Is M1 Finance Safe? Here’s the 411

Investing is always a risky affair. Market movements present an opportunity for huge profits and big losses. When you decide to invest your money for the future, you want to make sure that your money is safe.

In our M1 Finance review, we describe it as one of the best investing platforms for beginners around. But is investing with M1 Finance safe?

Let’s take a look at whether this is the right place for your portfolio.

The reality is everyone is at risk. Most people manage everything from their banking to paying their utility bills online. This presents a huge target for cyberattackers around the world.

Did you know that 2020 saw all records broken when it came to cyberattacks across the globe?

To put the threat in perspective, an American F-35 fighter jet is more likely to be brought down by a cyberattack than an actual missile. Cyberattackers have never been more sophisticated than they are now.

That’s bad news for your portfolio. When planning for retirement or to put down a deposit on a house, you need to be confident that any brokerage is doing everything they can to protect you.

The answer is yes to both.

M1 investing is legally required to be a SIPC member. This covers up to $500,000 in securities and $250,000 in cash in the event M1 Finance collapses. It also compels M1 to keep investor funds separate from their funds, as well as to maintain a minimum amount of liquidity to meet its business needs.

Your money is also FDIC insured. This federal protection is designed to protect American depositors and their money.

Since M1 Finance maintains your deposits in a bank account via the M1 Spend platform, FDIC coverage applies to you. It ensures your money up to $250,000 is protected.

M1 Finance uses the Plaid platform to transfer funds from your bank to M1 Spend. Plaid is renowned for exceeding industry standards and best practices on keeping accounts safe and secure.

All data transmitted to and from M1 is fully encrypted using AES-256 encryption. This is the gold standard for financial institutions.

A core aspect of security when you invest with M1 Finance is multi-factor authentication, or two-factor authentication (2FA)

2FA is an additional layer of security designed to protect your account if your password is compromised. There are several options for 2FA, such as an SMS code sent to your registered mobile number or a fingerprint scan.

This enhances security and prevents attackers from compromising your account. Google’s own data demonstrated that 2FA prevents 100% of attacks where an SMS code is required to log in and 96% of phishing attacks.

M1 Finance also employs an intelligent monitoring system to detect any unusual activity on your account. A big red flag for a cyberattack in progress is a login from an unusual IP.

For example, if you’re an American citizen and your account receives a login request from an IP in Morocco the chances are someone has stolen your login credentials.

With M1 investing, the platform reacts quickly to lock down your account before an attacker can cause any damage.

While this smart monitoring system is far from perfect and can be a source of frustration, such as if you’re traveling overseas, verifying your identity takes no more than a few minutes.

The M1 Finance app has been created with security in mind. Insurance is only the first line of defense for your money. With high levels of encryption and additional security measures in place, we at Modest Money believe that this is one of the best places to invest your money.

What we love about M1 is that it’s a completely free platform with no account minimums, no trading fees, and no commission fees.

While your investments are not protected against market volatility, it’s about as safe a place as can be to invest your money.

It shares many of the same protections as other investing platforms, such as Robinhood, Acorns, and Webull.

In our review on M1 Finance, we praised the platform for its approach to low-cost, simplified investing. It couldn’t be easier to make a deposit and create your portfolio using the M1 pie investing system.

When it comes to security, M1 is a top-tier investing platform. If you’re concerned about getting into the markets for the first time, M1 is the ideal tool to get started with.

To find out more about the platform, read our full M1 Finance review.

If you’re ready to sign up and invest with M1 Finance, follow our unique Modest Money link and start investing for free now.