M1 Finance Review [2024]: Robust Investing and Earning Features

How does M1 Finance work?

M1 Finance lets you choose your own investments for your brokerage account and use them to construct “Pies.” These are M1’s groups of investments. Each Pie can contain up to 100 Slices, while a Slice could be an individual investment or another Pie or group of Pies. I’d use a Model Portfolio if just starting out, though you can always customize and adjust your target allocations as time goes by. If you’d rather choose from expert Pies tailored to different goals, you can do that too.

Although you can’t invest in real estate or individual bonds, you can get exposure to these asset classes through bond and real estate investment trust (REIT) ETFs, as M1 Finance offers both. It’s even possible to get access to mortgage-backed security ETFs through M1.

Who is M1 Finance right for?

• Those who want to set up automatic investments
• Long-term investors
• Investors seeking low-interest loans secured by their securities

Investors who want to have their money automatically invested for them can benefit from M1’s auto-invest feature. It’s the default setting until you opt out of it, and means any time you have cash exceeding the minimum amount you set by $25 or more, M1 automatically invests it for you.

M1 Finance is also best for you if you’re planning to buy investments and hold them for a long time. Since there are limited trading windows with M1, you won’t be able to try to time the market with multiple trades per day. So if you’re a buy-and-hold investor, keeping your portfolio invested for many years to come, M1 Finance could be a good fit.

Finally, if you’re an investor who also wants an alternative to an emergency fund, you could take advantage of M1 Finance’s loan options. If you have at least $2,000 in your brokerage account or trust account, you can borrow up to 50% of the value of your securities. It’s simpler than applying for a loan with a bank, but you do pay interest (7.99%–21.75% (as of 12/5/24)). That rate is variable, tied to the Federal Funds Rate.

Who is it not right for?

• Investors who want automatic tax-loss harvesting
• Day traders

If you’re looking for automatic tax-loss harvesting, you’ll want to look elsewhere, as M1 Finance doesn’t offer that feature. Tax-loss harvesting is the strategy of selling securities at a loss in order to balance out gains on other securities. Some robo-advisors like Wealthfront do offer automated tax-loss harvesting, so you may want to check out those alternatives if that’s important to you.

Investors who intend to be super-active, buying and selling assets frequently, won’t be very effective with M1 Finance. That’s because M1 Finance, in keeping with the goal of focusing on long-term investments, only has two trading windows per day. They’ll only execute trades for you beginning at 9:30 a.m. ET or 3:00 p.m. ET on days the New York Stock Exchange is open.

M1 Finance products at a glance

M1 Finance Account	Minimum	Purpose
High-Yield Cash Account	$100 minimum deposit	Earn 4.25% (as of 12/11/24) APY
Brokerage Account	$10,000 or a personal loan to waive $3 monthly fee	Invest in stocks and ETFs and other securities
IRAs	$500 minimum initial deposit	Tax-advantaged retirement savings
Crypto	$100 minimum initial deposit	Investing in cryptocurrency
Trust	$5,000	Protect assets to pass to beneficiaries
Owner’s Rewards Card	N/A	Credit card with rewards you can reinvest
Margin Loans	$2,000 invested in a brokerage account	Reinvesting or accessing funds through a line of credit

M1 Finance account types

• High-Yield Cash Account: Earn 4.25% (as of 12/11/24) APY on your uninvested cash with M1’s High-Yield Cash Account. You must have an M1 brokerage account to use this option, and the minimum deposit requirement of $100 applies to earn APY. Benefits of this account include easy transfer of money between the cash account and investment accounts, and unlimited cash withdrawals.
• Brokerage Accounts: You can open up individual, joint, or custodial brokerage accounts with M1 Finance and invest in over 6,000 stocks and ETFs. As is fairly common with online brokerages, the company doesn’t charge commissions on online trades. M1 Finance charges a $3 monthly platform fee, which you can waive by either having an active personal loan or $10,000 invested at least one day during your billing cycle.
• Retirement Accounts: M1 supports traditional IRAs, Roth IRAs, and SEP IRAs. The same platform fee applies to IRA customers if you’re not exempt or don’t already pay that fee for a brokerage account.
• Crypto: M1 Finance offers cryptocurrency investing, which has weekend and on-demand trading because crypto markets are open 7 days a week. You have to have a funded Invest account to trade in crypto. Though there’s no commission to trade cryptocurrency, as with stocks and ETFs, there are crypto transaction fees to consider.
• Trust Accounts: You can set up either a revocable trust or irrevocable trust with M1 Finance. These accounts have a minimum balance of $5,000. It’s best to consult a lawyer if you’re arranging a trust due to the legal knowledge required to do this correctly.
• Credit Card: M1’s Owner’s Rewards Card offers 1.5% back as a base rate, with elevated rewards of 2.5% to 10% at select retailers like Starbucks and Spotify. The main unique feature of the credit card is that you can elect to reinvest your rewards earnings in your M1 investment accounts. (You can also redeem them as cash.)
• Loans: If you have a minimum of $2,000 invested in a brokerage account or trust account with M1, you can qualify for a Margin Loan, used for investing or as a Portfolio Line of Credit.

