Is M1 Finance Safe And A Trustworthy Investment App?

Is M1 Finance safe and a trustworthy investment app and trading platform? Investments can be tricky and challenging, so finding a platform to help and assist you will help your investment journey. 

In this article, let’s look at M1 Finance, which may provide you with the much-needed X-factor as you make your way through the different aspects of investment.

We’ll also go into the crucial question, is M1 finance safe? Read on to see why this app is not only safe, reliable, and trustworthy but also why you can use this app to grow your total net worth and your investment account.

About M1 Finance

M1 Finance is an all-in-one financial app that acts as an automated investment assistant, automating your money into investment products depending on your requirements. It can provide you with sound investment choices that fit your portfolio.

The app was launched in 2015 by Brian Barnes, who wanted to create a unique way of managing portfolio investments. With this app, you can pick and choose your assets. And because of the automated process, you won’t have to worry about money lying around—recurring deposits will automatically be added to your portfolio allocations. 

While the app is free, a premium subscription is required to get all the features. However, the app offers plenty of excellent services free of charge without paying a dime. There’s a minimum investment requirement of $100 for investment accounts and $500 for retirement accounts. 

I love this app because you can create your portfolio or choose from pre-made versions. If you’re unsure where to start, you can select a pre-made portfolio. Plus, M1 Finance makes sure to rebalance your investments automatically if any get off-track. The app can help you diversify your investment options, thus giving it an edge over other trading platforms.

You can also choose from various account types, from individual to taxable to trusts, LLCs, IRAs (traditional, Rollovers, SEP, Roth, and SEP), partnerships, and corporate accounts.

To know more about M1 Finance, read our full M1 Finance review and learn the platform’s services.

Is M1 Finance Safe?

Getting directly to the point, yes, M1 Finance is one of the safest investment apps in the market. The company takes every step to safeguard your money and protect it. As a result, you won’t ever have to worry about losing your personal information or financial assets to anyone. 

It is important to note that M1 Finance protects your assets and private information but does not cover investment losses. So, for example, in case you lose money due to drops in market value, your money isn’t insured in that case. 

So, how does M1 Finance protect your account?

Encryption

According to M1 Finance, all data stored in their systems is protected with military-grade 4096-bit encryption. It doesn’t get safer than that!

Two-Factor Authentication

If the encryption isn’t enough security for you, M1 Finance also offers two-factor authentication as another layer of protection. With this, you would need to approve the login attempts through your mobile phone first to sign in. 

How M1 Finance Protects Your Money?

Access to your account is one thing, but let’s talk about security for your money.

Not only does the app guarantee to protect your account, but you also won’t ever have to worry about losing your money. The following steps show why M1 Finance is safe to use.

SIPC

SIPC, or Securities Investor Protection Corporation, is a member-funded, not-for-profit organization that protects investors if their brokerages go bankrupt or their investments become insolvent.

The company has been active for over 50 years and has helped numerous investors over the years. To protect your investments, your brokerage firm needs to be a SIPC member, and you need to have money at your brokerage company to purchase securities. 

Currently, SIPC has over 3,500 securities brokerage firms as clients. Most US brokerages are required to be SIPC members.

Is M1 Finance a SIPC member?

Yes, the main reason why M1 Finance is trustworthy is because it’s a SIPC member. That means an investor’s funds are secure up to $50,000 and $250,000 cash claims. 

This, however, doesn’t mean that the app can protect you from drops in market value. Also, as I said before, the app doesn’t protect you from investment losses. However, that is understandable since risks and losses are part of investing in the stock market. 

But, being a SIPC member, you have insurance benefits in case you lose money because of failures related to M1 Finance, which is unrelated to changes in the market. 

It is doubtful that even that would ever happen, seeing how rapidly M1 Finance has grown, with it doubling its assets within six months. The company crossed the $2 billion mark quicker than any similar fintech company. 

If that doesn’t reassure you, M1 Finance has bought additional insurance to aid the protection it already gets from being a SIPC member. That should undoubtedly convince you that M1 Finance is a trustworthy investment app.

FINRA

FINRA is a non-profit organization that operates under the SEC’s supervision (Security Exchange Commission). The company works with investors, policymakers, and member firms to keep investors and their money safe.

Congress authorizes the company to protect American investors by ensuring the broker-dealer industry operates fairly and honestly. The company has a set of rules that govern all registered broker-dealer firms’ ethical activities. They have made it their mission to examine the firms, follow the rules and educate investors. 

To assess the transparency of brokerages, you can use FINRA’s BrokerCheck service. With this, investors can see if the broker is licensed and if they ever had any complaints, investigations, or violations. 

Does FINRA Regulate M1 Finance?

Yes, M1 Finance is regulated by FINRA. With this, you can rest assured that a regulatory body is present to address your concerns and make sure brokerages behave ethically. 

It is important to note that while both FINRA and SIPC are SROs (self-regulatory organizations), SIPC protects investors and their money while FINRA addresses the concerns related to brokers.

FDIC

FDIC (Federal Deposit Insurance Corporation) was created in 1933 as an independent agency by Congress to maintain stability and retain public confidence in the US financial system. The FDIC examines financial situations for safety, investor protection, transparency, and insuring deposits. 

The FDIC’s primary purpose is to ensure you don’t lose all your deposited money because of any issues with your bank. Banks pay a premium fee and become members of the FDIC. If you lose any amount under $250,000 in your bank account, FDIC will reimburse that amount. 

Is M1 Finance FDIC Insured?

Yes, M1 Finance is FDIC insured. The deposits you make within the app are stored within FDIC-insured bank accounts.

FDIC performs the following activities to banks and M1 Finance:

• Reviews M1 Finance’s bank assets and also sets insurance limits
• If M1 Finance fails to deliver what they’ve promised their investors or go bankrupt or are compromised in any other way, FDIC will pay the investors their money up to $250,000

FDIC ensures your money stays safe and you do not lose your deposits even if M1 Finance goes down. However, this is just a precautionary method. You should not worry as the app has been operating for many years and has strict protocols that make it bankrupt, or losing your deposits become nearly impossible. 

What Kind Of Security Protection Does M1 Finance Use?

Not only does M1 Finance keep your information and money safe through the various security methods mentioned previously, but it also keeps your data safe by making use of Plaid. Plaid is a financial services company that allows the secure transfer and check and balance of payments.

Besides the app itself using military-grade encryption and two-factor authentication, Plaid also has multi-factor authentication (MFA) in place. With this, you have additional safety. 

With these numerous security services in place, a third party won’t be able to access your account even if they know your account password or other security details. Besides that, the app has a monitoring system in place, which detects unusual activities like multiple login attempts or a login attempt from an unknown IP address. In this case, the app will lock your account till you review whether these activities were done by you or not. 

All In All – Is M1 Finance Safe?

M1 Finance is a legitimate and trustworthy investment app, which is free to use, and through which you can invest in numerous monetary products like Exchange-Traded Funds (ETFs) and stocks.

With its top-class security features like encryption two-factor authorization, and your money is insured through SIPC, FINRA, and FDIC, you won’t ever have to worry about losing your data, information, or deposits. Online trading can be risky, but online investing becomes so much easier when you have these safeguards and security practices in place. Now, you just need to worry about which commodity or asset suits your financial status.

The best part about this app is that it is beginner-friendly and especially useful for people looking to start with minimal investments. Not only can you choose from pre-made portfolios, but your investments will also be socially responsible. 

All in all, M1 Finance is a safe, trustworthy, and easy-to-use app for investors. It can help your investment portfolio for the betterment of your financial goals! So having this app as part of your investment strategy will help investing online a much easier task for your personal finance.