Wednesday, October 11, 2017

Pie-Based Investing with M1 Finance

Pies are delicious and with the holidays approaching, I'm looking forward to the cornucopia of pies that my family seems to produce this time of year. Those pies do a great job expanding my waistline, but they don't do so well when it comes to expanding my financial accounts.

Financial Pies

 Enter M1 Finance. This innovative new way to invest combines the automation of robo-brokers with the flexibility and control of a traditional brokerage account.

The concept is simple. You define a pie chart showing how you want your investments allocated - say 20% in conservative investments, 20% in stock of one company, and 60% in a mutual fund - and M1 does the rest! Each time you make a deposit, which can be scheduled to occur on a regular basis, M1 will purchase equities in the proportion your pie directs. M1 even purchases fractional shares, so your money is always invested as quickly as possible. No waiting around until you accumulate enough to purchase a full share!

Don't know what your pie should look like? M1 offers professionally created and managed pies for a variety of investments styles and objectives.

Over time, some assets will outperform others and your pie may get out of balance. A simple click of  a button will rebalance your investments. If you are using a pre-defined pie, this is done automatically for you each quarter.

Of course, all this can be done on your phone or tablet with their easy to use app.

How Much Does It Cost?

M1's pricing structure beats a traditional brokerage any day. Rather than pay a commission on each trade, M1 charges a low flat fee based on how much money you have invested with them. Your first $1,000 is free. For balances between $1,000 and $100,000, the fee is only 0.25% per year. Accounts large than that get a lower fee of just 0.15%. Keep in mind this is for unlimited trades. Rebalance every day if you want.

As of December, 2017, M1 is completely free! Full details are in their blog post here, including how they plan to make money going forward. But this is now a great win for consumers!

Regular Investing Is The Key

Studies have shown that the best way to build wealth in the stock market is to make regular investments. M1's combination of regular, periodic deposits and fractional share purchases ensure that you are able to get invested quickly and often. Furthermore, regular, periodic investing is the basis of dollar cost averaging, another proven technique to help manage risk.

There are no setup fees and all accounts under $1,000 are free, so you have nothing to lose by trying them out! Click here to open an account.

Note: From time to time, I may recommend products or services. I may receive some form of compensation. See my disclosure page for full details.

1 comment:

  1. This is so cool! A lot of those professional money managers charging 1% better update their resumes since this should put them out of business.