Are your assets safe with M1?

Yes, M1 Finance is safe, though the level of safety depends on the type of product you’re using. In terms of your investments, they’re covered by SIPC insurance, which protects your account up to $500,000 if the brokerage fails. However, SIPC insurance doesn’t protect you from market events. In other words, with stocks and ETFs, there’s the potential for losing money.

Ways to mitigate your risk include doing your research before selecting your portfolio, using one of the ready-made portfolios M1 Finance offers, and adjusting your “pies” to take a more conservative approach.¹ <p> All investing involves risk, including the risk of losing the money you invest. Brokerage products and services are offered by M1 Finance LLC, Member <a href="https://www.finra.org/" target="_blank" rel="noopener noreferrer">FINRA</a> / <a href="https://www.sipc.org/" target="_blank" rel="noopener noreferrer">SIPC</a>, and a wholly owned subsidiary of M1 Holdings, Inc. </p>

If you’re looking at the Cash Account, your money is also safe there, protected by SIPC insurance until it is swept to partner banks, at which point it’s then eligible for FDIC insurance.

When choosing investments and constructing your customizable portfolio, take into account your own personal goals for your money, your investment timeline, and your personal risk tolerance.

FAQs

Alternatives to M1 Finance

If M1 Finance doesn’t sound like the best option for you, consider other options that might fit the bill.

Wealthfront

If you’re more interested in a robo-advisor, you might check out Wealthfront.³ <p class="">FinanceBuzz receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. FinanceBuzz is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.<br></p> This also offers zero-commission stock trades, but unlike M1 Finance, it offers tax-loss harvesting that can lower your tax burden on investments. Wealthfront also automates rebalancing, while M1 requires a bit more work on your end to rebalance your holdings.

Another feature Wealthfront has that M1 Finance doesn’t is a 529 Plan to help you save for qualified educational expenses.

So if you need more automation, including tax-loss harvesting, or want a college investment account, Wealthfront may be the better option for you.

Visit Wealthfront | Read our Wealthfront review

Robinhood

Robinhood, like M1 Finance, offers commission-free trades of stocks and ETFs, but it adds the options trading into the mix.⁴ <p>Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the <a href="https://cdn.robinhood.com/assets/robinhood/legal/Characteristics%20and%20Risks%20of%20Standardized%20Options.pdf">Characteristics and Risks of Standardized Options</a> before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.</p> <p>Robinhood Financial does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. Supporting documentation for any claims, if applicable, will be furnished upon request.</p> <p>Financebuzz is compensated by Robinhood to produce this content.</p>

If you’re interested in day trading, Robinhood is a better choice for you than M1 Finance. Also, the APY on uninvested cash is 4.25% (as of 11/15/24) (higher than that of M1 Finance as of November 2024).⁵ <p>Annual Percentage Yield. Rate valid as of April 12, 2024. To earn interest, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Interest rates for cash sweep and margin investing can change at any time. Fees may reduce interest earnings.</p> ⁶ <p>All investments involve risk including loss of principal. Interest is earned on uninvested cash swept from your brokerage account to program banks. Robinhood is not a bank. For margin enabled customers, to earn interest through the cash sweep program, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest.</p> However, you must be a Robinhood Gold subscriber to earn that rate.

The IRA match is a great distinguishing feature. Robinhood adds 1% to your IRA contributions, and if you have Robinhood Gold, you’ll get a 3% boost to IRA contributions. Robinhood Gold costs $5 a month.⁷ <p class="">Investors should consider the investment objectives, risks, and charges and expenses of any Exchange Traded Product (ETP), including any Exchange-Traded Fund (ETF) and any Exchange-Traded Note (ETN), carefully before investing. The prospectus and, if available, the summary prospectus contain this and other information about the ETP and should be read carefully before investing. For a current prospectus, customers should visit the relevant ETP's details page to access a link to the prospectus.<br></p><p class=""><br></p><p class="">This is not investment advice, nor a recommendation of any specific asset or strategy. For specific questions, consult a professional.<br></p><p class=""><br></p><p>All investments involve risk and loss of principal is possible.</p><p class=""><br></p><p>Recommendations are one-time only. Any additional investment is at your sole discretion. Retirement recommendations aren’t available in Massachusetts at this time. <a href="https://robinhood.com/us/en/support/articles/retirement-recommendations/">Learn more about Retirement recommendations.</a></p> ⁸ <p>The 3% matching on contribution requires a subscription with Robinhood Gold (fees apply), must be subscribed to Gold for 1 year after your contribution to keep the full 3% match. You must have compensation (wage income) in order to contribute to an IRA. The funds that earned the match must be kept in the account for at least 5 years to avoid a potential Early IRA Match Removal Fee. For more information refer to the <a href="https://robinhood.com/us/en/support/articles/ira-match-faq/">IRA Match FAQ</a>.</p> <p>Robinhood Gold is offered through Robinhood Financial LLC and is a subscription offering premium services for a monthly fee.</p> <p>You must have earned (wage) income in order to contribute to an IRA. The funds that earned the match must be kept in the account for at least five years to avoid a potential Early IRA Match Removal Fee. For more information, see the IRA Match FAQ. </p> <p>Funds being contributed into or distributed from retirement accounts may entail tax consequences. Contributions are limited and withdrawals before age 59 1/2 may be subject to a penalty tax. Robinhood does not provide tax advice; please consult with a tax adviser if you have questions. </p> <p>The Robinhood IRA is available to any of our U.S. customers with a Robinhood brokerage account in good standing. </p> <p>Robinhood Financial LLC (member SIPC), is a registered broker dealer. Robinhood Securities, LLC (member SIPC),is a registered broker dealer and provides brokerage clearing services. All are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).</p> ⁹ <p>The IRA Match is automatically added after eligible contributions from an external account. Keep the contributions in your IRA for at least 5 years from the date you contribute. IRA Match <a href="https://robinhood.com/us/en/support/articles/ira-match-faq/">FAQ</a>.</p> <p>You must have earned income to contribute to an IRA. Funds being contributed into or distributed from retirement accounts may entail tax consequences. Contributions are limited and withdrawals before age 59 1/2 may be subject to a penalty tax. Robinhood does not provide tax advice.</p> <p>This is not a recommendation to roll over. Before taking any action with a former employer's retirement plan, be sure to consider the various options: <a href="https://www.finra.org/investors/investing/investment-accounts/retirement-accounts#loans-and-rollovers">https://www.finra.org/investors/investing/investment-accounts/retirement-accounts#loans-and-rollovers</a></p><p>The Robinhood IRA is available to any customer with a Robinhood brokerage account in good standing.</p><p>Other fees may apply. See our Fee Schedule for details.</p><p>Recommendations are not available to Massachusetts residents. All investments involve risk and loss of principal is possible. Robinhood Financial LLC (member SIPC), is a registered broker dealer. Robinhood Securities, LLC (member SIPC), is a registered broker dealer and provides brokerage clearing services. All are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).</p>

