What is M1 Finance | Set it and Forget it!!!

in my opinion m1 finance is a great starting point for newer investors who don't have any of their long-term accounts covered and want to have a say in what they're investing in so they can pick companies that they truly believe in but also have a platform that once it's set up it basically is automated for you let's break down m1 finance so you can understand how it works and the types of investing that is best for their platform stick around to the end to get some more info on other platforms you can use as an alternative so that you can make the best decision for yourself [Music] so how does m1 finance work on the surface it looks a little complex but it's actually really simple m1 finance lets you use their platform on pc or on your phone which is nice there's also a free version or a paid version but for most people the free version is going to be more than enough i'll talk about the different versions a little later on okay so m1 finance is using something they call a pie this is where people can get confused basically a pie is something you set up where you tell m1 finance how you want your money to be allocated when you deposit it you can have a hundred different slices as they call it in each pie meaning that you could have a hundred different stocks per pie you set up with different weighted percentages for each slice let's say you have two stocks you want initially in your pie when you first start to keep things simple you have two slices now you decide the percentage of each slice you could do fifty percent for the first and fifty percent for the second or pretty much whatever you want just so long as the total equals to a hundred percent this means when you deposit money m1 finance will try and balance your portfolio to match the percentages you have set for your pi when it comes to dollar amounts so in this situation if you put a hundred dollars in it would buy fifty dollars the first and fifty dollars of the second now let's say you have a deposit schedule to go into your m1 account next week so let's say your first stock is now a hundred dollars for your total account and the second stock is only worth fifty dollars still it will rebalance these totals by buying more of the second stock and less of the first stock with the money you put in your account to get the total value of your account as close to a 50 50 split as it can without selling anything m1 finance doesn't focus on numbers of shares when it comes to the percentage allocation it focuses on the dollar amount this is easy for them to do since they use fractional shares all you do is set up how much of the account percentage you want in each security and m1 finance will balance it for you this is part of why i like m1 so much for people who are learning and don't want to be super hands-on with a long-term account you set up how much you want to go into your account and what you want your pie allocation to be and then it does everything else for you if you don't feel comfortable creating your own pie right off the bat m1 also offers the ability to pick from what they call expert pies that are already set up with different goals for your investing so you could always go with one of those if you don't want to create your own the fractional shares is another plus here because you can put expensive companies into your pie like amazon or tesla and it will buy fractional shares with the amount of money that you do deposit you don't have to have the hundreds or sometimes thousands of dollars to buy a whole single share of some of these bigger companies like some brokerages still make you do one of my favorite parts about m1 finance over your more traditional brokerage is the ability to set up automatic deposits and then have your account set to auto invest this isn't something that you can really do with a traditional brokerage unless you're investing in mutual funds exclusively etfs don't allow for automatic investing but with m1 finance you can pretty much make your own etf and automate the whole process you could also make a pie consisting of all of your favorite etfs on m1 finance so it's great route for people who love etfs you can set up those automatic deposits and the auto invest and all of your etfs that you like get deposited money in every single week if the words etf and mutual fund just confused you we have a video for you so check it out right here whenever someone asks me about where to start when it comes to investing they always think they need a certain amount of money to start the truth is that forming a habit when it comes to setting money aside is much more important than having the perfect starting conditions m1 finance is perfect for this since you can set up a transfer to happen on payday and then auto invest in your pie when it happens automatically you just go about your life and don't really miss the money and it's a great way to start that savings and investing habit for people who are coming off the paycheck to paycheck lifestyle okay so now you kind of understand how m1 finance operates let's cover something else people may find confusing if they are used to traditional brokerages m1 finance uses trading windows you don't have down to the second control when you buy and sell stocks with them on finance this means that if there's a random dip throughout the day and a stock that you like you can't just buy more with your m1 account if you have auto invest turned on and money gets put into your account m1 finance will execute it at the next available trading window this is why this platform is better for hands-off investors when it comes to buying and selling at specific times if you have the premium version of m1 finance called m plus you get a second buying window that takes place like an hour and a half before market close but if you're wanting to buy and sell securities constantly you might want to stick with a different institution don't worry i've got something for you guys at the end of the video who are more interested in other brokerages so that's pretty much the investing side of m1 finance but what else do they offer well they allow you to borrow against up to 35 percent of your account's value at a three and a half percent interest rate for the free accounts and at two percent interest rate for their paid version the cool thing about borrowing from them is that unlike a lot of brokerages that allow margin that only let you borrow money against your account to buy more stocks with m1 finance allows you to do things like pay off high interest credit card debt auto loans or helocs they also will let you reinvest that money in their platform if you want like traditional margin i don't personally take out loans to pay off other loans but if you have a bunch of high interest loans and a large amount invested it might make sense for you to borrow at a lower interest rate against that portfolio to eliminate some of the higher interest debt i'll leave that decision up to you all i'll say is just be careful when it comes to how much debt you're carrying and where you're taking it from m1 finance also offers a debit card so you can further consolidate your accounts in one easy place and it allows you to transfer money seamlessly from investing borrowing and spending depending on how you're feeling that day for m plus members you will get one percent cash back on all purchases and one percent apy on money you have in your checking account with them as of right now m plus is free for one year and after that it costs 125 dollars per year and you get one more perk i want to mention other than the cheaper interest rate extra trading window and the debit card perks you also get access to custodial accounts for your kids so you can start showing them how to build long-term wealth and let them get introduced to how the stock market works if you aren't familiar with what a custodial account is or any other kind of investing accounts for that matter check out this video i made about types of accounts that i think cover a lot of the basis for most people the last thing with m plus isn't out yet but it's coming and that's the m plus credit card this credit card will integrate with your portfolio in a way i've never personally seen if you have seen this before leave a comment down below to where so i can check it out because it's awesome with their credit card that's coming out you can earn larger cashback rewards with companies that you were invested in names like apple amazon and starbucks as well as many others being able to be rewarded with a larger cash back reward just for being an investor in a company is pretty sweet in my opinion and they're throwing out numbers as high as 10 percent for those special rewards not only that but m1 finance is doing its best to make your financial picture as simple as possible you can invest borrow money have a checking account with a debit card and soon they'll have a credit card all accessible from one single app in this current day and age convenience is huge for people and i really like how they've implemented these features for people to take advantage of if m1 finance doesn't look like your cup of tea take a look at these videos to see what some other brokerages offer thanks for stopping by take care

Channel: PersonaFi

Views: 77

Rating: 5 out of 5

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Id: 6NYUJUthn0Q

Length: 7min 59sec (479 seconds)

Published: Tue Sep 21 2021