- So in this video today
we are going to be doing a tutorial of the M1
Finance investing app. I'm gonna be showing
you guys around the app and talking about some
of the basic functions that you need to be familiar with as somebody who is investing
with this platform. Now that being said, if you
decide at the end of this video that you want to open up
an account with M1 Finance, I have a link for that down
in the description below. It is an affiliate link
so if you do use it I will earn a small
commission in the process. But that's at no additional cost to you. So if you decide you
want to give back to me for putting this video together,
that is an option for you. And one other thing I want
to mention real quick, I have been getting a lot
of questions from people about how to use M1 Finance, how to open a brokerage account, all these different questions. So I actually put
together a completely free 30 minute video training showing you everything you need to know to
get started with M1 Finance. And that is also going to be linked up down in the description below. If you want to check out
that free 30 minute training on how to use M1 Finance. But we're gonna cover most
of the basics right here in this video today. Okay, so here we are inside
of my M1 Finance portfolio. This was originally a
$100 investment I made, mostly just for demonstration purposes to show people what this
app actually looks like. So my original investment here was 50% of my portfolio into
the Vanguard S&P 500 ETF under the symbol VOO. 30% into Amazon stock, and
then I had 10% in Apple stock, and then I also put 10% of my
money into Microsoft stock. Now obviously this portfolio has actually done pretty well here over the last, I believe eight or nine months. It's up about 17 percent,
closer to 18 actually. And this is the first thing
you have to understand about M1 Finance, is that
everything comes back to this pie here, or portfolio. So with M1 Finance, you are
doing portfolio-based investing. And that's where it's different than apps like Robin Hood for example
where you're just buying whole shares of stocks, and
then having those stocks within your portfolio. Well with M1 Finance, you
design a portfolio yourself, or you use one of the expert portfolios. And then as you add more
money to that portfolio, it's gonna be spread evenly
across those allocations. So in my case here, when I
initially invested that $100, 50% of that money went
into the Vanguard 500 ETF. 30% went into Amazon, 10% went into Apple, and then 10% went into Microsoft. Now I already have my portfolio
or my pie in here built, but when you actually get
started with M1 Finance, it walks you through the process of building your own portfolio. But I'll show you guys
what that looks like now by building a new portfolio from scratch so you see what this
looks like step by step. So now we're gonna go through the process of building a completely new
M1 Finance pie from scratch. And like I said when you
start off using the app it's gonna walk you through this process of how to build your first M1 Finance pie. So we'll go ahead and
hit the plus icon here, and then we're going
to begin adding slices to our M1 Finance pie. So your total pie is going to be 100%, and each of the stocks and
ETFs that you can select can make up as little as one
percent of your portfolio. So if you wanted to put
100 different stocks in your portfolio, I
don't know why you would, but M1 Finance allows you to do that. So we're just gonna make
a random portfolio here just so I can show you
guys what it looks like. We're gonna start off with 3M stock. That's just one that's
coming to my mind here. So 3M is a pretty popular company. I think the symbol is MMM. 3M Company, so we're gonna
add that to this pie. We're gonna also go with Procter & Gamble We'll add Procter &
Gamble to this portfolio. And then let's say you also want to add an ETF to this portfolio
for some passive investing. You can move over to
the ETF or Funds column, and select one. Or, I know the one that I want. Actually it's right here,
VOO, the Vanguard 500 fund. So we'll add that to
the portfolio as well. And then let's say we also want to have a tech stock in here. So let's say you like Tesla for example. So we'll go ahead and type in Tesla. And let's say these
are the four components of this portfolio that you're building. Or pie, whatever word
you want to use there. In terms of M1 Finance, it
always comes back to the pie, and each stock represents a slice. So, let's say that is the
pie that you want to build. Basically investing in Tesla, 3M, Proctor and Gamble, as well
as the Vanguard 500 fund. Then you would go ahead and hit Done, and this is the point where
you're going to decide how much of your money is going to go into each one of these stocks or ETFs. Now the reason you're able to do this is because M1 Finance allows you to invest using fractional shares. So all of these different funds and stocks are trading at a different share price, but M1 Finance allows you to buy as little as 1/10,000th of a share of
each one of these stocks. So you don't have to worry
about that share price, and you can create a
well-diversified portfolio with the minimum to get
started with investing, which is just $100. So let's say for example
you want to put 30% of your money in the Vanguard 500 fund. And then you want to put 15% in Tesla, you drop that down to 15. And then you want to put 20% in 3M, and you want to put the remaining
35% in Procter & Gamble. Well now you have created this pie here. And when you add money to this portfolio, 20% is gonna go to 3M, 35% is
gonna go to Procter & Gamble. 15% goes to Tesla, and 30%
is going to go to Vanguard. So, we'll go ahead and
