Is it possible to trade stocks and ETFs completely free? That answer is a resounding “Yes” with M1 Finance. This 100% free investing app lets you trade stocks and ETFs completely free. In this M1 Finance review, you’ll learn all the ways you can invest for free as a DIY investor or their automated robo-advisor investing options.
What is M1 Finance?
M1 Finance is a free investing app. Although they used to charge a small fee, they dropped all management fees in late 2017. Today, you will never pay to buy or sell an investment. And, they don’t charge annual account management fees.
DIY investors of all experience levels can greatly benefit by investing with M1 Finance. If you currently $4.95 per trade with your regular brokerage, you’ll now pay $0! These trade fees add up, especially when you’re only investing small amounts of money at one time. Some financial experts that a trade fee doesn’t exceed 2% of your investment amount. If you follow that rule, each investment needs to be at least $250 with a $4.95 commission.
M1 also lets you buy partial shares of stocks and ETFs, so you can invest in multiple companies and build an instantly diversified portfolio.
Is M1 Finance a Good Fit for Every Investor?
Also, professional traders won’t want to use M1 Finance because all trades are executed at the beginning of the trading day. All shares are purchased or sold at the current market price.
Because you must assign at least 1% for each investment, you can technically have up to 100 holdings in your personal pie. Keep in mind that you can buy shares in $0.01 increments and must sell in $0.02 increments.
Almost any Stock and ETF
You can invest in either stocks or ETFs that trade on the NYSE or Nasdaq exchanges with M1 Finance. All trades are executed starting at 9 am Central Standard Time (10 am Eastern) every day the market is open. Like other free investing apps, you can’t trade on-demand. For most investors, this isn’t an issue as a few cents difference in share prices doesn’t necessarily matter when you dollar cost average or you keep your investments for several years.
At this time, you can’t trade OTC stocks, penny stocks, mutual funds, options, individual bonds (you can trade bond ETFs), or short sell stocks.
While many discount brokerages place a restriction on which stocks and ETFs you can trade for free, M1 lets you trade almost any individual stock or ETF. For example, you can trade Baidu (BIDU) because it trades on the Nasdaq, but you can’t trade Tencent (TCEHY) because it’s an over-the-counter stock that trades on the Hong Kong exchange. For these “specialty stocks” you will still need a regular brokerage like Fidelity. But 99% of casual investors will find everything they need on M1 Finance.
M1 also has a cool customized investment option called “Expert Pies.” These are custom-made portfolios that let you invest in a basket of stocks or ETFs for the following investing strategies:
- General Investing (Ultra Conservative to Ultra Aggressive risk tolerance options like a robo-advisor)
- Retirement (Target date funds)
- Responsible Investing
- Income Earners (Fixed Income investments)
- Hedge Fund Followers (Mimic hedge funds without paying hedge fund fees)
- Industries and Sectors
- Just Stocks and Bonds
- Other Investing Strategies
You can invest in one expert pie, multiple pies, or no pie. It’s your choice.
Although your main investing portfolio is called “My Pie” which can hold up to 100 different holdings. You can also create your own “custom pies” if you want to hold more than 100 different stocks and ETFs. If you subscribe to several investment newsletters, you can create a different pie for each one to easily track your investment performance. You can include these pies in your primary portfolio and decide how many cents of each dollar you invest goes toward that pie.
With M1, you need to decide which funds you’re going to invest in. After picking your initial investment(s), you can either do manual investing or automated investing.
With either option, M1 calls your investment portfolio a pie. With other brokerages, you measure your portfolio investments in dollars instead of percentages. Instead of saying, “I’m investing $25 in Stock X each month,” with M1 you say, “I’m investing x% each month in this stock.” This can be a little tricky to adjust your mindset at first, but it helps to ensure you don’t over-invest in one stock and don’t properly allocate your portfolio.
Automated Option (Option #1)
This is probably the easier option, especially if you only choose one fund. What’s awesome about M1 is you can access basically any ETF for free. It doesn’t matter if it’s from iShares, Vanguard, Fidelity, Schwab, etc. If you have your eye on a particular ETF, you can invest in that.
Once you decide which pie, ETF, or stock to invest in, you set your target percentages. Although you may have to manually rebalance from time to time, you can schedule auto-deposits and M1 automatically rebalances your portfolio by putting more money in the holdings where the actual allocation is below the target allocation.
Manual Option (Option #2)
You can pick your own stocks, ETFs, and expert pies. As money comes available, you can schedule a deposit that can be automatically invested in the next trading window. When you want to rebalance your portfolio, you click the “Rebalance” button and M1 automatically restores your holdings to their target allocation.
M1 Finance supports the following account types:
- Taxable brokerage
- Traditional IRA
- Roth IRA
- SEP IRA
Although you can open an account for free, your initial minimum investment for a taxable brokerage account is $100. For retirement accounts, you must invest at $500 before M1 will execute your first trade request.
After your account is funded, subsequent trades can be as small as $1 for any account type.
M1 Finance Contact Information
You can contact M1 Finance via phone or email. Live support is available from 9:00 am CST to 5:00 pm CST Monday through Friday.
The toll-free M1 phone support number is: 1-888-714-6674
- 100% free investing
- Trade fractional shares
- More than 2,000 ETFs and most NYSE and Nasdaq-listed stocks and ETFs
- Traditional and Roth IRA accounts supported
- % based investing instead of dollar-based investing (if you prefer percentage based investing more)
- Can invest in “Expert Pies”
- Automated Investing is possible
- Only one trade window (Opens 9am CST)
- Minimum initial investment of $100 (non-retirement accounts) or $500 (retirement accounts)
- Some investors don’t like allocating their portfolio by percentage points
- Constant portfolio reallocating can increase tax burden
Many investors like M1 Finance for this three reasons:
- It’s free
- Can trade fractional shares of any stock or ETF
- Fully-customizable portfolio
If you’re tired of only being able to invest in your own brokerage’s ETF list for free, or you want to trade fractional shares of stocks for free, M1 Finance is worth a try.