/ Investing Thoughts

The future of finance is free... and so much more

About 8 months ago, M1 announced we removed all fees to offer a free investing experience for our users.

We made this choice for a few, straightforward reasons. As with every M1 decision, we first considered our users and how we could help improve their financial lives. Paying less so that more of your money is invested and working for you certainly fit this criteria. Next, we had to consider business. While our profitability truly comes second, we cannot continue to serve you without a sustainable business model. We determined that even while free, M1 has healthy and diversified revenue streams allowing it to survive and thrive. And finally, we saw free investing as an inevitability. Wanting to be a leader in the future of personal finance, not a follower, we chose to take the plunge.

When we made the announcement, we hypothesized that it was only a matter of time before all investing applications were free. Finance firms have already given us free checking accounts, savings accounts, and credit cards. Free investment accounts were the natural next step — it simply doesn't make sense to charge $5-10 per trade for what amounts to an electronic message.

Our hypothesis proved correct for a few firms (and, truthfully, a bit more quickly than we anticipated). Fidelity announced a no-fee index fund on August 1 and JPMorgan Chase unveiled a new platform offering free trades just three weeks later. Vanguard and Ally joined the tidal wave of headlines for August as both expanded its number of commission-free ETFs  — Vanguard from 77 to nearly 1,800 and Ally to over 100.

With these changes, we've been frequently asked for a response.

Well here it is: we're thrilled!

This move by other brokerages lowers the barriers to investing and should be applauded. There has truly never been a better time to be a retail investor, and there is now absolutely no reason for any person to ever pay for investing. Their decision is also a validation of our vision for the future of personal finance — a vision of more accessible solutions working harder for every person, all ushered in by the move to free.

But, it will not just be the same old services and functionality for free, which is the move our competitors recently made. It will be new and better functionality for free.

Typically, progress is forged through one of two paths:

1. The same product at a lower price, or

2. A better product at the same price.

In the exceedingly rare but ideal case, you get a better product at a better price. This is where M1 strives to be.  

It's a mission that drives every move we make as a company. M1's portfolio automation lets you tell us what you want to own once and then have software intelligently manage towards that goal. Fractional shares allow you to put any amount of money you want to work in an investment — not amounts dictated by an arbitrary share price. And it's why we launched M1 Borrow: so investing for free opens up a line of credit at the lowest rate and most flexible terms.

We believe you should be able to do exactly what you want with your money simply, conveniently, and with little to no cost. We're excited that cost is now benchmarked to zero. Moving forward, it's about how investing tools make your life simple and convenient. M1 is excited about this chapter and to continue innovating on these fronts.

Read our original free announcement.

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