Update 1/5/22: Updated the brokerage bonus tiers, notably the $500 might for $50k might be interesting to some. The $50/$50 referral bonus is still going as well, no referrals in the comments below, go here instead. (hat tip to reader Avi)
[Below is a guest post from reader A M.]
M1 Finance Introduction
M1 Finance is an investing service with a unique approach: fractional share investing of a “pie” of stocks and/or ETFs (funds consisting of many stocks, like ticker VGT) of your choosing, for no fee. Think of it as making your very own ETF in a way, with no expense ratio (except if you add actual ETFs to it, which have their own expense ratios). M1 has been around for at least a year, and has a fairly active subreddit and a thorough help section with detailed articles on all of the things I will cover below. I’ll then explain the $100-$2,500 brokerage transfer bonus and the current $20 referral bonus for January 2020.
First, the pie. Your entire portfolio is considered your “pie.” When you set up your “pie,” you can break it up into “slices,” each of which you can allocate from taking up 1% all the way to 100% of total dollar value of your pie (you can have a maximum of 100 slices, then, and minimum of just 1). Each slice can be a stock or an ETF, and basically every stock and almost every ETF is available at the same expense ratio as you would find anywhere else (no additional fees from M1 finance). As a neat little feature, your slices can themselves be “pies” with those smaller pies having slices of their own. For instance: Your portfolio pie contains two “slices” that are actually pies called “CAR STOCKS” and “TECH STOCKS.” The “CAR STOCKS” slice can contain TSLA as well as, say, KARS, which is an ETF. Your “TECH STOCKS” one can also have any number of slices with either ETFs or stocks within it, allocated from 1% all the way up to 100%.
Importantly, your “pie” represents your target portfolio. When you schedule an investment into your pie, you invest into your “pie” as it’s set up by you at that very moment. You can change the pie and all of the slices within it at any time — this would mean you are just changing the target allocation of all the slices. It does NOT mean that you’d instantly be selling off any stocks — this only happens when you choose to “rebalance” one of your pies and both sell and buy to get all of the slices at your target allocations. If you increase the target allocation of TSLA, M1 will of course buy TSLA in the allocation you set for it. And, of course, if the value of TSLA rises and it consists of less of your pie than the target percent, M1 will buy more of it for you to bring it up to the target allocation. M1 shows via color-coded and differently sized slices what both your target pie and your current allocations look like in both the app and the website, both of which have essentially the same functionality.
The rest of the app is pretty straightforward as a sort of mix between a robo-advisor that can autoinvest for you during one set trading window daily at 9 AM and a Robinhood type pick and choose stocks and ETFs app. Poke around and it’s pretty easy to pick up how it all works. One note: If you intend to use a pie you make pie as a “slice” in your portfolio, then you make that pie beforehand in the “Research” tab under “My Pies” and then add it to your actual pie as a slice under the “Invest” tab.
For the help section with detailed articles, see: https://support.m1finance.com/hc/en-us. The subreddit is r/m1finance. Also see the full fee schedule here, notably a $20 fee for accounts with less than $20 in them which go inactive for 90 days.
- $50,000 – $499,999.99 for $500
- $500,000 – $999,999.99 for $1,000
- $1,000,000 – $1,999,999.99 for $2,500
- $2,000,000 – $4,999,999.99 for $4,000
- $5,000,000 +for $5,000
Just note, there seems to be $100 fee to transfer out your funds.
(1/5/22: Currently it’s $50/$50)
Referral bonus is usually $10 for the new member and $10 for the referrer. To qualify for the bonus, referred family and friends must make an initial deposit of $100 for taxable accounts (or $500 for IRAs) within 30 days of signup, and not withdraw that initial deposit for 30
Basic steps from the website for opening with referral:
- Create an account using your friend’s unique referral link
- Fund your account within 90 days of signing up
- If you opened a retirement account, you must also open a non-retirement account to receive your referral credit.”
Update 11/7/21: Referral bonus back up to $50 now.
Update 9/8/21: Referral bonus is now $30
Update 7/8/21: Referral bonus is now $50 for each party (link). You can also leave and find referral links on this dedicated page by following the rules outlined there. Hat tip to reader Peek
Update 1/6/21: They changed the brokerage bonus tiers, and also added a higher
$3,500 $4,375 tier. Updated below. Bonus seems to be available in some cases to existing customers who transfer over new assets as well. Also referral bonus increased to $30/$30 through 2/28/21. (ht reader Xatos)
Update 10/7/20: Brokerage bonuses have been increased by 25% (up to $3,250) for October. Hat tip to reader SamL
Update 9/1/20: Referral bonus back up to $20.
Update 5/1/20: Offer is back for the month of May. Though the referral bonus is down to $10 for each the referrer and the new customer (down from $20 in January).
Thanks to reader A M for submitting this guest post. We’ll add this to our list of brokerage bonuses. Feel free to comment below with your thoughts on M1 Finance. You can also leave and find referral links on this dedicated page by following the rules outlined there.