Is M1 Finance a Scam?
M1 Finance is a financial services company that offers a one-stop-shop approach to banking and investing. The firm’s list of brokerage accounts, bank accounts, and lines of credit can be used one by one or as a comprehensive financial management system.
Thanks to its long list of services and impressive interest rates, M1 has become quite popular, but is it safe?
Let’s find out.
Is M1 Finance Safe?
The short answer to whether M1 Finance is safe is yes, and many aspects of the firm’s business
confirm that.
As a member of FINRA and SEC, M1 Finance is obligated to protect its customers in every way it can. As a result, M1 uses an industry-leading clearing firm and provides insurance on all its accounts.
Is M1 Finance Legitimate?
Apex Clearing is one of the most popular clearing firms in the retail trading industry. It powers
some of the industry’s best-known brokers, and it provides a high level of security and reliability
for M1 Finance users. M1 Finance makes good use of Apex’s infrastructure to provide a safe and reliable trading platform for its users.
Some of the safety and stability features of Apex Clearing include efficient trade execution,
trade clearing, backend record-keeping, and settlement services. Additionally, Apex requires its broker-dealers (M1 included) to maintain good business practices.
Insurance
All U.S.-based brokers must have safety nets in place to protect customer accounts. Some of the
accounts and services offered by M1 Finance are protected by FDIC, and others are protected by SIPC. Both forms of insurance are in place to protect investors in the unlikely event that M1 goes out of business.
FDIC
FDIC protects M1 Save and M1 Spend accounts.
Deposits have protection of up to $250,000 per account type. Since coverage is based on each account, it is possible to insure up to $500,000 if you have an M1 Save and an M1 Spend account.
SIPC
SIPC covers most other products at M1 Finance, except for direct cryptocurrency investing. Whether you have an individual, joint, custodial, trust, or retirement account with M1, securities and cash are protected up to $250,000.
M1 Finance Awards
In addition to using one of the industry’s top clearing firms and adhering to the various regulations
of SEC and FINRA, M1 Finance awards and reviews also provide evidence of the firm’s trustworthiness.
With recognition for its sophistication, auto-investing offering, cash management services, and
investment platform coming from names like Money, Yahoo!, the ascent, and Investopedia, M1 has
clearly struck a chord with industry leaders.
M1 Finance Incentive
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M1 Finance Reviews
Awards are excellent indicators of quality and innovation, but customer reviews can be even more telling. As advertised on its website, M1 Finance enjoys very positive user reviews.
Apple’s App Store shows a rating of 4.7/5 out of nearly 53,000 opinions. Google Play offers a
similar story, with over half a million downloads and an average rating of 4.5/5 stars.
M1 Finance Review
It should be clear now that M1 is safe and can be trusted. There is more to a broker than simply being trustworthy. Should you use M1 Finance for your brokerage and cash management needs?
Let’s take a closer look at M1’s features and services.
M1 Finance Bonus Offer
First, it’s good to know that when you open and fund a new account at M1 Finance, there is a
generous bonus offer to take advantage of.
The deposit bonus pays between $75 and $500 when you deposit new money into a new M1 Finance brokerage
account. The bonus is given out in tiers, with each new level unlocked by a specific deposit amount.
Qualifying deposits range from $10,000 to $100,000.
M1 Finance Bonus Link
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Fees and Commissions
M1 Finance has low fees, but it is not free. Whether M1’s services are a good deal depends on a few
factors.
M1 Finance doesn’t charge any commissions on trades,
but investors still have some exchange and clearing fees. These fees are extremely small and are
charged by all brokers.
M1 Finance does charge a $3 monthly fee for accounts with under $10,000 balance.
Interests Rates
Interest rates on banking products at M1 (M1 Save and M1 Spend) are significantly higher than those
offered by traditional banks. M1 members get a 3.3% APY
for funds deposited into the M1 Spend account and as much as 5% APY on funds deposited into the relatively new M1 Save account.
There are also interest rates paid to M1 for margin-based loans. The rate is
7.25%.