save this portfolio here. I'm not going to personally use it, and we'll just go ahead and
name this the demo portfolio. Just so you guys can see the functionality and how this works setting it up. And the other things that's really great about M1 Finance is you can create multiple different portfolios,
and even track that progress. So if you wanted to make like
a dividend-oriented portfolio or a growth-oriented portfolio, you could invest in both of them, or you could just use it to benchmark these stocks or this portfolio, and see what the performance is like. Now that being said,
let's say you're somebody who doesn't want to build
a portfolio from scratch. Well another great option that you have is the Expert Pies offered by M1 Finance. They have over 30 different portfolios that are prebuilt that are
completely free to invest in. For example you have
General Investing here which is just a spread of ultra aggressive to ultra conservative portfolios. And each one of these you can click on and read about them, and what is actually held within that portfolio. And it'll show you what
is actually in here. It's usually Vanguard
and iShares type ETFs, because those are very
low fee index funds. So you have a general investing category. You have plans specifically
for retirement, which is great for people who invest using a Roth IRA, which is
available through M1 Finance. You also have responsible investing for people who are looking
for environmentally-friendly companies to invest in. Income earners, hedge fund followers, basic stock and bond allocations, which is just gonna be a two-ETF fund. For example this one that's a 90/10 split is just going to be 90% into
the Total World Stock market, and 10% into the Total Bond Market. Which is as simple as it gets in terms of your basic stock and bold allocations. So, M1 Finance really does have something for everyone here. They have the ability to
build your own portfolio from scratch, with whatever stocks or ETFs you want to invest in. Or, if you don't want to
do all of that yourself, you simply pick an expert
pie that's prebuilt to automatically invest your money in. Now the last thing I want to
cover in this tutorial here is the rebalancing of the portfolio, which is something that a lot of people get a little bit confused on. So we're gonna cover what
that automatically means here. So as you can see here on the left, we have two percentages under each one of these pieces of my pie. Under the Vanguard 500
ETF we have 48% and 50%, and that means that my target allocation for the Vanguard 500 ETF is
50%, but I'm currently at 48. For Amazon it says 27.6%, even though my target allocation is 30. Apple it's 12.3%, even though
my target allocation is 10, and then finally Microsoft, 11.9%, even though my target allocation is 10. And this is because of something
called portfolio drift, and the reason behind that is
as soon as you invest money in the stock market, well
things are gonna be doing different things at different times. That's the best way to explain it. So some stocks are gonna go
up, some are gonna go down. I happened to pick four that all went up. If you look on the right-hand
side, I'm up 40% in Microsoft, 45% in Apple, which is crazy, I wish I bought a lot more. I'm up seven percent in Amazon, and 13%, closer to 14 in
the Vanguard 500 fund. The issue being, this
portfolio is no longer in line with what my
target allocations were. So, what would happen as I add more money to this portfolio is more money would flow into the ETFs and stocks
that I'm underweight in. So right now I'm underweight in Amazon and the Vanguard 500 ETF,
because my target allocation for Amazon is 30, and I'm at 27.6. And my target allocation
for the Vanguard 500 fund is 50 and I'm at 48. So I have more money than I
want in Microsoft and Apple, and less money in Vanguard and Amazon. So if I were to add more
money to this portfolio, slightly more would flow
into Vanguard and Amazon to bring me back to my target allocations. And this is a really important feature for maintaining the portfolio
that you're looking for because a lot of people, they
may say hey I want to have 25% in these four stocks,
an equal amount in each, and then a year later,
your portfolio could be totally out of whack
because of portfolio drift. But M1 Finance takes all of
that out of the equation here, because as long as you're
contributing regularly to this account, they're
going to keep your portfolio in line with what your allocations are, that you set at the beginning. But that being said, guys, that is the basics here of
investing with M1 Finance. Like I said you can either build your own portfolio from scratch, or you can use the expert portfolios available to you for free. Or you can do a mixture of both, and invest in both with this platform, and compare the performance of both. As I'm sure you guys know,
M1 Finance is 100% free. They are making money
but they are doing so on the backend with a
couple of different methods. For example, they make money
by directing order flow, and they also make money
from their M1 Borrow which is gonna be margin. Not really stuff that
most people are using, so I didn't cover in this tutorial. So they're not a charity,
they are making money but they're just doing it in
a couple of different ways than the traditional
method of charging fees and commissions to customers. But anyways guys, that's
gonna wrap up this video. I hope you enjoyed it. If you're looking to learn more
about how to use M1 Finance, I literally walk you guys step by step through the entire process in
that free 30 minute training. That's gonna be linked up
down in the description below. But thank you guys so much
for watching this video. I hope you enjoyed it, and I
will see you in the next one.
