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This content is for informational purposes only and is not intended to provide financial advice.
If you don’t have enough money to justify paying the expenses of a human, financial advisor, getting a Robo-advisor is a no-brainer. When they started, Robo-advisors were a low-cost alternative to traditional financial advisors. With average fees of only 0.25%, you could get a Robo-advisor for around a fourth of the cost of what you would pay a human to manage your accounts.
And performance? Since they’ve only been around since 2008, there isn’t enough data to judge their long-term efficacy, but performance-wise Robo-advisors hold their own against traditional financial managers. But, in some cases, they perform even better.
M1 Finance is consistently one of the better-ranked Robo-advisors. Founded in 2015, the financial services company already has more than $6 billion under management. You can buy stocks, bonds, and ETFs and even allow them to create a customized, well-diversified portfolio. Since its inception, M1 Finance has been headquartered in Chicago.
What is M1 Finance?
M1 Finance was the first company to take the concept of low-cost Robo-advising and make it no-cost Robo-advising. That’s right, with M1 Finance, you’ll pay no management fees on your investment accounts. You receive all the benefits of their excellent investing portfolios and “pre-built pies” for free.
Unlike most other Robo-advisors, you won’t pay a percentage of your assets under management (AUM) for the privilege of using their service. And you won’t pay commissions or trading fees either. M1 Finance is as free as free can be.
But is it safe? What are you giving up in exchange for receiving M1 Finance’s expert investment advice totally for free?
Is M1 Finance Really Free?
However, before we get to that, you are probably wondering if M1 Finance is really free. M1 Finance is entirely free, though you may consider upgrading to M1 Plus, which will cost you $125 per year.
With M1 Plus, all the features you receive with a basic M1 account are enhanced. For example, you can borrow money for a low rate of only 2%, you have more trading windows available, and you get 1% back on your M1 Spend checking account, which itself could quickly pay for that $125 M1 Plus annual fee.
You can read about all the enhanced features you receive with M1 Plus in this review. You can click here to open an M1 Finance account for free and check out what M1 Plus offers.
What is the Concept behind M1 Finance?
Pies are what M1 Finance calls the diversified portfolios they build on your behalf. You can customize these pies based on your investment preferences or choose from a list of pre-constructed pies. A list of the available pies and information on how to build them can be found here.
More than a Robo-advisor, you can also open a checking account and borrow money from M1 Finance. The platform could easily become your one-stop shop to cover all your banking and investment needs. You can read more in this article about all the different types of accounts you can open with M1 Finance.
How Safe is M1 Finance?
M1 Finance has been independently evaluated, with experts concluding that it is a safe place to park your money and watch your investments grow. M1 Finance is appropriately insured by federal agencies, with the FDIC insuring your M1 Spend checking accounts and the SIPC insuring your investment accounts.
A word about FDIC and SIPC insurance, however. These protect your assets in the relevant accounts, but only if the firm fails financially. For example, if an investment—even an expert-created pie—loses money, you will personally absorb that loss.
That’s why it’s essential to choose pies based on your individual risk tolerance and retirement horizon. Federal agencies don’t cover losses due to poor economic decisions or a market downtown.
M1 Finance is also a registered broker/dealer with the Financial Industry Regulatory Authority (FINRA), which provides another level of vetting. FINRA ensures that registered brokers follow applicable laws and regulations. FINRA also makes a reasonable effort to ensure its member brokers operate with integrity.
Though many of its products are free, M1 Finance is no fly-by-night investment company. You can read more about their safety and legitimacy in this article.
M1 Finance: Concluding Thoughts
If you are looking at no-cost Robo-advisors, M1 Finance should be at the top of your list. You can open both taxable and retirement accounts, and their 1% back on the M1 Spend account is an attractive perk. To get even more relevant features, consider opening an M1 Plus account.
More than half a million customers have joined M1 Finance, and their client list is growing.
At only $125 per year, the M1 Plus account is a banking/investing/borrowing best value. To open an account with the best rates plus take advantage of any current offers and promos, you can click here.
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