M1 Finance is one of the most unique investing platforms on the market today. You get the convenience of using the automated investment technology that most robo advisors offer, while also being able to individually pick your own investments.
When you open an M1 Finance account, you’re able to set pre-build portfolios that are referred to as ‘pies’ or build your own. Each individual stock or exchange traded funds (ETFs) become a piece of that pie and you’ll make regular automated investment contributions. You also won’t get charged any fees to use the service and manage all your pies.
As if these features weren’t already beneficial enough to help you on your investing journey, M1 Finance has recently rolled out a new feature called Smart Transfers. If you’re a fan of automating your finances, you’re really going to find value in using this feature while enjoying putting more of your financial management tasks on auto-pilot.
What Are Smart Transfers?
Smart Transfers is a groundbreaking M1 feature that helps you reach more of your financial goals automatically. You must be an M1 Plus member to take advantage of the feature, but it’s worth it because you can realistically create a path to fund your goals with little to no effort.
M1 Finance has always allowed automatic transfers, but it’s been calendar-based so you could set a weekly or monthly transfer. While this is great, Smart Transfers is smarter in a sense because you’d be setting up transfers to different funds or pies based on how much money you actually have in your account.
SmartTransfers allows you to set threshold-based rules for your various M1 accounts. You know how much you need to keep in your M1 Spend account to cover basic living expenses. From there, you can set a Smart Transfer to keep that minimum amount in your account (to spend on budgeted expenses) but invest the rest automatically.
As a result, you’re no longer waiting for a date on the calendar to make a transfer. Instead, you’re moving money to your pies automatically based on what you can actually afford and every dollar gets utilized.
How Smart Transfers Work
You can set up your Smart Transfer(s) in just minutes with your M1 Spend account. Let’s say you spend $2,000 per month on living expenses. Set this as your monthly threshold which means you won’t be automatically investing your living expense money.
Instead, you can set a Smart Transfer to automatically invest anything above this threshold. Say your M1 Spend account has a balance of $4,000. That means you can create Smart Transfer rules for up to $2,000 that month.
Go to your M1 Spend account, click on the ‘Transfer’ tab then choose the ‘Smart Transfer’ option. Choose which pie you want to contribute money to and how much per month.
Continuing with our example, maybe you want to send $500 to your Rainy Day Pie as your primary Smart Transfer, then $500 to your Roth IRA afterward.
Once your balance is over $2,000, M1 Finance will automatically start transferring money to your Rainy Day Pie up to your preset limit of $500. Once that money is transferred, the next Smart Transfer will go toward your Roth IRA and so on. Did I mention that all this will happen automatically and without any effort or tracking on your part? Pretty cool, right?
To make Smart Transfers, you can choose between the following invest and spend options:
- Spend-over balance - Demonstrated in the example above, this is when you automatically invest any money over your budgeted amount for living expenses
- Invest-cash over balance - Challenge yourself to invest more than usual or during months where you come into more money by setting up Smart Transfers from your M1 Invest account to another M1 account.
Another option is to pay back your principal balance from your M1 borrow account when excess funds are available.
Why Use Smart Transfers?
Smart Transfer allows you to make the absolute most of your money and utilize every dollar you have.
With a normal checking account, you’d have to carefully watch your balance, track your spending and keep your budget updated all in order to make sure you can afford to make certain investments each month. If you have a windfall or get a bonus, you may run the risk of spending that money on something other than your investments and savings.
With Smart Transfers, you literally don’t have to think about any of that and you’ll still be making tremendous progress when it comes to growing your portfolio. You have full control over how much excess money you invest all while not having to worry about not having enough to cover your regular living expenses.
Calendar-based automatic transfers are fine, but we all know that life is unexpected and your financial plan may change at the drop of the hat. M1’s Smart Transfers feature is flexible enough to quickly protect and adjust your financial activity depending on how much money you have rather than what day of the week or month it is.
Do Smart Transfers Only Work For Your Pies?
No, Smart Transfers can be used for your pies and between M1 accounts as well. Remember, M1 Finance allows you to invest, borrow, and spend all in the same place. Whether you’re saving up for the future, or want to go all in with your retirement savings, Smart Transfers makes it easy to do this while saving you so much time.
You can also automate debt payments for your M1 Borrow account with excess funds or set up a Spend Underbalance Smart Transfer. Underbalance transfers help to automatically transfer money out of your M1 Invest account when your other M1 Balance is low or borrow additional funds as needed .
Can You Stop or Change a Smart Transfer After Setting It Up?
Of course. Smart Transfers are not permanent and you can change them as your needs and goals change. You can even stop a Smart Transfer any day of the month or even pause Smart Transfers. This is good to know because if something pops up, you can make a quick adjustment with just the touch of a few buttons.
If you want to edit an existing Smart Transfer, click on the amount and click ‘update’ then add your changes. To pause a Smart Transfer, move the toggle switch to turn the Smart Transfer off. That way, it doesn’t disappear if you want to turn it back on when you’re ready.
Maybe you’ve met a goal or just want to delete a Smart Transfer rule. You can do that too. Just click the ‘delete’ button at the top right corner to get rid of the transfer and confirm your decision.
What About Extra Costs?
The Smart Transfers feature is free to M1 Plus members. However, you’ll need to pay for an M1 Plus account so there is a cost involved. M1 Plus is $125 per year and includes premium features for your M1 Spend, M1 Borrow, and M1 Invest accounts.
To see if it’s worth the price, break down the cost and determine how you’d utilize all the benefits. M1 Plus is only $10.41 per month. With that, you get to make the absolute most of your money with Smart Transfers. Plus, you’ll get 1% APY and 1% cashback for your M1 Spend account as well as 4 ATM fees covered per month and no international fees.
If you’re using M1 Invest, you get two daily trade windows available when you have $25,000 in your investment portfolio.
M1 Finance Smart Transfers Pros and Cons
- Set up automatic transfers between M1 accounts based on spending thresholds - Instead of setting up transfers based on a date on the calendar, you can transfer money automatically based on how much you have on your account. This method of transferring funds for your financial goals is a step up from the norm so you’re giving every single dollar a purchase.
- You don’t have to worry about not having enough to cover your regular bills and expenses - Smart Transfers allows you to set your own excess threshold so you’ll always have the money in your M1 account to spend on your needs and wants
- Pause, edit or cancel Smart Transfers at any time - M1 makes it easy to do this so you don’t have to waste time calling customer service or waiting several business days to edit or stop your Smart Transfers
- You must have an M1 Plus account and an open M1 Spend account - You can’t get access to the Smart Transfers feature with a free basic M1 Finance account so you’ll need to upgrade if you haven’t already. However, at just $10 per month all the features you get are well worth it even if you plan to use a few of them regularly.
- Smart Transfers for Spend Underbalance may be a little trickier to use - While paying off a loan in your M1 Balance account with Smart Transfers is a great idea, M1 Borrow is only available for margin accounts with a balance of at least $10,000 and does not apply to retirement accounts.
Who Are Smart Transfer Best For?
The M1 Finance platform itself is definitely worth considering if you’re trying to invest consistently and manage your money with less effort. Smart Transfers takes it to the next level and is well worth upgrading to M1 Plus in my opinion.
The Smart Transfers feature is best for anyone looking to optimize every dollar and reach their financial goals automatically without overthinking it and consistently monitoring their account.