M1’s algorithm aims to keep your portfolio balanced, based on the percentages that you allocate, so you don’t have to.
Auto-Invest is automatically turned on in all accounts to compare what your current holdings are vs. your customized target percentage allocation.
Money is first divested from overweight securities and is first invested in underweight securities. That way, your securities grow closer to your ideal target percentage
You can also turn Auto-Invest off and create manual buy/sell orders.
Your trade will go through during the next trade window.
You can learn more about Auto-Invest in our short how-to videos:
If you have additional questions about how we trade, check out this article about how we trade.
At M1, we use a dynamic algorithm to help you easily maintain a diversified portfolio that matches your target allocations—all with minimal effort on your end. Here’s a comprehensive explanation of how your money is invested and managed at M1.
The M1 investment process: An overview
You customize your Pie
Select the stocks, ETFs, or Expert Pies that reflect your investment goals.
Assign a target percentage allocation to each slice of your Pie.
Auto-invest works in the background
M1’s Auto-Invest feature is automatically enabled for new accounts.
The system continuously compares your actual holdings to your target percentages.
Deposits, dividends, and cash management
When you deposit cash or receive dividends, the system automatically distributes those funds.
The algorithm first seeks to invest in underweight slices (those below their target percentage) to bring your overall portfolio back in line with your goals.
Trade windows
All buys and sells are executed during scheduled trading windows.
Trades are typically placed once (or twice, for clients with >$25k in their M1 account) each market day.
How your money moves: Step-by-step with examples
Let’s walk through a typical investment process at M1:
Example 1: New deposit
Suppose your target Pie is:
Stock A: 50%
Stock B: 30%
Stock C: 20%
Your actual holdings drift to:
Stock A: 55%
Stock B: 35%
Stock C: 10%
You deposit $1,000.
How does M1 invest it?
The algorithm checks your current allocation against your targets.
Cash is directed first to Stock C (the most underweight), then to B, then to A, until target weights are reached (or as close as possible).
No new money is invested in overweight Stock A until B and C reach their targets.
Example 2: Dividend reinvestment
You receive a $40 dividend, and Stock B is currently 2% underweight.
Unless you’ve set a minimum cash threshold, M1 automatically uses this $40 to buy more of Stock B during the next trade window.
Example 3: Buying and selling to rebalance
If you initiate a rebalance, M1 will sell overweight slices and buy underweight slices in a way that moves your portfolio closer to your target allocation.
The process considers whole and fractional shares for precise balancing.
How trade windows work
All investments and redemptions are executed during scheduled trade windows.
Accounts with <$25k have one trade window to trade from (9:30 AM ET or 3:00 PM ET).
Note: Accounts with less than $25,000 in invested assets must select which window they wish to participate in.
Accounts with >$25k AUM have both windows to trade from.
For more information on M1’s Trading Windows click here.
Order timing basics:
Deposits, dividends, and other investment operations queued up before a trading window are typically eligible to execute during that window, but will execute according to your trade window preference (AM or PM).
Transactions after the window starts will queue for the following window, but will execute according to your trade window preference (AM or PM).
Auto-invest settings
By default, Auto-Invest is ON for all new accounts.
How to Adjust Auto-Invest:
Go to "Settings" in your account
Select "Auto-Invest"
Toggle on/off as desired and set your minimum cash balance (only cash above this threshold will be auto-invested)
Save changes
If Auto-Invest is OFF, new cash sits in your account, and you control when and how to invest.
How dividends are handled
By default, dividends are auto-reinvested based on your Pie’s target allocations.
You can change this in your account settings if you prefer dividends to be held as cash.
If you have additional questions about how we invest, trade, or manage your portfolio, contact our Client Success team or explore our complete help center.
Brokerage accounts on the M1 platform are either fully disclosed to APEX Clearing or cleared through M1 Finance LLC. Please look at your account statement to determine how your account is cleared.
All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Using margin can add to these risks. Users utilizing APEX cleared margin accounts should review the APEX margin account risk disclosure before borrowing. Users utilizing M1 cleared margin accounts should review the M1 margin account risk disclosure before borrowing. M1 Margin Loans are available on margin accounts with at least $2,000 invested per account. Not available for Retirement or Custodial accounts. Margin rates may vary.
Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.
This content was generated using artificial intelligence and is intended for informational and educational purposes only. While reasonable efforts are made to ensure accuracy, AI-generated outputs may omit key context; and should not be construed as financial, investment, legal, or tax advice. Users should independently verify all information and consult a qualified professional before making any financial decisions.
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