Investing Simple is affiliated with M1 Finance. This relationship does not influence our opinion of this platform.
Times have changed, and investing in the stock market is not the same as it was 10 years ago. The rise of the roboadvisor and algorithm based trading have taken the brokerage industry by storm. One of the most established examples being M1 Finance.
M1 Finance is a pie based investing platform. No, this is not the kind of pie your grandmother would make, but instead this is a pie based investment portfolio.
Within M1 Finance, your portfolio is referred to as a pie. Your pie breaks down what positions or securities you would like to hold in your account as well as how much weight they carry in your portfolio. You can create your own custom pie in M1 Finance and choose your own investments or you can invest in an M1 Finance expert pie.
M1 Finance also offers expert pies on the platform. These expert pies are created by M1 Finance and are offered to provide increased diversification as well as low cost alternatives to some of the other investment options on the market. These expert pies can also be a suitable choice for beginners who do not want to build an investment portfolio from scratch. These expert pies can make up your entire investment portfolio or just a portion of it.
M1 Finance creates these professionally built pies based on generally accepted investing principles as well as past performance data. They offer a variety of expert pies, each composing of 2 to 20 securities depending on the type you choose. Expert pies are designed by M1 Finance investment professionals as well as third party partners such as Cambria Investments. M1 Finance offers 9 different categories of expert pies.
Here are the categories of the M1 Finance expert pies…
- General Investing: Choose from risk levels ranging from ultra conservative to ultra aggressive.
- Plan For Retirement: Invest for your target retirement date. Your portfolio allocation will adjust over time to become more conservative as you approach retirement.
- Responsible Investing: Socially conscious investing. This investment category invests in companies that are concerned about financial obligations as well as social and environmental obligations.
- Income Earners: Contains dividend and interest paying securities.
- Hedge Fund Followers: Pies that track public funds such as Berkshire Hathaway and Icahn Enterprises.
- Industries & Sectors: Invest in one segment of the overall economy.
- Stocks & Bonds: Multiple options of diversified stock and bond exposure.
- Other Strategies: Other investment options like blue chip stocks, domestic growth, domestic value and more.
- Trinity Portfolios: Portfolios created by Cambria Investments. Learn more about Cambria Investments here.
M1 Finance has a quantitative model for choosing the specific ETFs within each expert pie. This model takes into account variables such as fees, assets under management, and tracking error of standard deviation. These variables are considered and result in low cost ETFs that track the underlying benchmark(s) better than others.
There are no fees associated with using M1 Finance or the expert pies. However, all ETFs have management fees associated with the fund. M1 Finance chooses ETFs with some of the lowest fees. They are also very transparent about the management fees charged by ETFs on their platform.