Follow the dividend investment decisions of a person who has no background in financial investment and wishes to take control of their financial future to retire from their full-time job at 60.

Another Reason Why M1 Finance is a Great Platform for Dividend Growth Investors - 08 Aug 2019 22:07

Tags: m1_finance


Back in January I did a write up on my experience opening an M1 Finance account and creating a pie based primarily on dividend growth. Flash forward 7 months later and I am still making steady deposits and continue to be impressed with the platform.

One feature I recently discovered and missed in my initial review is what I believe to be extremely useful for dividend growth investors and a feature not talked about in any other review of M1 Finance. Many of you are probably expecting a feature to help you improve your dividend growth investing but that is not what I am writing about today. Instead I’d like to discuss what to do at the end of your investing journey when you want to start living off your dividend stream and how M1 Finance can enable this.

The feature I discovered was “Scheduled Withdrawals” in the funding section. I am not sure why I didn’t see this before but when I entered the funding screen to do a one-time deposit I noticed that the calendar had a “Scheduled withdrawal” legend which of course made me curious so I clicked on the Withdraw feature to see what options are available.


Sure enough in the withdrawal window was a “Set a schedule” toggle and after hitting it I had the option to schedule withdrawals weekly or monthly by date or monthly on a given week. This feature allows you to create a weekly or monthly paycheck… how frick’n awesome is that!


When combined with the Cash Balance Control feature it opens a powerful feature of how and when dividends are withdrawn and/or reinvested.

For example:
3 months before I retire I see that I collect $12,000 in dividends every quarter but I only need $10,000 to cover expenses and would like to reinvest the $2,000 difference. To accomplish this I would simply set the Cash balance control to invest anything over $10,000 and let the dividends collect for one quarter.

I would then schedule a monthly withdrawal of $3,333 (or $833 weekly) to begin in the first month of the following quarter. In theory since I already have a $10K balance and I am withdrawing at a slower pace than I am receiving dividends then approximately $2,000 every 3 months will get reinvested back into the portfolio.


In this example, once a schedule is setup you would only have to revisit once a year to increase everything to account for inflation which should be minimal between organic dividend growth and the extra $2,000 invested every quarter. - Comments: 0

Experience with New M1 Finance Account and It's Awesome! - 13 Jan 2019 21:30

Tags: m1_finance


Two years ago this month my wife went back to full-time work and after 15 years we became a dual income family once again. My wife did not go back because she was bored or looking for new challenges. On the contrary she loved being a stay at home Mom and kicked ass at it.

Unfortunately, she had to go back to work out of necessity as my paycheck was no longer paying the monthly bills and we were racking up considerable credit card debt to cover the monthly shortfall. Luckily, our expense gap was small enough that she could choose a job that she enjoyed and not worry about a large salary. In the end she was offered two jobs; one in a medical practice as a phlebotomist and medical assistant for $45K/year and the other was working with children as a paraprofessional for $28K/year. The medical job had the better pay but she dreaded going back to an office environment. In the end she chose working with children and the lower salary but much higher job satisfaction and has loved her job since.

With the additional income we focused on one thing, eliminating all of our credit card debt. It took two years but we were finally free and clear of credit card debt last September. Also, with our mortgage getting paid off last summer we no longer need my wife’s additional income but she does love her job and decided to continue working. With her decision to continue working she asked how she can start her own savings since her employer does not offer a 401K so we started her with an M1 Finance Roth IRA account.

The account was opened with a $500 deposit and scheduled a weekly deposit of $10 and will double the contribution rate every year until she hits the IRA maximum of $7000/year.

