M1 Finance Investing App Review
Product Description: Unique investing app and financial tools that allow you to build your own investment portfolio, and invest with as little as $10 into your portfolio.
Features: Create your own stock portfolio comprised of your favorite companies. Low minimum investment amounts.
Benefits: With your own personal built stock portfolio, you get to invest in your favorite companies and markets. You no longer need thousands of dollars just to start investing in the stock market.
Competitive Advantage: M1 allows you to create your own investment portfolio, a feature that not many of it's competitors offer. They also give you the ability to borrow up to 35% of your investment portfolio and pay it back on your own schedule.
What Is The M1 Finance Investing App?
It used to be that you had to go to an expert financial advisor to begin investing in the stock market. Not only that, but you had to have at a minimum thousands of dollars to begin with. With the help of innovative companies like M1 Finance, you can begin investing in just a few minutes, with just a few bucks, and its totally free!
M1 Finance is an investing company that allows you quick and easy access to invest in the stock market. You can choose to invest through your computer on M1 Finance's website, or you have the option to download their user friendly app.
Their goal and current customer campaign is aimed at making investing free, accessible and automatic.
What Makes M1 Finance Different From It's Competitors?
After all, its just investing…right? What could an investment company possibly offer that's different from the rest?
First off, let me briefly explain the options you have at other investment companies so that you more fully understand some of the benefits M1 Finance offers.
Most investment companies today allow you to pick among different investing vehicles such as Stocks, Bonds, ETFs (Exchange Traded Funds), and Mutual Funds. If you're looking to diversify your portfolio, most people would choose an ETF or Mutual Fund to be able to invest in multiple companies and diversify their risk.
ETFs and Mutual Funds are investment vehicles that either follow a market index, or are managed by investment portfolio managers who pick the companies that make up the portfolio. These are options for investors wanting to diversify their portfolio at regular investment companies, but they come with multiple fees.
Keep these in mind as you read the following benefits offered by M1 Finance. (I know, enough technical talk…I'm getting to my point…) The next two following topics explain the unique benefits M1 Finance offers as compared to an original brokerage company.
M1 Finance Is Free
Regular investment companies charge hefty trade fees, management fees and advising fees. Most are hidden in the fine print, and just shaved off the top of your investment portfolio returns, making these fees a bit disguised to the inexperienced investor.
M1 Finance, on the other hand, is free. Enough said. Next topic…
Create your own portfolio & invest in fractional shares
M1 Finance allows YOU to pick that investment portfolio yourself. You can create a portfolio comprised of your favorite stock companies and spread your money out amongs them all much like an ETF or Mutual Fund.
“Can't you just pick 10 different stocks with any other investment company and invest in them the same way? What's the difference?” Allow me to explain.
When investing with other brokerage companies, you certainly can pick your favorite companies and invest in them. However, you are only allowed to purchase whole shares, not fractional shares.
So if you wanted to invest in Apple, Amazon and Microsoft to start out, you would need to buy 1 share of each of those. That equates to $200+ for one share of Apple, $1,900+ for one share of Amazon, and $100+ for one share of Microsoft (as of this writing. The share prices are around those values as of this writing, and may change over time).
In other words, if you wanted to make a portfolio of just those 3 companies, you'd have to invest at least $2,200+ ($200 of Apple + $1,900 of Amazon + $100 of Microsoft = $$2,200) just to get started! And any additional investments you'd need to purchase whole shares of each respective company.
M1 Finance allows you to create your portfolio with your favorite companies and invest at least $10, and it spreads out your investment among your chosen companies in your portfolio…for free! See the difference?
You Can Borrow Up To 35% Of Your Portfolio Balance With M1 Finance
Another unique feature you get access to with M1 Finance is the ability to borrow against your portfolio. If you have a balance of $10,000 in your M1 Finance account, you can take out a loan against your account of up to $3,500 at a lower interest rate than a bank loan, credit card or line of credit, and without a credit check.
Why would anyone do this? If your in need of quick money, you can take it from your account at M1 without withdrawing from your investments. In other words, M1 will lend you $3,500 and let you keep your full $10,000 invested so you get to take advantage of the returns on a higher balance.
Should you not pay your $3,500 back to them, they will just deduct it from your total portfolio balance. They let you keep your money invested, while still having access to it for a quick personal loan as circumstances arise.
To clarify how this works, compare it to borrowing against your house. If you purchase a home for $300,000, and you have paid the mortgage balance down to $250,000, you technically have equity in your home of $50,000. If you need quick access to money for an emergency or large expense, you can go to the bank and take out a loan against that $50,000. This is called a second mortgage.
The difference with a home equity loan, is that the loan is also dependent on your credit score. With M1 Finance, they don't require a credit check to borrow against your own portfolio balance.
Should You Invest With M1 Finance?
If you're an ambitious investor that likes to take control of your money and save on fees, then M1 Finance is an excellent pick. M1 Finance is a great tool for those of you who like hands on control of their investments, and the ability to change, choose and diversify your investments.
You can choose among expert made portfolios if you're a beginner and don't want to risk making your own, so its a very beginner friendly investment platform as well. Some, however, may feel they don't have enough money to invest or want a more basic approach to diversifying your portfolio.
If that sounds like you, then take a look at how these guys allow you to invest your spare change from your everyday purchases. Don't have enough money to invest? That's no longer an excuse…you can start with as little as just $5.