Posted by Chuck on January 5, 2020
Brokerage Bonuses

Published on January 5th, 2020 | by Chuck

41

M1 Finance Investing Review, Plus Up to $2,500 Brokerage Bonus and $20 Referral Bonus

[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.

Brokerage Bonus

The brokerage bonus essentially involves transferring your assets, starting at minimum of $20,000, over to M1. Here are the bonus tiers as of January 2020, and of course do consider doing the referral bonus (see below) when opening for the brokerage bonus.
  • Get $100 for $20,000 – $100,000
  • Get $250 for $100,001 – $250,000
  • Get $500 for $250,001 – $500,000
  • Get $1,000 for $500,000 – $1,000,000
  • Get $2,500 for $1,000,001 and higher
Full instructions of what the transfer entails and the terms and conditions: https://support.m1finance.com/hc/en-us/articles/360036067694-Transfer-Promotion-earn-up-to-2500

Referral Bonus

Referral bonus is usually $10 for the new member and $10 for the referrer. For January 2020, it’s been raised to $20 for the new member and $20 for the referrer; plus, get $1,000 if you refer 10 friends. 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 90 days of signup, and not withdraw that initial deposit for 30 90 days.

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.”
“Refer and earn” under your name in top right hand corner of M1 shows referrals you’ve made. All of the detailed terms can be found here.

Final Thoughts

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.



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Sa
Sa

Highly recommend.

Dave S

I love M1 Finance because of its fractional investing feature. I’ve been a member for 1.5+ years. I have a regular trading and roth IRA account with M1.

After you create your investment pie with stocks or ETFs and have the ‘auto invest’ feature enabled, then M1 will automatically invest into the stocks and ETFs you’ve allocated if you have at least $10 in cash. I’ve had instances where as low as $0.01 have been invested in Google and Microsoft.

Unfortunately you can’t manually invest into a specific stock or ETF at $0.01, but at a minimum of $10. Before Oct 2019, it was possible to invest in $0.01 manually, but M1 has closed that ‘bug’ or ‘loophole’.

Keep in mind that dividends don’t get reinvested into the same stock/ETF, but goes into your ‘cash balance’ and once it exceeds $10, then it will auto invest into your portfolio if you have the ‘auto invest cash’ feature enabled.

Overall I recommend M1 as a great starter for investing. Once Robinhood makes fractional investing and DRIP available to everyone, I may move my active investing to Robinhood depending on the features it will offer, but keep my Roth IRA at M1.

I’ve added my referral link to the M1 sharing page. I would appreciate the support! 🙂

Dave S

I forgot to mention that as long as you initiate your deposit of any amount before 9AM EST during a trading day then M1 will invest the money into your allocated stocks and ETFs on the same day.

A M
A M

I did notice a weird quirk that basically allows you to buy a small chunk of a stock and hold it. Say I don’t currently have any AMD in my pie and want to buy a piece of AMD because I noticed at 8 AM EST it’s falling. You can go into your pie and add 5% of AMD and it’ll purchase x amount of AMD based on how large the pie is (or the pie within the main pie, to make 5% an even smaller amount) and what 5% of it translates into. Then, as soon as the trade occurs on that day, you can set AMD to 1% of that pie.

Then AMD won’t be purchased automatically for you but won’t be sold either, until such time as it becomes “underweight” OR you choose to rebalance

Also, you can only have any 100 ETFs or stocks total in your portfolio, however they are allocated within the pie or pies. So there’s a limit to how many you can do this with. But it’s an interesting option if you want to buy into a stock asap and then hold it.

Dave S

You can also open multiple active trading accounts in case you want to own more than 100 stocks and etfs.

At one point I had 3 regular trading accounts but had it merged to one for convenience.

debit
debit

How do they enforce wash sale rules when self defined etf with fractional shares are involved?

Steve

What do you mean? I don’t see how this would make any difference for wash sales. (You’re not really creating your own ETF; I’m guessing they would report each stock individually to the IRS.)

A M
A M

Like the recent Tastyworks brokerage bonus, this one seems to count cash as assets in the brokerage transfer. So, for instance, 5K of stocks + 15K of cash transferred should be a okay for lowest tier of bonus. I’m basing this only on this text: “The account value is determined as the current market value of all holdings and cash on the day the transfer is completed. ”

Rest of the terms aren’t super clear on it. I wanted to add this to the post but I wasn’t entirely sure if it’s true (and still am not)

Justin
Justin

Unlike Tastyworks, it doesn’t look like they will reimburse the transfer fees which kills the deal on the lowest transfer bracket.

