Investing is exciting. There are profits to be made, fortunes to be lost, and a slew of things to learn and discover. Diving into the world of stock-trading is not only about gathering knowledge of certain companies and how they operate, but also involves seeing the world at large, and how things really work. Investing is really a new way of seeing.
That said, the actual process of investing can be a bit dull. What we are referring to is the array of graphs, charts, and statistics that the average user must comb through in order to visualize the performance of their portfolio. Sometimes, all we want is a simple picture.
That’s why M1 Finance’s founder and CEO Brian Barnes decided to create a unique and innovative product for beginners. In a Reddit “Ask Me Anything” session, he states that his intention behind founding M1 Finance was to create “a holistic, personalized, and automated personal finance app”.
And we can say without hesitation that this is exactly what M1 Finance does. M1 Finance is a robo-advisor, but it combines the easy charm of automated (robotic) investing with the option of making your own choices and allocations. This has great appeal for the amateur that, despite their inexperience, revels in the autonomy associated with hands-on investing.
Most robo-advisors will present customers with a questionnaire that determines their optimal stock/bond allocation, but M1 Finance goes a step further by matching each profile generated by the questionnaire to a unique, robust portfolio. In this sense, the service feels personally tailored to each and every user. M1 Finance, in this sense, could be your first step on the quest to become independently wealthy.
What’s more, if you have the drive and know-how, M1 Finance allows you to create a portfolio from the ground up.
Four Major Perks of M1 Finance
Below are four features which really set M1 Finance apart from its peers and competitors. In a rich market of robo-advising, it is important to pick the platform that suits your needs. While no investment is risk-free, M1 Finance goes a long way in ensuring you success.
- Pie Investing: as the phrase suggests, this feature of M1 Finance allows you to manipulate and adjust your portfolio by selecting, adding, and removing ‘slices’ from the whole. There are also ‘professional’ pies to choose from, which can later be tweaked and customized.
- Automatic Rebalancing: M1 accounts have a built-in rebalancing feature. What this means is that M1 will rebalance your portfolio as your investments grow. For example, if one of your ‘assets’ is overachieving and you make a new deposit, that asset will get a lower % of deposited funds so that your other assets will ‘catch up’. This leads to a balanced and secure portfolio, and prevents you from having all your eggs in one basket. As a casual investor, this is the kind of small, but crucial detail that is easy to lose sight of.
- Fractional Shares: This is a great feature for beginners who may not have the money to buy whole stocks that they desire. Say you have eyes on one of those expensive behemoths like Facebook (NYSE: FB) or Amazon (NYSE: AMZN) but have only $200 dollars to invest. M1 gives you the chance to buy a fraction of a share, so that you never have money that is not active with potential.
- Tax-Loss Harvesting: Ok, don’t get your hopes up too much here. M1 Finance does not have tax-loss harvesting. Yet, they have a few features which mimic the benefits of tax-loss harvesting. For example, when you sell shares, M1’s system will first sell losses that offset future gains, thereby helping you in the long run.
M1 Finance’s Visual Charm
Pie investing is perhaps M1 Finance’s most remarkable feature. It sounds simple, but that’s exactly where its charm lies: pie-based investing allows the user to visualize, or picture their portfolio holistically. Modestmoney.com notes that this feature is what makes M1 Finance “really shine”.
M1 Finance’s pie charts allow for a kind of intuitive flexibility. One is able to choose from predetermined charts and then tweak them to your own specific needs. What’s more, the pies’ “slices” can be made up of stocks, bonds, and electronically traded funds.
M1 Finance’s “expert” pies are a completely hands-off option: members are able to choose from “themed” pies, such as general investing, plan for retirement, hedge fund followers, and responsible investing. Whatever your status in life, M1 Finance probably has a pie that is suited. And if that is not the case, adjust it a little. That is the beauty of this system.
The Bottom Line
We think that M1 Finance might be the most visually impressive of the burgeoning robo, or auto-advisor field. It’s pie-based trading allows members to objectify their wallets beyond symbols and numbers. While it is basic enough to appeal to beginners of all stripes and persuasions, it allows for the flexibility that more seasoned traders crave.
A major drawback is that M1 Finance is only available to U.S. citizens and green card holders. If you reside outside the U.S. and M1 Finance sounds like the perfect platform for your investing needs, just do some quick research – there are many comparable robo-advisors out there.