Experience Opening the Account

This was the easiest account to open and fund. If you have your bank routing number this is a pretty quick process which took us no more than 15 minutes and this included making an investment pie and scheduling the recurring deposits. By the next day her account was credited and her first transaction was executed. This process was extremely painless and we created a pie with 31 individual stocks with a 50% weighting towards dividend growth and 50% towards REITS. After four additional weekly deposits of $10 here is what the portfolio looks like:


Anyone not familiar with M1 Finance it’s a pretty straight forward process of creating a pie (kind of like your own mutual fund). You then populate the pie with individual stocks or ETF’s (referred to as slices) and assign a percentage value to each one and M1 finance will then take your initial deposit and buy each stock to the percentage you allocated (including fractional shares) and charges no commission to buy. A single pie can hold a maximum of 100 individual stocks or ETFs and you can even nest pies within pies as long as all the pies do not exceed 500 individual stocks or ETFs. Not sure who could ever buy 500 stocks but the option is available.

The Brilliance of an Algorithm

As easy as it was setting up the account what was more impressive was how additional investments are made after the initial trade.

The algorithm that M1 uses is nothing short of brilliant. Most would assume when a subsequent investment is made it goes out and buys all the stocks defined in your pie based on the percentages you set but that is not how it works. The way the algorithm works is that it analyzes your portfolio to determine which slices are above or below their assigned allocation and then executes a buy order that prioritizes slices whose percentage allocation is below what you assigned and gives the least priority to stocks whose value has exceeded your allocation.

Below is an example of this with my wife’s account. The initial investment bought 31 stocks, but the subsequent investments bought 20, 26, and 23 stocks. The Dec 28 buy order of 20 stocks was primarily due to an overall price drop in REITs and focused the bulk of the investment dollars to REIT stocks. With, the trade of 26 stocks the largest amount of money went to Apple (APPL) which reflected the recent stock drop.


This is such an amazing process and it puts every investment penny to work. We even had had a buy for $0.03 yes 3 cents. Not sure how effective this is but at least we are not paying a commission for it. This process is so different from what I have to go through with my regular account. In that account I wait until I have $600 to $1000 and then decide to buy 1 stock. Typically I have several potential buys but have to go through the process of down selecting to just 1 and even then the investment is not a full $1000 because I cannot buy fractional shares. M1 finance eliminates that decision process by investing in all of the best opportunities at once and invests every penny via fractional shares.


Overall my opinion of M1 Finance is that for the average person or buy & hold investor when used with regularly scheduled investments it is the best wealth building tool second only to a 401K! It accessible to anyone with a computer or cell phone and a checking account. While it takes a $100 to open a brokerage account ($500 for an IRA) you can set recurring deposits at ANY amount.

If you do not make a lot of money you can set the recurring deposit anywhere from $1 to $10 per week and as you make more money you can increase the amount. In theory, you could initially not deposit the $100 minimum and just setup a recurring deposit and when your cash balance hits $100 it will then make the initial investment. This is what makes M1 such a fantastic tool, it brings the ability to invest to everyone regardless of the size of your paycheck!

As great as M1 Finance is there are drawbacks especially for more experienced investors:

  1. Limited asset class – OTC or pink sheet stocks as well as mutual funds and bonds are not available to trade
  2. No covered calls – If you were looking to make some additional income with options you cannot do it with M1.
  3. No limit or stop loss orders – M1 trades only once a day at 9am Central Standard Time and you are subject to whatever prices are at that time

While M1 is a great platform it is far from perfect and there are some improvements that need be made:

  1. Lack of Educational Material – M1 is too flexible for people new to investing and having too many options could be confusing. While there are pre-made pies available there is little material available to help newbies navigate on what to choose.
  2. Research Tools are Too Basic – The research tools to search stocks & ETF’s is near useless in its current state, you would be better off using an external search tool.
  3. No Portfolio Downloads – This seems like it should have been a no brainer but M1 does not allow you to download your portfolio as a spreadsheet or CSV file.
  4. No Community or Blog – A community for members to share and comment would go a long way especially for those new to investing
  5. No Reports for Income – While it does state what yield a pie has it does little to tell you how much income you are generating.

Do you invest with M1? I’d love to hear your experiences. - Comments: 1

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