A M
A M

You’re right. I used to mainly use Fidelity, which doesn’t charge transfer fees, so I didn’t think about that!

Brian C 🐕

They reimburse the fees up to $100

Justin
Justin

I’ve recently started using M1 and it’s great. For those that like this idea but don’t want to do the work to create your own pie. Paul Merriman, an expert on asset allocation, has prebuilt pies that you can use based on your risk tolerance and whether it’s tax-deferred or taxable. Here’s a link: https://paulmerriman.com/m1-finance/

max martori
max martori

seems like the lowest initial deposit is 100$ it is not allowing me to do less is this true?
EDIT:please add to the T&C “The offer is valid only for new brokerage or IRA accounts with M1. Please send invitations only to people you know personally and who will be glad to get them. To qualify for the bonus, referred family and friends must make an initial deposit of $100 for taxable accounts and $500 for IRAs, within 90 days of signup and not withdraw that initial deposit for 90 days.”

dizzy

Cool, will definitely sign up now that there’s a bonus. I’m just starting out on investing and hate how a lot of these signup bonuses have high limits. Really like to support a site that’s been free all along too.

G
G

I’ve used M1 Finance since 2018. It’s probably the best zero-cost way to get started with investing. Solid interface and everything is straightfoward. Now that others are introducing fractional shares I’m not sure if their growth will slow down. The one downside is lack of options for trading windows; Robinhood is better for active investors. However, one thing OP didn’t mention, M1 makes some of their money from premium account upgrades. Some people might be interested in those perks. Personally I don’t think it’s worth the annual fee, but a cashback debit card might be useful for some.

Mdam0re

There’s also a 20$ inactivity fee(90days) if your account has less than 20$ in there..

Learned the hard way with a 10$ referral bonus that sat there.

A M
A M

It’s in the post

Richard
Richard

I don’t see a requirement to maintain balance in M1 transfer bonus. Does it mean I can transfer out the next day and still qualify for bonus? Not sure how in-kind transfers are working with their “pies” either. I don’t want to trigger taxable event.

A M
A M

I don’t see a time requirement either.But on the page talking about transferring in, it does discuss how M1 will contact you to figure out how you want to fit your transferred assets into your pie. I do think based on my reddit reading that they’ll just hold the assets as is, without selling, except in the case of ETFs they don’t support (which they will sell)

According to the fee schedule linked in the post, there is an outgoing account transfer fee of $100 so that’s something to keep in mind.

Ben
Ben

Last year I considered opening this account since the auto balancing and fractional share capabilities seemed like a big advantage over Robinhood. But I stopped part way through the application when I came across some nasty clauses hidden in the agreement. See https://money.stackexchange.com/questions/107765/if-the-broker-invokes-this-clause-to-sell-assets-to-themselves-on-death-how-is

Now that a lot of major brokerages have gone fee-free, the appeal of M1 would be just the bonus, and it is small compared to most others. But if you’re churning it then I guess the weird terms aren’t as likely to be a problem.

Wilson
Wilson

sounds like that is to cover cases where you owe them money, brokers can’t take losses on accounts or they would not stay in business long

Ben
Ben

In that case they should be forced to sell at full market value, and then take part of the proceeds. There’s no need for a clause like this; other brokers don’t have it.

Justin
Justin

The appeal of M1 is to auto-invest in custom asset allocations and have it automatically rebalanced as money flows into the account.

As far as I know, only Motif offers something similar to this.

Chunk
Chunk

I have a question, I opened one of these M1 accounts in early 2018. I never funded it.. and my account was zero. I just tried logging in and I can log in using that login but it shows the account as “closed.”

Am I eligible to open a new account with the referral bonus?

Brian C 🐕

Im actually very excited about this. This looks to be exactly what I have been wanting. Will definitely be moving my auto investing to this platform. Thanks Chuck !!!

Brian C 🐕

Actually thanks A M !!!

Sodium
Sodium

M1 is so far good.Even in the pie i can invest more in a particular stock i wanted. Integrates easy with turbotax.

Pag
Pag

sounds like motif.com

Justin
Justin

It is similar to Motif with more flexibility and fewer fees.

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