M1 glossary

Here’s a list to familiarize you with the terms you’ll find when using M1 Finance. 

If you’re new to M1, be sure to check out our intro webinar that breaks down all you need to know about using your account. 

 

Getting started

Get started investing. 

 

Stocks - Shares in the ownership of a company that represent a claim to the company's earnings and assets. Your return on investment depends on the performance of that company.  

To learn more about stocks, please visit FINRA's website. 

Funds - An exchange-traded fund (ETF), is a security that tracks an index, a commodity, a set of bonds, or a basket of assets.  

ETFs blend aspects of mutual funds and stocks. Like mutual funds, ETFs are pooled investment funds that offer investors an interest in professionally managed and diversified portfolios of investments. 

Unlike mutual funds, ETF shares trade like stocks on stock exchanges and can be bought or sold throughout the trading day at fluctuating prices. 

To learn more, please visit FINRA's website on exchange-traded funds. 

Mutual funds and options - Mutual funds and options trading are not supported on M1. 

All securities available to be included in your portfolio must be listed on either the New York Stock Exchange or NASDAQ. 

Corporate action- A corporate action occurs when a company makes a decision affecting shareholders and results in a significant change to a company's stock. This can take the form of a mandatory or voluntary corporate action. Learn more about corporate actions. 

Account rejected – Any newly opened account can be ‘rejected’ which means additional documentation is needed before it can be activated. M1 needs a government ID and utility bill as verification documents. Users are often ‘rejected’ because of a security freeze, a typo with their biographic information, or they are between the age of 18-23 and do not have a credit history. 

 

M1 Plus 

M1 Plus allows you to make the most of your M1 experience with exclusive features and rewards that help you earn more, access more, and receive more perks and discounts. Learn more about M1 Plus. 

 

M1 Invest 

M1 Invest allows you to open a Individual/Joint Brokerage Account, Traditional IRA, Roth IRA, SEP IRA, Custodial Account, Crypto Account, and/or Trust Account and invest your money intelligently. This is shown in the Invest tab of your account. Learn more about M1 Invest. 

Portfolio - Your portfolio is made up of slices. Add custom 'my pies' and expert pies to organize your stocks, each Pie is a Slice in your Portfolio.  

Pie – A Pie is a group of stocks. Pies can be used to organize your portfolio and your investment strategy. Make your custom pie under the Research tab and set your target weights percentages. Expert pies are built by M1 and can also be added to your portfolio.  

Slice – A slice can be an individual stock or a Pie. Portfolios can have a total of 100 Slices.  

Auto-Invest – When this function is on and your cash balance exceeds $25, M1 will invest the funds automatically into the portfolio using the dynamic rebalancing method. You have the option to turn auto-invest off and make manual orders if you would prefer. 

Dynamic Rebalancing - With M1's Dynamic Rebalancing, every trade with new cash in your portfolio pushes you closer to the target percentages you set. Whenever your account makes new trades with auto-invest, the algorithm identifies slices that are most relatively underweight and puts money in those first.  

Manual Rebalance – A manual rebalance can take place on your full portfolio or one pie within your portfolio. This can be done by clicking the ‘Rebalance’ button and M1 will sell overweight securities and buy underweight securities. Your target percentages will become your actual percentages for each security.  

Buy/Sell Manually – You can place manual buy or sell orders on the portfolio, individual pies, or individual slices. On the portfolio tab, click directly on the pie or slice for the order then click the buy/sell button. 

Trading window- The trade window is the window of time each weekday when M1 makes all trades for client accounts. M1 has 2 trading windows: 9:30 EST and 3 pm EST. The afternoon trade window is exclusively available to M1 Plus members. Find out more about M1 Plus here. Learn more about M1’s trading windows. 

Apex clearing firm- Apex Clearing Corporation is M1's clearing firm and custodial bank. The money and securities in your M1 account are held by Apex.  

Apex is a leader in digital wealth solutions and is consistently selected as the clearing firm for tech savvy fintech firms. For more information, please visit Apex Clearing. 

 

Bank connection & money transfers 

Connecting your bank & transferring money. 

 

Micro-deposit- When connecting your bank through micro-deposits, two small deposits are sent to your bank within 1-2 business days to verify your connection between your M1 Invest Account and your external bank. 

Plaid- Plaid is a third-party bank data service that M1 works with to perform external bank account authentication and identity verification. Learn more about Plaid. 

