Modern technology has made investing in the stock market easier and even more exciting than ever! The hard part is choosing where to start investing. With new investing apps popping up left and right, it makes for a difficult decision on where the best place to invest is.

I've personally used nearly all the top investing apps, including M1 Finance. Here is a detailed M1 Finance review based on firsthand experience, and how it compares to the competition. I'll cover the basics on M1 Finance such as what they offer, how they are different from other apps, potential alternatives to choose from, and my final opinion of whether to use M1 Finance for your personal investing needs.

What Is M1 Finance?

M1 Finance is a modern investment app that allows users to invest in the stock market for free. Most investment banks traditionally charge management fees or transaction commissions, creating hesitation for people to invest if they don't have much money to start with.

Another barrier many people face when getting started investing in the stock market is the lack of funds to buy whole shares of a company. Most investment banks require that you purchase whole shares of the stock, making it difficult for someone wanting to invest in Google, whose share price is $1,000+ as of this writing.

M1 Finance allows investors to invest in fractional shares, so anyone with any amount of discretionary money can invest in their favorite companies regardless of the current company stock price.

Apart from their investing platform, they enable users to borrow against their investment portfolio of individual investment accounts (excluding IRA accounts due to IRS regulations and requirements). Customers who have at least $10,000 invested in their M1 Finance investment account can borrow up to 35% of their account without any credit check or income requirements.

Lastly, M1 Finance is currently in the process of creating M1 Spend, a checking account that offers 1.5% interest rate and 1% cash back on all purchases without any limits. There are no minimum balances required either.

When all is said and done, M1 Finance is a free financial app that allows users to invest for free, borrow money and spend money to get cash back on all purchases.

What Sets M1 Finance Apart From The Rest?

As briefly mentioned above, the ability to purchase fractional shares is a newer concept where traditional investment banks require the purchase of whole shares. While there are other companies that offer fractional shares for investing, most companies only offer this ability for a select amount of companies. Not only can you buy fractional shares of stocks, but you can also purchase fractional shares of exchange traded funds (ETF's) as well.

With the ability to purchase fractional shares, M1 Finance also allows you to create your own funds, or “pies” as they call them. You can create a group of your favorite stocks and ETF's and decide what percentage to allocate to each investment. You can create multiple “pies” in your account, giving you the ability to diversify your investments.

M1 Finance Pies
M1 Finance Pies

Then, each time you make a deposit to your investment account and invest your funds, your money is diversified among each of the investments in your “pies”, and among all your pies as well.

For example, you can create a pie focused on your favorite stocks and decide how much of your investments goes to each stock in that pie. You can then create another separate pie with a few of your favorite ETF's and determine how much to allocate to each of those investments. You can also create another pie and have it include companies that support green energy, for example. Your investment account would consist then of 3 pies, each of which have multiple stocks and ETF's.

Lastly, M1 Borrow is a program that allows investors with a balance of $10,000 to borrow against their portfolio without any credit check or income requirements. This allows you to stay invested while still getting access to cash if needed. As far as i'm concerned, there aren't any other investing apps that allow this type of lending at such easy terms, giving M1 Finance a large competitive advantage.

M1 Finance Loans
M1 Borrow

Their marketing efforts focus largely on promoting the fact that their platform allows you to invest for free and automatically. There are no trade commissions or management fees to use their platform. Cheaper investment accounts are a growing trend, especially among investing apps and robo-advisors. However, most have a monthly fee such as $1 per month or 0.25% of your account balance per year.

What types of accounts are available through M1 Finance?

M1 Finance allows you to open the following types of investment accounts:

  • Individual brokerage accounts
  • Roth IRA
  • Traditional IRA
  • Investment trust accounts
  • Individual line of credit (with your investing account as collateral)
  • Interest earning checking account with cash back on all purchases

There are no minimums on the investment accounts as far as investing is concerned, they do however require your initial deposit upon account opening to be at least $100. After that, your account has no required minimum balance.

Who Will Benefit The Most From M1 Finance?

M1 Finance caters to investors who seek to have more hands on management of their money, while having the ability to invest for free. Those who wish to invest in their favorite companies but don't want to purchase whole shares or allocate certain amounts to full shares will also benefit from M1 Finance's ability to buy fractional stock shares.

M1 Finances gives investors the ability to invest for themselves, with little money, and the ability to still diversify their investments to limit their overall risk. The ability to invest in their “expert pies” also allows newer investors to get a feel for the stock market with the help of an expert portfolio.

If you want to invest your money yourself, with fractional shares, for free, and have further options to borrow against your portfolio, then M1 Finance is no question a top choice.

Alternative Options To M1 Finance

Other popular investment apps available today that are similar to M1 Finance are:

  • Stash Invest – Best for investors wanting to learn how to invest, buy fractional shares, get “stock back” from companies they make purchases at, and the ability to invest their spare change via “round-ups.”
  • Stockpile – Best for investors who simply want to invest in fractional shares and low cost transaction fees ($0.99 per trade).
  • Acorns – Best for investors who want to invest their spare change from daily purchases, and have it automatically invested in a diversified portfolio.
  • Motif – Best for investors who want to create their own portfolio, invest in fractional shares, and market their portfolio to others while getting paid when others invest in your portfolio.

My Opinion On M1 Finance From Firsthand Experience

M1 Finance is one of my top choices for investing apps because they allow you to invest in individual stocks with fractional shares, while being able to create your own diversified portfolio of stocks and ETFs. Their option to open a line of credit against your portfolio is second to none, and opens up a plethora of options for those in need of some quick cash but don't want to sell their investments.

Their new Spend checking account will even make for unlimited options to get cash back for daily purchases, and even get interest on your uninvested cash that is higher than most traditional banks offer.

M1 Finance offers a sophisticated way for investors ranging from beginners to experts, while making that sophistication as simple and convenient as possible. If I had to pick just one investing app as of today, my choice would be M1 Finance.