#MyM1Story Winner: From active trading to auto investing

M1 Team
M1 Team November 13, 2018
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As a college student studying finance, Michael began day trading in his free time, buying and selling stocks, options, and futures. It wasn’t just a way to try to earn some extra money — it was a hobby he was passionate about.

Michael learned as he went and often preferred to bet on companies he knew well.

“You want to put your money in companies you believe in.”

“My very first investment was Apple because back in the day I used their product and followed their earnings calls,” Michael recalls. “I know their product, their release cycle, and just kind of how they operate as a company. I feel more comfortable investing in companies like that.”

Fast forward 15 years…

Nearly 15 years later, Michael hardly has time to day trade any more — as he puts it, work and “life in general” have left him with much less time to babysit his position. But that doesn’t mean he’s withdrawn from the stock market game entirely.

With less free time on his hands, Michael turned to a longer-term solution for building wealth using the knowledge he gained from years of active trading: buy-and-hold investing. This more passive strategy may appear a far cry from his active trading days, but Michael still prefers to invest in companies he knows well.

“It’s just my philosophy,” he says. “I want to know a lot about the company before I get in there because, ultimately, when you’re talking about investing, you want to put your money in companies you believe in.”

But Michael discovered that finding an investing platform that offered both the control and customization he craved and the ability to “set and forget” with automation wasn’t as easy as he had hoped.

He’d used TD Ameritrade in his active trading days, but the manual nature of the brokerage was still more time consuming than Michael was looking for to accommodate his newer, busier schedule.

Finding a new platform

As he searched for a more convenient solution, he came across Acorns and Betterment. After doing a bit of research, however, Michael was ultimately turned off by the fees and lack of customization.

“Acorns is charging a dollar for investing your spare change — that seems steep to me. Because when you’re investing your spare change, you may only be doing $2 or $3 a month. Then when they take a dollar out, that’s like 30%,” he called. “The problem with [Betterment] is that they don’t really have a lot of choices, because you can only invest what they think is best. And while I don’t really do day trading any more and I don’t really invest in future contracts any more, I still want to invest in stuff that I know.”

That’s when he came across M1. Intrigued by the platform’s customizable portfoliosautomation, and fractional shares, he decided to give it a try, opening an individual taxable account to start out.

“Giving fractional shares access to every investor is a game-changer.”

“It really makes me excited about investing again,” Michael said. “You can invest in ETFs, you can invest in individual stocks, and you can build a completely custom portfolio. All these years of trading and investing, I haven’t seen anyone with that and fractional shares — it’s a game changer.”

Michael notes that his favorite part of fractional shares is the ability to stay diversified and invest in solid companies with higher shares prices, such as Amazon or Apple, without giving them too much weight in his portfolio. Used in tandem with M1’s dynamic rebalancing, he feels confident knowing his portfolio will stay on track over time.

Harnessing the power of automation

Rather than manually placing each trade and calculating how many shares to purchase to maintain his target asset allocation, Michael simply chose his portfolio targets and set a schedule to invest each Friday. It took all hard work (and guesswork) out of the equation.

“I don’t have to do anything — it’s great. I just put money in and [M1] spreads across my investments according to my portfolio targets,” he noted. “You can never really rely on the human brain, you know? If I tell myself, ‘OK, it’s Friday. I have to go put this much money in my M1 account,’ I think I would forget half the time. So the fact that everything is automatic makes it super easy.”

Michael particularly appreciates M1’s intelligent automation during times of down markets.  

“These past couple weeks the market has been going down, so some of my investments have been going relatively lower than my allocations. And that’s fine, because with the automated investing, [M1] will just automatically buy more of that stock and less of the ones that are overperforming. So it’s nice — I don’t have to do anything. I don’t have to think about it.

“It’s just the way to go. In this kind of market and this kind of climate, you don’t want to be panic selling. You want to be accumulating some positions, and I think dollar-cost averaging is a very good way to do that.”

Happy with the ability to choose his own investments and automate the entire investing process, Michael decided to open a Roth IRA with M1 in addition to his taxable account.  

“It truly is the best of both worlds—the vast choice of securities like traditional brokers as well as the ease of use and automation of modern robo-advisors.”

He may not have time for active trading these days, but he’s found his passion for long-term investing has finally started to match the excitement he felt when he first began trading back in college.

“I haven’t been this excited about investing since I first started over a decade ago, and I plan to use the service for a very long time.”

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Check out the finalists’ stories here or learn about even more ways investors use M1.

*Testimonials may not be representative of the experience of other customers and should not be considered a guarantee of future performance. These stories come from an M1 Finance contest in which users submitted their stories of using M1 for a chance to win $500 to invest. Finalists received M1 merchandise after the winner was announced.

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