M1 Finance Roth IRA Review: Fully Customizable Retirement Account

In a nutshell: The M1 Finance Roth IRA gives you complete control over your retirement account by giving you access to all of M1’s features. There are no monthly or trading fees for a basic account and M1 gives you access to its pie system to make managing your portfolio a breeze.

Pros and Cons of M1 Finance Roth IRA

Pros

• Easy portfolio management with M1’s pie system
• No monthly fees, trading fees, or minimum balances
• Easy portfolio rebalancing

Cons

• No tax-loss harvesting available

M1 Finance Roth IRA Introduction

One of the best things about an individual retirement account (IRA) is the ability to build your own portfolio. Hence, you can choose from stocks, ETFs, bonds, and more. And the M1 Finance Roth IRA lets you do all that.

The problem with the IRA and Roth IRA, though, is they can be overwhelming to manage. You have an unlimited number of options for what to do with the account, and that can lead to a choice paralysis. However, M1 Finance makes it easy to settle on an investment strategy.

Yes, M1 Finance gives you complete control over your portfolio. But it also features Model Portfolios tailored to different investment goals. Thus, if you’re having trouble figuring out how to manage your Roth IRA, the M1 Finance Roth IRA gives you an easy starting point. From there, it’s easy to customize your portfolio if you so chose.

What is an M1 Finance Roth IRA?

This Roth IRA is offered by M1 Finance, a financial firm based in Chicago, Illinois and founded in 2015. While M1 Finance is still a relatively new company, it has grown quickly and already has billions of assets under management.

M1 Finance is known especially for its M1 Finance pies that make it easy to manage your portfolio. Each investment you have is a percentage of your portfolio or a “slice.” M1 then gives you a visual representation of those slices so you can see when slices are underweight or overweight.

M1 Finance supports many account types, including brokerage accounts, trust accounts, and Roth IRAs. While you need $100 to open your account, there is no minimum balance or any monthly fees. Plus, you can roll an existing Roth IRA over to an M1 Finance Roth IRA.

Once you open an M1 Finance Roth IRA or roll over an existing Roth IRA, you gain access to all of M1’s features. We’ll details those more in the next section.

M1 Finance Roth IRA Features

If you open an M1 Finance Roth IRA, you will gain access to all of M1’s features. Discussed below, they make it easy to manage your investments.

M1 Finance Pies

M1 Finance pies continue to be the standout feature of M1 Finance. You can either build your own investment pie or select from one of M1’s pre-built Model Portfolios. Its Model Portfolios align with various investment strategies, such as an aggressive strategy, target-date fund, or responsible investing.

If you decide to use an expert pie, you can customize it once it is added to your portfolio. This is why we say M1 is fully customizable: you’re never limited to any one set of investments.

Easy Rebalancing

Rebalancing is easy when using M1 Finance. You can either rebalance by clicking the “rebalance” button under your pie (see the screenshot above) or by transferring cash into your portfolio.

Clicking rebalance will have M1 sell some of the shares in your overweight slices and invest them in the underweight slices. However, this could result in capital gains.

The other, preferred method is by adding cash to your portfolio. When you do that, M1 will automatically invest money in your underweight shares until your portfolio is in balance.

Auto-Invest

Auto invest is exactly what happens when you transfer cash into your M1 Finance Roth IRA. However, you can set an auto-invest threshold, meaning money won’t be invested automatically until it hits that threshold.

For example, if you have $25 in your M1 Finance account but a $100 auto-invest threshold, it won’t automatically invest until you add at least $75. This allows you to use M1 as a way to stow away some cash.

Fractional Shares

M1 Finance has fractional shares, which allows you to buy pieces of a stock share. In fact, you can buy fractions as small as 1/100,000th of one share. Some stocks have share prices in the thousands of dollars; fractional shares allows you to invest as much as you want whenever you want.

Are There any Fees?

There are no fees for the M1 Finance Roth IRA if you are using a basic account. M1,  which gives you some additional features, has a $125/year fee. But a basic account doesn’t have that fee, and there are never any trading fees.

The only fees that could apply are, for example, a $20 inactivity fee for accounts with less than a $20 balance for at least 90 days. Generally speaking though, a basic account is completely free.

Frequently Asked Questions

You might have some questions about the M1 Finance Roth IRA, and we will answer them here.

Can you transfer from M1 to Roth IRA?

Really, it depends upon what exactly you are looking to do. For example, if you have money in an M1 Finance cash account, you can easily move it into a Roth IRA as long as you are below the contribution limit. If you have money invested in an M1 brokerage, you can move it to a Roth IRA, but that means selling investments first which could result in capital gains.

Is M1 Finance Roth IRA Free?

Yes, an M1 Finance Roth IRA is free if you use a basic M1 Finance account. M1 costs $125/year, but that is an optional upgrade. Most users can have an M1 Finance Roth IRA for free.

Can you have multiple Roth IRAs?

The short answer is yes. But keep in mind there is an IRA contribution limit, meaning you can only contribute so much each year. That applies not only to your M1 Finance Roth IRA but also any Roth IRAs you may have elsewhere.

M1 Finance Roth IRA: is it Right For You?

If you are looking for a customizable experience that also offers some guidance, an M1 Finance Roth IRA may be right for you. Its pie investing, fractional shares, and lack of fees make it ideal for most Roth IRA investors.

It is really that simple. There are very few downsides to M1, so we recommend the M1 Finance Roth IRA for anyone who isn’t satisified with their current Roth IRA. To get started, head over to M1 Finance and start setting up your Roth IRA.

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