not comfortable
picking the individual ETFs, you can just select one of these pies depending on how aggressive
or how conservative you are. Now this is different than Betterment where Betterment's going to
ask you your risk profile. Like, what is your timeline? When are you gonna need this money? What is this money for? So M1 Finance is not
gonna have you fill out any sort of risk questionnaire
or investment profile, you're basically gonna have
to select the pie on your own. But if you know that you are aggressive or you are conservative or maybe you wanna be
somewhere in the middle, either way it just
takes the guessing game, having to choose, having to
build an ETF portfolio for you and the best part too when you wanna compare this to Betterment is that there is no management fee to choose one of these pies. So once again, there are no trading costs. So you select this pie, there it is. There are no additional
costs to have that pie rebalance whenever you
wanna make those changes. So once again, just putting
more money back into your pocket not having to pay fees on somebody to manage that part for you. Uh huh, uh huh. That was good. Alright, so we talked a little bit about the investments that they do have. Let's talk about the investments
that they don't have. So we know they don't have penny stocks. They also don't have mutual funds. They don't have access to cryptos. You're not buying
options on this platform. If you wanna buy annuities, guess what? That's not going to happen here. M1's finance niche is buying and selling individual stocks and ETFs. That's it. They want to keep it simple and the way that they can keep in simple is to offer those two offerings and then not charge you
to make those trades. So that's their bread and butter and that's really where they found a spot to really dominate in that
niche and I don't blame 'em. I like the fact that you can
get access to stocks and ETFs and not paying transactions costs. I'm like, M1 Finance, you do your thing. You do your thing. No need to go into cryptos
and all these other things. One other cool benefit with M1 Finance is the fact that you can
buy fractional shares. So if you don't know this and if you want to buy a share of stock and let's say this stock is Amazon. Well, if you open an account
with like an Allied Financial or an E-Trade or if you go to any brick and mortar brokerage firm local to you, if you wanna buy a share of any stock then you have to have
the full on dollar amount plus commissions like to buy that stock. So let's say that Amazon is
trading about $1200 a share, you have to have at least
$1200 plus the commission on top of that to be able
to buy one share of Amazon. But with M1 Finance, they allow you to buy fractional shares. So if you only have $100 to get started then you can buy a
fraction of Amazon share. Now I really think that's pretty cool because if you're buying a mutual fund or if you're buying an ETF, essentially like that
is what you are buying. You're buying a fractional share but the one thing about ETFs
and mutual funds is that you really don't get to see it. You know, unless you
wanna check the perspectus and see all the different holdings inside that mutual fund or ETF. But with an M1 Finance account, if you're buying fractional
shares of different companies, then when you log into
your account you can see all the different shares,
all the different companies that you own. And there's just something
I think powerful in that, being able to see what you actually own and what you're actually investing into. Another feature that M1 Finance
offers is what they call dynamic rebalancing. So what this is, so if you imagine when you are buying a
share of stock or an ETF, I mean the price is going to fluctuate. So let's say for example that you wanna buy shares of Facebook and Tesla and you want
have 50% in Facebook and 50% in Tesla. Now if you're not adding any
new money to the portfolio and like over time, like the
prices of both those stocks are going to fluctuate. So after say six months,
you might have 60% weight of all your money in
Tesla and 40% in Facebook just because their prices are fluctuating. Now imagine that you're adding new money to your M1 Finance account and you want to buy those equal weights in Facebook and Tesla. Now with dynamic rebalancing,
that's going to allow you to buy more shares of the
stock that has dropped in price and less shares of the
one that has decreased to get you close to that
50/50 balance that you want. So that means you don't have
to constantly try to monitor and share fractional shares of this stock or buy fractional shares of that stock to get you close to that 50/50 balance. It just takes extra work out of your hands having to sell fractional
shares or buy fractional shares to get you to that 50/50
blend that you want. Once again, you're not paying
to have this done for you so let M1 Finance do their thing, have that dynamic rebalancing, take care of getting
you where you wanna be with your portfolio. Other common question
that many people have about a platform like this