Investment Approach
In terms of the investment opportunities on offer at M1 Finance, traders will find a lot to be attracted to.
One of the unique features of M1 Finance is its investment pies. Pies are portfolios of stocks and ETFs that users can create and customize to their liking. Pies can be as simple or complex as users want and can be easily rebalanced.
Investors can create custom portfolios of cryptocurrencies, stocks, and ETFs or choose from pre-built portfolios curated by M1’s financial experts.
The platform also offers features such as automatic rebalancing and fractional shares, which makes it easier for users to diversify their portfolios.
Investment Windows
One unique aspect of investing at M1 Finance is the trade window concept. Instead of traders buying and selling securities independently, M1’s trade desk completes all within trade windows.
Two trade windows are available at M1: one in the morning and another in the afternoon.
Overall, M1 Finance's investment windows should be sufficient for most users' needs, but users who require more frequent trading may want to consider other platforms.
Account Types & Cash Management
One of the most attractive features of M1 Finance, other than the unique investment approach, is the ability to use M1 as an all-in-one investment and cash management platform.
With multiple investment accounts to choose from, a variety of available investment strategies, dedicated accounts for banking, a credit card, and personal loans, M1 customers can take care of a large portion of their financial lives right from the app.
Here is a summary of M1’s various services.
M1 Save
M1 Save is M1 Finance's high-yield savings account. It offers users up to 5% APY on their savings, is FDIC-insured and has no minimum balance requirement or monthly fees. Users can easily transfer funds between their M1 Invest account and M1 Save account, making it easy to manage their cash holdings alongside their investments.
M1 Spend
M1 Spend is a checking account offered by M1 Finance. It provides up to 3.3% APY on cash balances within the account. M1 members can earn up to 1% cash back on certain purchases made with the debit card. The account has no minimum balance requirement or monthly fees and is FDIC-insured. M1 Spend is an excellent choice for users seeking a fee-free checking account with competitive features and benefits.
M1 Borrow
There are two types of loans that M1 offers, each with its own rates and specifications. There are personal loans and margin loans.
M1 Personal Loans are lines of credit provided by M1 Finance. Loan amounts range from $2,500 to $50,000, and rates range from 7.49% to 21.75%. M1 Personal Loans have no extra fees, making them quite attractive to borrowers on a budget.
M1 Margin Loans use the M1 Invest account balance as collateral for the loan amount. Users can borrow
up to 40% of the value of their portfolio at a low interest rate (7.25%), making it a potentially attractive option for users who need short-term financing.
M1 Owner’s Rewards Credit Card
The M1 Owner's Rewards Credit Card is a credit card offered by M1 Finance. It offers 2.5% cash back on all purchases and up to 10% cash back on purchases made with M1 Finance's partners. Users can redeem the cash back earned from the card into their M1 Finance account or use it to pay down the balance on the card.
Additionally, the card has no annual or foreign transaction fees, making it an ideal choice for users who frequently travel or make purchases from international retailers.
Find a Financial Advisor
If you are looking for a professional money management service in your area, you can
find a Financial Advisor on the Wiser Advisor
(or read
Wiser Advisor review).
Visit Wiser Advisor
M1 Finance Review Recommendation
M1 Finance is suitable for investors looking for a flexible, user-friendly investment platform with low fees. It is also a good option for users looking for a checking or high-yield savings account with competitive interest rates and no fees. M1 Finance is also a good option for users looking for a credit card with cash-back rewards and no annual or foreign transaction fees.
M1 Finance is unsuitable for investors requiring frequent trading or access to more advanced research and analysis tools. Additionally, users who prefer a traditional banking experience with brick-and-mortar branches may not find M1 Finance to be the best option for their needs.
M1 Finance Promotion
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Updated on 4/17/2024.
Ben Wright is an investor, a trader, an educator, and something of an explorer. He spends his days in the markets when he is not teaching or spending time with his family. Ben writes about stockbrokers, markets, investment vehicles, promotional offers, and tools that help investors make the most of their time in the markets.
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