Posted on by Micah McDonald

My Experience Signing Up With M1 Finance

My Experience Signing Up With M1 Finance

I originally heard about M1 Finance through my financial mentor, Paul Merriman. Everything I had been told about M1 Finance made me think, finally, somebody has built the perfect platform for the long-term DIY investor. Partial shares, zero trading commissions, one button portfolio rebalancing, the ability to pick your own ETFs without worrying whether they are on the commission-free list, automatic investment of cash; what more could a long-term investor ask for?

After hearing about M1 Finance, I didn’t initially sign up with them because I am an investor who goes overweight ETFs that are going down in value and I purposely do not make any attempt of keeping a balanced portfolio. I like my portfolio the way I run it and I thought that M1 Finance could not serve my needs as an investor. Well, I was wrong. I have recently been able to save money above and beyond my retirement account, and I was putting this money in our brokerage account. I was determined to continue my own investing philosophy inside my brokerage account that I was employing in my retirement accounts. But, the more I thought about this, the more I realized that M1 Finance is a better solution for our taxable account holdings. The reason is that we may potentially be tapping these assets in the not-so-distant future, while the retirement assets are ‘off-limits’ for another decade or longer. M1 Finance’s methodology for withdrawing funds from these working assets is yet another perfect modern-day personal finance solution. If you want to withdraw funds from your account, the securities are sold in the most profitable and tax efficient methodology.

So, I spent the week of July 7th – July 13th, 2018 doing my own due diligence on this new company, M1 Finance. During that week I read all the disclosure documents at M1 Finance and I read many online reviews. Once I was satisfied that M1 Finance was indeed a legitimate, licensed, insured and reputable company, I decided to open and fund a standard brokerage account with them. Below, I have listed the time-line of the steps I took to open and fund this account.

  • July 13, 2018 – that evening I opened a joint brokerage account with M1 Finance on their desktop platform
  • July 14, 2018 – early in the day I began building my first “Pie” or portfolio with all 31 ETFs that I monitor daily on my website, the Deep Value ETF Accumulator. I then downloaded the M1 Finance iOS app to my smart phone. I really liked how clean and simple their app was.
  • July 14, 2018 – later in the day I decided that I would indeed fund this newly opened account.  I used the M1 Finance desktop website to connect my bank account with M1 so I could do a transfer. I then eagerly awaited the two small deposits to show up in my bank account.
  • July 17, 2018 – the two small deposits from M1 Finance showed up in my bank account. I then set up a transfer for $1,000.00. The minimum is $100 in a brokerage account and $500 in an IRA.
  • July 18, 2018 – early in the morning I checked my new M1 Finance account to see if the transfer had happened yet. To my surprise, the transfer-in had taken place. These kinds of transfers have taken up to 3 business days with other companies I have dealt with.
  • July 18, 2018 – shortly after 10:00 a.m. EST the securities had been bought and were viewable at both the desktop site and the mobile app.

The speed at which I was able to open, fund and invest in my selected securities was very impressive. This is definitely a PLUS for M1 Finance. At this speed, I will assume that it is possible to get paid on a Friday and have my savings working for me by the next Monday or Tuesday.

My original intent was to set up this M1 Finance account just to see if I liked it or not. I thought I would just monitor it for 6 to 12 months and then commit more savings to it. But, the more I’ve thought about the power of this investment vehicle and gotten use to their website, the more I believe I will be putting more of our saving here.

As I stated earlier in this article, I did review all the disclosures at M1 Finance. While reading these documents, I was satisfied that my money would be safe at M1 Finance. But, there was one red flag that I think investors need to be aware of. They loan out your securities while you continue own them. This is a normal practice that is done at most brokerage houses and this is one of the ways M1 creates revenue. But, I believe investors need to read, understand and accept the risk of this disclosure statement before they invest: “THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT PROTECT YOU WITH RESPECT TO YOUR SECURITIES LOAN TRANSACTIONS IN THE PROGRAM. THEREFORE, THE COLLATERAL HELD FOR YOU MAY CONSTITUTE THE ONLY SOURCE OF SATISFACTION OF APEX’S OBLIGATION IN THE EVENT APEX FAILS TO RETURN THE SECURITIES.” There is a lot more to read in the disclosures, but I wanted to highlight this particular statement. As always, please perform your own due diligence prior to investing in any securities or with any broker.

Now, I’d like to move on to some screenshots that you may find useful if you are considering signing up with M1 Finance.