is how do they make money? I mean if they're not charging you for account fees or
commissions or trading costs, then how are they exactly profitable? I mean, they're not a nonprofit. They're not a charity. They are a business so
they have to make money. Now one of the most common
ways that they make money is by lending securities. And this is a very common
practice that you'll see many of the big Wall Street firms do but basically anybody
that's wanting to short any sort of security on the open market, M1 Finance can lend those
securities that they have in their possession and then charge an interest rate on that. It's very similar how banks make money. In fact, they're gonna take your money, pay you interest rate
and then loan that out at a higher rate. Now another way that they make money is through margin loans. Now this is something that
they're getting ready to unleash so it's not quite there
yet but essentially, if you open an account and you want to buy or invest on margin, well
you can borrow up to 50% of your account and then pay
an interest rate for that. Now this isn't exclusive to M1 Finance. Other investment platforms
do the exact same thing. But with their model, the idea was that if we offer trading for free, you know, we're going to increase the
amount of clients that we get, the amount of customers that we get so that we can make money off
these different revenue models and that's exactly how they've done it because once they
removed the trading costs from their investment platform, their customer base almost doubled. I don't think it was overnight
but it was pretty quick and basically they are just adopting to what is happening in their market. You know, they are a disruptor like a lot of the other
investment platforms are and guess what. It's working. Another common question
regarding M1 Finance is how safe are they? You know, is my money
protected if I open an account and invest money with them? So, one thing you need to know, like, they do not offer FDIC insurance, so this type of insurance
that you're only gonna get from a bank. So you're not gonna get FDIC insurance. What you are going to get is
what is called SIPC insurance. So this is the type of insurance
that investment platforms, brokerage firms, what they
offer for their clients. So you have SIPC
protection up to $500,000. $250,000 of that can be up to cash so that is protecting you in the event that they were to go belly up or insolvent or something happened with them. But you also have to realize that the investments that
you are making inside the M1 Finance platform,
you're not buying shares of M1 Finance. You're buying publicly traded stocks. You're buying publicly traded ETFs. So even if M1 Finance
were to go insolvent, were to go bankrupt, you still have access
to those investments. Those are not directly correlated to the financial health of M1 Finance. Now I wanna take you behind the scenes of what it looks like to open
an account with M1 Finance. Now prior to me recording this video, I didn't do a lot of research on them. Yeah, I read a little bit on their website but I wanted to find out, just through my own personal experience, what was it like opening an account and actually making my
first investments with them. Alright, so we're gonna
do this from the ground up as if I've never opened
an account with them which I haven't. That's why I'm doing this video. So, this is what is looks
like to open an account with M1 Finance. We're gonna get started
and do this together. So we are going to invest now. Set up my password. Sign up. Alright, complete these three easy steps to setup your personalized M1 portfolio. It will only take a few minutes. So we're gonna build,
create a brokerage account, and then fund the portfolio. Alright, so let's continue. Welcome to M1. This is your portfolio. The simple tool you will use to manage your investments on M1. Alrighty. We have moderately aggressive, expert pie. You can chose slices of M1. Yeah, that's cool. You can also add any stock or ETF. I like it. You can add custom pies. Okay. Let's do this. Expert pie, so alright. So you got general vesting, easy created versatile portfolio set to your own personal risk tolerance. Take a look at these real quick, just what they look like. So we got ultra conservative. Let's see, what does ultra
aggressive look like? Alright, so kind of
reminds me a little bit of a Betterment in essence. Looks like, okay, so here's our slices. 34% into developed markets, Vanguard ETF, we got 29% in S&P 500. So all these are are Vanguard ETFs. So this is exactly, to me, it's almost exactly like a Betterment. Low cost. We got seven ETFs total. 2.545% dividend yield
and a 0.0% expense ratio. So, if I wanted to add that, I could. Let's go back and see what else we got. Let's just, out of curiosity, aggressive. Probably more of the same, correct. Looks like they just added an ETF that wasn't in the other one. Not sure what that was. Probably the corporate bond, the ETF since it's not as aggressive. What else we got? Expert pies. That's kind o' cool. I mean, this is kind o' nice. So if you don't know
what you wanna pick and you wanna just allow them to