Deposit – Money transferred from your external bank into your M1 Account.  

Withdrawal – Money transferred from M1 into your external bank account. 

Contribution- A contribution refers to the amount of money you invest into your portfolio.  

*An IRA overcontribution occurs when you contribute past the yearly limit. This can result in a 6% tax penalty. Contact us if you believe you have overcontributed to your IRA. 

Distribution- A distribution refers to the amount of money you take out of your portfolio. 

*A premature IRA distribution can result in a 10% tax penalty. Contact us if you have any questions regarding IRA distributions 

 

Performance

Understanding performance on your M1 account. 

 

Overweight- When the current value of a slice is above its target value in your portfolio. 

Underweight- When the current value of a slice is below its target value in your portfolio. 

Net cash flow- The net amount of cash and cash equivalents transferred in and out of your account. 

Cost basis- The original value of an asset for tax purposes. 

Money-Weighted Return (MWRR)- M1's performance is based on Money-Weighted Return (MWRR). MWRR is built to track an individual's portfolio performance taking into account all incoming and outgoing cash movements.  

Tax minimization strategy- M1 Finance uses a tax-minimization strategy for any sell orders in your account. When M1 sells securities, we prioritize the lots to sell in this order: 

1) Losses that offset future gains 

2) Lots that result in long-term gains 

3) Lots that result in short-term gains 

 

M1 Spend

M1 Spend holds your personal M1 Checking Account and Owner's Rewards Card by M1 and allows you to move money seamlessly between your accounts.

 

M1 Checking Account 

M1 Checking is your personal checking account that allows you to easily move money between your accounts. Get started with your M1 Checking Account. 

M1 Checking Debit Card- You can enroll in the Spend tab and order your Checking Account debit card. Learn more about M1 Checking.   

Lincoln Savings Bank (LSB)- Lincoln Savings Bank (LSB), Member FDIC is the bank of record for M1 Checking Accounts. For more information, please visit Lincoln Savings Bank.  

3.30% APY- M1 Plus users get 3.30% APY (annual percentage yield) in their M1 Checking Accounts. No minimum balance to open account. No minimum balance to obtain APY (annual percentage yield). APY valid from account opening. Fees may reduce earnings. Rates may vary.     

1% cash back- M1 Plus users get 1% cash back on qualified purchases from using their M1 Checking debit card. Qualifying debit card purchases are when the card is swiped or the 16 digit debit card number is entered online. Any transfer of funds, including those facilitated via a card transaction, are not eligible for cash back.  

ATM Reimbursement- All M1 users get 1 monthly ATM fee reimbursements, M1 Plus clients get 4 monthly ATM fee reimbursements   

 

Owner’s Rewards Card by M1 

The Owner’s Rewards Card by M1 is a credit card that: 

• Offers enhanced cash rewards when you spend with qualifying brands that are held in eligible M1 accounts. 
• Allows you to automatically invests rewards into your M1 Invest Account. 

To learn more about the card, visit our Help Center. 

Deserve- M1's partner for the Owner’s Rewards Card. For more information, please visit Deserve. 

Celtic Bank- The Owner’s Rewards Card is issued by Celtic Bank, a Utah-Chartered, Industrial Bank, Member FDIC. For more information, please visit Celtic Bank. 

 

M1 Margin Loan

An M1 Margin Loan is a simple way to borrow money at a low cost. Margin Loans allows you access to a flexible portfolio line of credit offered at one of the lowest interest rates on the market—no paperwork or credit check needed.  

Interest rate- The interest rate that is charged for Margin Loan funds. Margin Loans charge a variable interest rate that tracks the federal funds rate.

Margin- Margin refers to the money that is borrowed from a brokerage firm to purchase an investment. 

Line of credit- The line of credit is what is available for your to borrow in your M1 Margin Loan account. You can see how much money you have available for a Margin Loan in the Borrow tab. To make a payment, visit Borrow and select "Pay Back." 

Maintenance margin/ requirement- The minimum amount of equity that must be maintained in a margin position. Learn more about these requirements. 

Maintenance call- If your equity value falls below our maintenance threshold, M1 will issue a maintenance call. The margin threshold usually is 30% of your account value, but M1 may impose additional restrictions based on the risk of stocks held or portfolio concentration. Learn more about maintenance calls. 

Magnified Losses: If you use M1 Margin Loans to increase your M1 portfolio investments, any losses in your portfolio will be magnified.