M1 Finance

M1 Finance is a financial platform that combines robo-advising with self-directed investing, offering a hybrid approach to wealth management. It caters to individuals who want to build and manage their investments with a degree of control while still benefiting from automated processes. The core of M1 Finance is the "Pie" system. Users create a personalized portfolio represented as a pie chart, where each slice represents a specific stock, ETF, or even another pre-built expert portfolio. The size of each slice dictates the target allocation for that asset within the overall portfolio. This visual representation makes it easy to understand the portfolio's composition and diversification. Once the Pie is set up, M1 Finance handles the rebalancing automatically. When new funds are added or withdrawals are made, the platform directs the money to buy or sell assets proportionally to maintain the target allocations. This ensures the portfolio stays aligned with the user's desired asset allocation strategy over time. Users can also manually rebalance their portfolios if they wish to deviate from the automated system. A key advantage of M1 Finance is its cost-effectiveness. The platform boasts no management fees or commissions for brokerage accounts, making it an attractive option for both beginners and experienced investors. They generate revenue through securities lending, interest on cash balances, and premium features. Beyond investment management, M1 Finance also offers other financial services. "M1 Borrow" allows users to borrow money against their investment portfolio at competitive interest rates, providing access to a line of credit without needing to sell their assets. This can be useful for managing short-term cash flow needs or pursuing other investment opportunities. "M1 Spend" offers a checking account and a debit card, integrated directly with the investment platform. This allows for seamless transfers between cash and investment accounts. M1 Plus, a premium membership, enhances these features with higher interest rates on checking accounts and cashback rewards on debit card spending. While M1 Finance offers a robust and flexible platform, it's not without its drawbacks. The trading window is limited to one or two times per day, which may not be ideal for investors who prefer day trading or require more frequent trading opportunities. Furthermore, M1 Finance doesn't offer access to certain investment types, such as mutual funds or options trading, limiting the investment options available to users. In conclusion, M1 Finance provides a unique and cost-effective platform for individuals who seek a blend of automated investing and self-directed control. Its Pie-based system simplifies portfolio management and rebalancing, while features like M1 Borrow and M1 Spend offer additional financial flexibility. The platform's limitations on trading frequency and investment options should be considered before making a decision, but for many investors, M1 Finance presents a compelling alternative to traditional brokerage accounts and robo-advisors.