kind o' choose it for you. I mean, this is actually
a great way to do it. This is actually why I
like Betterment Wealthfront is because of that. You can also see the one, three
year, and five year return so let's look at the five year return on the ultra aggressive. Is it gonna show me? Okay, sweet. So in the last five
years, it's 41.55% return. That is crazy when I see that. Just because, in context, the
stock market has been insane. For those that are watching this, if you haven't really
been investing that long especially if you haven't
invested before 2008, please realize that this
is, this doesn't always look like this. The market does not always go up. We do have corrections,
downturns, bear markets, so do not expect to average
41.55% over the next five years. I kind o' hate the fact it doesn't go out any longer than that but anyway, at least you get a sense of what the returns could be. But, do not expect that going forward. Past performance does not
guarantee future results as they like to say. So you can do the expert pies or looks like you can choose some of your own ETFs. Just kind of curious which ones they have. They've got quite a few. I mean, this is a good selection. I mean, almost every ETF that you'd want. I'm just seeing what
other ones they may have. Short term futures. I don't know if they have like, they probably don't have
like the inverse ETFs. They may. I'll have to look into
that at another time. But, stocks wise, looks
like they got quite a few. Who else, just look at some stocks. So, can you, so you could buy Visa. Let's say you wanted Under Armour, yeah. Under Armour's there. So many like, just a lot
of the big stocks, I mean. There might be some small caps. There aren't any here. Probably don't do a lot
with the pink sheets like penny stocks which shouldn't be messing with that crap anyway unless you know what you're doing. Most people don't. So. Alright. Let's go and escape there. So, that's what I could do. I need to reset these percentages. Right now, I'm at 120% so
let's just make it 20 even. Alright. So save and continue. Alright, you've created your portfolio. Don't worry. You can always edit and change it later. We'll now sign you up for
a M1 investment account by asking you a few quick questions. Alright, continue. For this sake, so here's the options. Individual investing so this is if you're not married. If you just wanna set
up individual accounts. If you have a spouse, you might wanna set up a joint account. Retirement, so now we're
looking at Roth IRAs, traditional IRAs. If you watch any of my other videos, I talk a lot about the Roth IRA. You can rollover an old 401K into here. Trust account, that's more rare but something that you could do. Just for the sake, I'm gonna just open up an individual account. Alright. I will blur this screen so
you will not see where I live. Also saying that for my editor to make sure we block that out. And then also my social security number, probably don't need to see that. So, this will also be blurred out. We will now ask to provide some insight on your financial situation
and investment style. This is the know your customer rule which I did with all my clients. What's your approximate annual income? What's your approximate net worth? What is your approximate liquid net worth? How much experience do you have investing? Extensive. What is your tolerance to short
term swings in the market? I have a very high tolerance. How long do you plan on
holding your investments? We're gonna say long term. How important is liquidity to you? Not important. So we're gonna review and submit. Net worth, liquid,
extensive, blah, blah, blah. Good to go. All these links. If you wanna read all
this stuff, you sure can. And now we're gonna hit submit. Now we get to fund our portfolio. So here, this is what I love about any of these online brokers. If you have a bigger bank, sometimes regional banks
don't work well with this. I know like my last bank
when we moved from Illinois, it typically didn't work with this. We now work with US Bank. Alright, so typically just click that if your bank is there. I'm just curious real quick. So, our old regional bank was Banterra, yeah, I didn't think so. So that one does not exist. But just typing in BA. I mean, you got Bastille,
Boston, First National Bank of, I mean, these are some banks
I'm really not familiar with. So, unless it's like a very
small regional bank like the one I used to be with, it's not there. As I mentioned though, we are with US Bank so let's like that. Okay so now you would just log
in to your bank account, if it's here. Once again, we're going to blur this out so you do not see how I log in. Hopefully I can remember my password. Alright, so we got the account verified. It should be good to go. And, awesome. We'll just do this later. So if I do this later... Alright so let's get logged back in. So now you see some of the challenges. But so typically if you
can't set it up that way, I'm sure I'll be able to
enter in my routing number and my bank account number and they might do one of those
