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||So Brad I do love tech. I love tech that solves problems. I love tech that makes life easier. And actually another tool has come on my radar very very recently. It was starting to see it come up in the Facebook group and then actually Jared who writes over at i believe fifthwheelpt.com he actually messaged me and told me this is quickly becoming my favorite financial tool and the tool is M1 finance. he got me curious. And so I went and I checked around and I was so blown away by the features that I actually got on the phone with the CEO Brian Barnes to just ask him how the heck do they do this. How are they able to set this up So I'll tell you all about that, before that let me kind of open this up for you and explain what it does. So M1 finance is like a commission free platform. It's basically competing with like a fidelity but if you look at like Vanguard right. They have a really clunky interface it's not fun to use. Everybody loves Vanguard. Nobody is like a huge fan of The Vanguard platform. We love that they keep their expenses low though so it's fine. Fidelity doesn't necessarily even have that excuse but it's still an outdated platform. M1 finance is just beautiful to look at. The next point for me that just blows my mind is that it is commission free. They do not charge you any sort of assets under management. They don't charge you to purchase ETF anything like that. So you can't access mutual funds so you will not be able to get VTSAX on this platform. But one of the problems with the VTSAX has always been that you have to get a $10000 minimum in order to buy into it. So there are some work arounds from that. You can purchase you know VTI which is the ETF at one hundred twenty plus dollars a share. And then on top of that maybe once you're up to a certain amount you could purchase mutual fund VTSMX but that requires $3000 dollar minimum. Those are just kind of always been baked in and we tried to give people work arounds. What's incredible about finance is they actually allow you to purchase fractional shares of ETF. It blows my mind. So now think this through. The only advantage that VVTSAX has over the ETF VTI is that you are able to buy fractional shares. The actual expense ratio is the exact same. You can purchase VTI on the M1 Finance Platform and you can purchase fractional shares and there are no commissions no assets under management fee for that.
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||Yeah Jonathan that sounds cool. I know when you when you got off the phone with him you were like really started a barrage of messages to me like I've never seen you as excited about a platform or essentially anything as you were about this. and I basically signed up for it just because of how excited you are. So I have not tested it yet but I'm signed up I moved like $1000 in there just to kind of test it out. But yeah I definitely will get back to you and the audience obviously and a couple of weeks when I when I figure out how the platform works. But I guess my first question to you is OK they don't charge commissions. There's no assets under management. How did these people make money. That's always like that. The real question to me.
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||Right. Yeah no absolutely. And so I asked Brian this exact question and what they do is basically securities Lending. It's kind of like a banking model so one of the things that actually makes us even more cool is if you have assets with them that you have invested either an ETF or whatever else, so that keep in mind they let you purchase all ETFs. It's not just VTI any ETF you can purchase Apple you can purchase Facebook you can purchase all of your individual stocks on this platform but you can do it in fractional share so if you can afford a certain amount of Amazon. you can buy a fractional share Amazon which is cool. Now imagine you get to a point in time where you have like $100000 saved up in one of these taxable account. They will now allow you to take a loan out up to 50 percent of the amount of money that you have invested with them and they will charge you a fixed 3.5% This is amazing. This completely negates the need to have a Heloc altogether. You don't need a credit check for it because they have all of your assets in place right there. And so I know one of the things that we were talking about in terms of problems was like where to park your emergency fund and people are like. "Well true emergency is if you were to lose your job. What if you were to lose your job at the same time the market goes down you would have to take that out and you need to take out you know maybe 20000 dollars of your hundred thousand dollars. Right as The market's going down that's going to take out an outsized piece of that pie until you get things sorted." This completely solves that. You can take out a $20000 dollar loan or even a $50,000 loan at a fixed three point five percent interest rate and allow yourself to get some extra time to get it whatever you need to get resolved and leaving your money in the market to recover. So it's not you're not taking it out based on whatever the market is doing. You know if for whatever reason it extends past that point in time you can always sell those assets and pay off the loan because you had the assets. But this gives you that extra delay step which completely like it adds an extra element to the power of the emergency fund episode that we did with big on.
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||Yeah that's an interesting wrinkle. I haven't researched enough to to know all the fine print details but it certainly sounds like a pretty cool extra option which is what we're always looking for right just options and ways to access our money like we talked about in that episode with the emergency fund.
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||So the other thing that's really cool because now you can do these fractional shares you can let's say you have like 90 percent of your or 80 percent of your money into like one of these low cost index funds that we were talking about but you kind of want to do something on the side you're interested and maybe you know investing or are getting a little bit more of an investment in some very specific companies. You can create your own portfolio on the side and it can tell you whether or not you're getting out of weight based on what percentage you want to have in each individual company. And instead of selling that are doing like a rebalance because you can do because you can do fractional shares on anything that you purchase you can it will then you can tell I want to invest 100 bucks every week, every two weeks, every month. whatever amount you specified it will then reallocate that and just purchase a little bit more of that fractional share to round out the pie to hit whatever model you decided and you can actually share or you can you can learn what models other people are using you can actually share that kind of like in a network. So there's just a lot of really really cool stuff here and this absolutely solves a problem. And then the final thing and this is the thing that was kind of worried about. you know how personal capital allows you to track all of your accounts in different places M1 does not do that they will only show you the assets that they have with them. While I was thinking to myself that's the only downside right. I don't want to necessarily have all the stuff orphaned out there where I can't track it in my net worth. I checked yesterday with personal capital and you can bring in all of your M1 into your personal capital account so that you can see it all there so you can still use personal capital as your dashboard and use M1 for your taxable accounts or your pre-tax accounts but you can use that to get this really beautiful interface for investing with no commissions. So I was like Brian this is blowing my mind. This is solving so many problems. And I want to be a part of this so we did set up an affiliate link if you're interested in checking that out. You can just go to choosefi.com/m1
||M1Finance, indexfunds, networth, tax