Here’s a link to the sign-up page: Start Using M1 Finance Today

Here’s how to build a portfolio or your first “Pie”:

When you click “Create New Pie” you’ll come to this page:

After you put in a symbol, hit enter and it will bring up the selected security:

Once you click the “+” symbol, you’ll come to this page, now click the “ADD” button:

Next, you’ll see the “New Pie” with the selected security in it:

Now you can click the “EDIT” button to change the name of this Pie and/or add more securities to this Pie.

Below, I’ve built a “SAMPLE” Pie with four securities in it and chosen “EQUALIZE” for equal weighting of this portfolio. Don’t forget to save your first Pie when you’re finished building it.

I’ve shown in the above steps how to build a portfolio or “Pie” with the M1 Finance desktop website. Below is a screenshot of the same portfolio in the iOS App.

Although I could show screenshots of the entire M1 Finance website; I think it would be better for new investors to just sign up without funding their new account and explore. There’s no obligation; if you don’t like M1 Finance, you can just delete your account without funding it.

If you want to invest in the same 31 ETFs that the Deep Value ETF Accumulator invests in, click this link:  DEEP VALUE ETF ACCUMULATOR  – EQUAL WEIGHT

If you are looking for a more comprehensive review of M1 Finance, I would suggest an article other than mine. The reason for this article was to simply introduce people to M1 Finance and to share my experience with signing up with them.  Here are a few reviews about M1 Finance that I found useful:

Thank you for taking time to read this review of M1 Finance. If you found it useful, please share it with a friend.

Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator

Disclosure: I have a brokerage account with M1 Finance. I also have affiliate marketing links inside my website that go to M1 Finance. Please perform your own due diligence or seek the advice of a Registered Investment Advisor prior to investing in any security or investing with any company mentioned in this article.

 

 

 

18 Replies to “My Experience Signing Up With M1 Finance”

  1. Hi Micah,
    Thanks for sharing details. I opened the M1 finance account but yet to link my bank account. Only question I am looking answer is “how fractional shares / etfs are allocated”. If it is fund i could understand. But how come a share / ETF can be fractional. Vanguard does for it’s dividend reinvestment for etfs. M1 finance treats it as a Fund? i.e Only one price per day or is it trad-able? Can you please explain.

    1. Hi Vijay. I had to get the answer directly from the M1 website. Here’s what they have to say about fractional shares: “What are fractional shares?
      May 23, 2018 07:58
      A fractional share is equity in a security that is less than one full share. M1 splits every share into 1/10,000th of a share so you can trade exact amounts of each based on the targets set in your portfolio.” I hope that helps explain. Thank you for your question. Micah

      1. Thanks. whether M1 finance treats fractional shares as funds. i.e Only one price per day or is it trad-able?

        1. You can see the real time value of your shares at M1 but they only trade (both buy and sell) once a day. They do all their trades once a day at 9am CST utilizing only market orders.

      2. Micah,

        Vijay was asking how is M1 able to sell fractional shares of ETFs when the large investment firms (Fidelity, Vanguard, Schwab, etc.) cannot.

        So, how is M1 able to do this when others cannot or choose not to?

        1. Hi Greg
          I don’t think that the big firms cannot, they just choose not to offer fractional shares.
          Currently, the big firms do use fractional shares for their DRIPs (dividend reinvestment plan).
          In my opinion the big firms are just late to the table on this.
          I also believe these newer, smaller companies like M1, StockPile, Motif, Folio, Betterment, Stash, etc. will eventually force the hands of the larger companies into offering fractional shares for all investors.
          The brokerage industry is evolving quickly, but this might take a couple more years for the big brokers to get it “right”.
          I hope this answers your question.
          Thank you for checking out my website.
          Micah

  2. Hi Micah,
    I’m brand new to investing. I bumped into this site while looking for info on M1 investing( first i wanted to go with Stash) and found your site to be incredibly helpful reviewing M1 and explaining how you pick ETFs (a lot of info still goes over my head but I’m learning). My question is regarding your buys and sells. I know you try to sell when you’re 1% or more in profits. How do you that with M1? or do you just use another software for this. As well, how would you use M1 to reinvest that money into another ETF?
    I’m sorry if these questions sound stupid.