things where they do like a small deposit into your account and then you verify and then you transfer the money in. And that's how we do it. Alright, so. Man, I mean, that's for the most part, how easy it is. I thought it would be a little easier just getting it authenticated. Just being totally transparent, I had an issue with one of
those security questions 'cause my wife had set it up and she couldn't remember
exactly what the answer was. And it is case sensitive
so keep that in mind. Not so much with M1 Finance,
more with your personal bank so if you do online banking. But let me play with this a little bit and let me see if I have any more to share but we'll definitely close this video out. Alright, I lied. So I played with this a little bit and I was able to go here and then I was able to add my account. I did the exact same process that should've worked. It did work. I put in a request to transfer in $1000. You can do so, a one time transaction or you can set up a
reoccurring, if you want. So here is the upcoming transaction. Looks like it is taking place today. You can see the amount here. One time. I'm assuming it takes a day or
two for that to transfer over so once that money comes in, then I'll be able to invest. Alright so that was me
opening my M1 Finance account and then as I mentioned
earlier in this video, I think it was like
two business days after I opened the account, the
money was invested, the money. I bought the shares of Google and Amazon and the Vanguard ETF so
all that money got invested pretty quickly and I really
love the investment app. It allows you to just review your accounts to see what's going on. Obviously, of course, the
day I opened my account, a few days later the market takes a dive. So right now, my portfolio is down. Not stressing yet because obviously investment is a long-term game so not freaking out there. Alright so now let's answer the questions. Like, who is M1 Finance for and who is M1 Finance not for? Well let's first start like
who is M1 Finance not for? Obviously if you want to buy mutual funds, if you want to buy crypto, if you want to buy options, M1 Finance is not an
investment platform for you because you don't have
access to any of these. M1 Finance also, is it really suitable for short term traders or day traders? You know, they have some decent tools but they don't have a lot
of the charting tools, resources that you would need to track all the different stocks
that you want to make. Plus with them offering fractional shares, when you actually
execute trades with them, they're not going to happen
immediately like they would if you were with a different
investment platform. So if you're trying to like
execute a certain price and exact time, M1 Finance
really isn't the best platform for that. There are better
platforms for day traders. So who is M1 Finance for and really, this is why I love them because anybody that wants to start investing, I mean, you can open
an account with nothing and make your first trade
with as little as $100. And the fact that they
offer fractional shares, I love the fact that you can build a stock portfolio with fractional shares. I mean, that's just awesome. You don't see that offered really in a lot of different places. And the other aspect I like about them is with their investment pies. You know, if you're not
comfortable choosing individual stocks or individual ETFs, you can choose one of the investment pies and buy one of those different models. You know, the most common reason I hear that people don't invest is because they don't know what to buy, they don't know what to invest into and this is just removing
one of those objections, one of those stumbling blocks
from keeping you to invest because you can open an
account, fund it with $100, and pick one of the investment pies. You're done. You're invested now. You're getting experience as
an investor in the stock market and that's why I love this platform. As you can see, there are
definitely a lot of pros why M1 Finance is a good option for anybody that wants to become
an investor in the market. Now if you're interested
in opening an account, I'll have a few links in
the description below. One link is an affiliated link so if you do, click on that link. I do get paid a small commission for opening an account with them. The other link is a
more detailed blog post that living on my blog right now if you wanna know more about M1 Finance, you can read more about it there so I have a link to that blog post in the description as well. Alright, that's it. That's my review on M1 Finance. You've been asking me to do it. I finally delivered. If you've opened up an
account with M1 Finance, I wanna know what has
your experience been. Now if you haven't opened one yet and you still have some
questions, I'm curious. What's keeping you from opening your first
investment account with them? Let me know in the comments below and be sure to get your questions answered so we can get you investing right now. 'Til next time y'all, this is Jeff Rose reminding you that it is your money, it is your life and only
you can make it awesome. 'Til next time. Peace.