Visit Robinhood | Read our Robinhood review

Betterment

Betterment is also more of a robo-advisor than M1 Finance. You can select from among Betterment’s diversified portfolios and then Betterment takes care of automatic trading, rebalancing, and dividend reinvestment.

With Betterment, your cost for an investment account is $4 a month or 0.25% annually (a bit higher than M1 Finance’s monthly fee).

Betterment also offers a checking account with a debit card that pays cashback rewards on select purchases, so if checking is important to you, Betterment is the better option. However, its cash reserve account pays 4.25% (as of Dec. 2, 2024) APY, which is equal to M1’s cash reserve account as of November 2024.¹⁰ <p class="">Current promotional rate; annual percentage yield (variable) is 5.00% APY as of April 2, 2024, plus a .50% boost available as a special offer with qualifying deposit. Terms apply; if the base APY increases or decreases, you’ll get the .50% boost on the updated rate. Cash Reserve is only available to clients of Betterment LLC, which is not a bank; cash transfers to program banks conducted through clients’ brokerage accounts at Betterment Securities. </p> ¹¹ <p class="">Paid non-client of Betterment. Views may not be representative, see more reviews at the <a href="https://apps.apple.com/us/app/betterment-investing-saving/id393156562" target="_blank" rel="noopener noreferrer">App Store</a> and <a href="https://play.google.com/store/apps/details?id=com.betterment&amp;hl=en_US&amp;gl=US&amp;pli=1" target="_blank" rel="noopener noreferrer">Google Play Store</a>. No guarantee of future performance or success is being made. <a href="http://www.betterment.com/affiliate/financebuzz" target="_blank" rel="noopener noreferrer">Learn more</a> about this relationship.<br></p> ¹² <p class="">For Cash Reserve, Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.<br></p> ¹³ <p>Betterment Cash Reserve ("Cash Reserve") is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients' funds are deposited into one or more banks ("Program Banks") where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.</p> <p>If you participate in Cash Reserve, you authorize Betterment, on a discretionary basis, to direct Betterment Securities as to the allocation of your funds among one or more Program Banks. Deposits at each Program Bank are insured by the FDIC up to $250,000 for each insurable capacity (e.g. individual or joint). In aggregate, funds deposited into Cash Reserve are eligible for up to $2,000,000 (or $4,000,000 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to eight Program Banks). Even if there are more than eight Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $2,000,000 (or $4,000,000 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. Although certain types of accounts, such as trust accounts may be eligible for additional FDIC insurance based on the number of beneficiaries, funds will be allocated to each Program Bank in such a way that provides up to $250,000 of FDIC insurance for individual accounts, $500,000 of FDIC insurance for joint accounts, and $250,000 of FDIC insurance for trust and other corporate account types, in each case per Program Bank. In the event you maintain an individual or joint Cash Reserve account and are a beneficiary of a Cash Reserve trust account, Betterment does not provide FDIC insurance based on your status as a beneficiary. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full <a href="https://www.betterment.com/legal/cash-reserve">terms and conditions</a> and <a href="https://betterment-prod-cdn.s3.amazonaws.com/agreements/Betterment_LLC_ADV_2023_09_28.docx.pdf">Betterment LLC's Form ADV Part 2</a>.</p>

Read our Betterment review