    Thank you, Juan

    1. Hi Juan
      Thanks for the comments and questions.
      These are certainly not stupid questions you’ve asked.
      In fact, they are extremely important questions because they need to be satisfactorily answered before you invest your hard-earned dollars.
      The most important thing that I must clear up is the distinction between my M1 Finance account and my other accounts.
      M1 Finance is specially designed for long-term and mostly buy and hold investing.
      I love M1 Finance and highly recommend it for most investors looking to buy ETFs for long-term investing.
      I am using M1 for my liquid long-term savings (non-retirement funds).
      I just put about $100/week in my M1 account on Fridays and it buys on Mondays to balance out the portfolio.
      This is great because the money goes to work almost immediately, and it is consistently buying more shares of the ETFs that haven’t gone up in value or have gone down in value.
      So, M1 is constantly balancing my portfolio with every contribution I make, which I like for this account.
      M1 can be used for IRA accounts too, but I currently only have a brokerage account with M1.
      In my opinion, M1 shouldn’t be used for trading, it’s not designed for that.
      As far as my buys and sells; those are in my IRA accounts at TD Ameritrade.
      TD is a typical low-cost brokerage, so I do pay a commission on most of my buys and sells there.
      I don’t sell very much in these accounts and when I do sell, it’s typically a much higher profit than 1% because I must cover that $7 commission.
      Also, when I sell, I don’t sell my whole position, just trimming some profits.
      So, if I have $5000 invested in an ETF and it becomes worth $6100 (22% gain), I’d sell just enough shares to get to about $1100 cash.
      I do like buying and selling, but that isn’t the goal for me.
      My goal is to buy shares of ETFs that I want to own at the lowest prices I can get them at.
      So, when you look at my daily list that I publish, the ETFs are ranked by “most discounted” at the top, to least discounted at the bottom.
      I prefer to buy the ones that are closer to the top of the list.
      This method of buying cannot and should not be tried with M1.
      M1 isn’t designed for the method of buying & selling I do at TD Ameritrade, M1 is designed for a “balanced portfolio” approach.
      Here is another reason I like M1.
      M1 makes reinvesting dividends super easy.
      Their default option for reinvesting is: any time your cash balance goes above $10, M1 will purchase more shares of the ETFs and stocks in your portfolio on the next business day.
      I like the default setting at $10, so that’s what I’m doing, but it can be changed to another dollar amount if you like.
      So, if you had $10,000 invested at M1 and you were getting 2% dividends paid quarterly, you’d see about $50 in dividends every 3 months.
      So, pretend you got a $50 dividend one month, the next day M1 would buy shares of the ETFs and stocks in your portfolio with that money (affectively rebalancing your portfolio).
      This is a far better way to reinvest dividends, than the traditional “DRIP” programs that just buy more shares of the same ETF or stock that the dividend came in from.
      I usually have long winded answers, so I apologize for the length of this response.
      If I didn’t answer any of your questions very well or you have other questions, please write me again.
      Thank you again for commenting on the Deep Value ETF Accumulator blog.
      Micah

      1. Micah thank you for the quick reply and great info. I wasn’t really expecting to get a reply so soon. As of now, since I only have $1000 as capital to start I’m thinking of using the learner’s portfolio that you outlined for Vin awhile back (DEM, FGD, PDN, FTCS, EZM and EES). I’ve been reading a lot in your site and I know you like to buy in $1k+ chunks, but given that M1 has no fees and allows to buy fractional shares I was thinking of spreading the $1k through all these 6 positions. Do you think that’s ok? or should I just use the 1k to buy one EFT and when i get another 1k buy another position?

        Once again, thanks a million in advance.

        Juan

        1. Your plan is perfect in my opinion. That’s the great thing about M1; you can diversify immediately. And, if you can afford $10 or more per pay check, you can set up an automatic transfer and continue to add money to those ETFs weekly or biweekly; however you get paid. The $1000 chunks is all about reducing the impact of commissions at TD Ameritrade and nothing to do with M1. I’m not exaggerating when I say; I think M1 is the best new financial platform in the last decade. I wish you well Juan.
          Micah

  5. Hi again Micah,

    Signed up with M1 and got this baby up and running with (DEM, FGD, PDN, FTCS, EZM and EES)

    I’m thinking of adding 4 more ETFs that are in Bear Mode to my pie. I don’t mind the volatility. So i’m thinking FXZ, RWJ, IJT and either EZA, FNI, EWW, EWY, EWD from the miscellaneous region.

    Any thoughts?

    Thank you.

    1. Congrats Juan. Add as many as you are comfortable with. The only ones that could remotely be considered “overly risky” are the single country ETFs and QLD. QLD is leveraged, so it does carry twice the risk of QQQ. So, all that to say, QLD is the only one I would discourage you from using. I own all 31 in my M1 account, and it’s been a little less volatile than the S&P 500. But I’ve only had that account for about 6 months. Good luck. Market corrections are excellent times for accumulating equities. Micah

  6. Oh wow, you my friend have the fastest replies ever!!!

    Thanks again for all your valuable insights.

    Cheers 🙂

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