How to Buy Stocks With No Trade Fees Using M1 Finance

How to Buy Stocks With No Trade Fees Using M1 Finance

I use M1 Finance to trade stocks without paying fees on any of my trades. It’s super-easy to use, much less expensive than many of the other trading platforms that are available. As someone who is not a professional stock trader, it gives me the flexibility and liquidity that I want. Consider these thoughts before making your own investment decisions. If you plan to invest a significant amount of your wealth, then be sure to speak with a professional financial advisor before executing any trades.

Fractional Shares in Stocks and ETFs

Rather than buying whole shares, your money goes into a pool with the rest of the M1 Finance members. Then, once or twice per day, the system places bulk orders for all members, and divides the shares according to user preferences. To make things simple, you pick out the stocks and ETFs that you want, and assign percentages of your total investment to each of your picks. The process from end-to-end looks something like this:

  1. Create an account
  2. Make a deposit
  3. Pick your stocks
  4. Assign percentages of your deposit to each of your stock picks, for a total of 100%
  5. Every morning during the week, the system will attempt to invest all of your funds according to your preferences
  6. You can make adjustments to your percentages throughout the day, and the system will readjust your holdings the following morning to closely match your preferences
  7. Optionally, you may create a pie that consists of some of your stock picks, and assign a percentage of your total investment to that pie, as compared to your other individual investments
  8. Optionally, you may pay for the ability to trade stocks and ETFs twice per day instead of once, and the system will begin to balance your holdings every weekday afternoon, in addition to weekday mornings

Benefits to Investing in Fractional Shares Using M1Finance

Similar to cryptocurrency investing, you do not have to buy whole units. Instead, you can buy fractional shares. In the crypto world, this is essential. Consider that bitcoin is worth about $10,000 as of the original publication date of this post. Few people would buy into it at that price, and consequently, there would be no trading volume. However, bitcoins are divided into units called Satoshi, each of which is worth a fraction of a bitcoin, and you can buy as many Satoshi as you want.

Fractional investing in the stock market works the same way, with one difference. When you invest in crypto, your fractional shares are recorded on a public blockchain and this digital ledger is built with fractionality built into the system. This is not possible in the stock market, which creates a barrier to entry for people looking to invest. For example, Amazon stock is at $2,647 per share as of this post, and under normal circumstances, you would have to buy whole shares. M1Finance enables you to buy a fraction of a share, and since they place bulk orders, you don’t have to pay fees on each trade, either.

Drawbacks of Investing in Fractional Shares Using M1Finance

Overall, fractional investing is a great framework. However, it does have some drawbacks. The biggest drawback is that you may only trade once or twice per day, at set times. This means that if there is volatility in the market, you may not react in real time to preserve your wealth. You will need to wait until the next trading window in the following morning or afternoon, in order to adjust your investments. This means that you risk losing everything if the market crashes, and you are unable to respond in a timely manner. For this reason, it’s probably a good idea to choose investments that are relatively stable.

Stocks, and Gold and Silver ETFs

I am not a professional trader, so personally, I make relatively conservative investments when it comes to the stock market. There are potential changes in how we live and shop as a direct result of the government-mandated lockdown. Over the past three months, people have been working and shopping from home. Some of these behaviors will carry over to the period that follows the COVID-19 lockdown, and some of them will become permanent. Also, there are growing trends, and behaviors that people miss, which they may dive into with full force. I made a number of investments when there was a dip in the market, and they proved fruitful so far. Among them:

  • Amazon (AMZN) – because people are staying, and shopping from home more
  • Starbucks (SBUX) – because people miss this addictive habit and will resume when lockdown is over
  • Google (GOOGL) – because people are shopping online more
  • Facebook (FB) – because they’re releasing new technology to compete with the other platforms
  • Lululemon (LULU) – because I’ve been following the health and wellness industry and this brand continues to gain traction

In addition to growing my investments, I want to preserve the value of my money as much as possible. Government bailouts will amount to trillions of dollars in an attempt to save the US economy (and the world economy). This means that there is the possibility of hyperinflation, where the dollar is significantly devalued. For this reason, I have some of my money in crypto, despite the volatility. I also hold some precious metals, which are great if the S ever HTF. However, precious metals are not liquid and I’m pretty much stuck with them forever. By contrast, ETFs are liquid and easy to trade using M1 Finance. I hold some precious metal ETFs and picked up a small amount of energy ETFs:

  • iShares Silver Trust (SLV)
  • iShares Gold Trust (IAU)
  • Global X MLP & Energy Infrastructure ETF (MLPX)
  • iShares Global Energy ETF (IXC)

Start Your Journey Towards Financial Liberty

Financial freedom is a key to sustainable happiness. With a platform like M1 Finance, you can begin your path to a better future, without a huge up-front cost, and with the flexibility to trade as much as you want, without fees every single time you adjust your portfolio.

Dennis