What You MUST Know About M1 Cash Account - Revealing The Truth
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- Опубліковано 1 лип 2024
- M1 Finance Cash Account is not what it seems, and I use the service personally! Today we dive into the truth of what makes this account work, the fact that it's not a savings account, and we compare it to an actual high yield savings account product that is sort of still offered by M1 Finance. I will also share the 4 issues I have with the current cash account system and how M1 Finance could do a much better job communicating how this works to the average person so they knew where their money was going. Finally, we look online to see if there are any other obviously good choices for our uninvested cash and briefly compare what M1 Finance offers to what Wealthfront is currently offering. Let's go!
0:00 Intro
0:55 Part 1: The Positive things
2:05 Part 2: NOT a savings account
7:42 Part 3: The Problem with this
11:37 My Biggest Issue
13:25 Part 4: Can we make our own cash sweep program?
15:59 Part 5: Is it worth using this service?
18:42 Part 6: Other Savings Alternatives Online
19:55 Wealthfront is at least clearly communicating
20:50 Is it our job to figure this out on our own?
22:46 Got Questions?
22:50 Other M1 Video
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It seems like they intended it to be confusing. I decided to move my money to an American Express Savings account for the time being because I am uncertain about keeping my money there. Thank you for the video; this was very informative.
M1 CEO was on Reddit and he did answer a lot of questions.
He had a great response when I asked him about if they are going to have something like what robinhood just launched
Ooh I saw he was going to be on! I will have to find the thread
Uh, don’t tease us like that! What did he say?
@@BrendanEvan I commented the info
@@ThatLazyInvestorwhere?
@@ThatLazyInvestorwhere?
The difference between the interest rate and APY is due to compounding, not fees. The APY indicates the total compounded interest over one year.
Also, here are the details from M1’s website. The Cash Account is like any other brokerage account that sweeps to partner banks:
**The cash balance in your Cash Account is eligible for FDIC Insurance once it is swept to our partner banks and out of your brokerage account. Until the cash balance is swept to partner banks, the funds are held in a brokerage account and protected by SIPC insurance. Once funds are swept to a partner bank, they are no longer held in your brokerage account and are not protected by SIPC insurance. FDIC insurance is not provided until the funds participating in the sweep program leave your brokerage account and into the sweep program. FDIC insurance is applied at the customer profile level. Customers are responsible for monitoring their total assets at each of the sweep program banks. A complete list of participating program banks can be found here.
@@mere_cat lol so i have to keep track of which banks m1 loans my money out to?
can you compare wealthfront , public , m1 and betterment savings/cash accounts
Maybe...plus this comment has 5 likes so 5 other people may also like that comparison. Anything in particular you want to see?
@@BrendanEvanpros and cons of each account and which is best
Hey Brendan!
Correct me if I'm wrong... the stated interest rate compounded monthly (which is the case at M1) will equate to a 5% APY. So, the reason your money isn't growing every month at one twelfth of 5% isn't because of fees, it's because compounding the growth needs to be factored into the APY.
Also, I love this channel and have been using it as inspiration to make UA-cam content of my own!
You could be right, kinda hard to tell from the info they give us
I believe you are correct. APY divided by 12 is not accurate. Because every month, you earn interest on top of earned interest. At the END of one year, the total should equal 5%. But M1 is still not being clear about what fees and expenses there are.
Yeah. I got my interest payment this morning and it seems inline with what I expected when comparing to my other accounts. Plus I like that I can transfer it to the stock accounts in minutes when I feel like doing some extra buying. I’m cool. This felt like mostly noise.
This was interesting, thank you. I have a HYSA with M1 and saw this new cash product but was also confused by what it was. I just hope they don’t cancel the HYSA… I already had to move my money over to it from their high yield checking which they just discontinued, I don’t want to have to migrate everything over again a year later to whatever this new shady thing is.
Thanks BK!
FYI, The monthly statement for the Cash Account lists the specific bank(s) and corresponding balances where cash is held, and FDIC insured, as of the statement end date. My entire balance was held in a partner bank as of my first statement. I assume this means that they will sweep everything to the bank(s) once deposits are made. Also, my APY as of 4/30/24 was listed as 5.08% on my statement.
Before the Yotta situation, i felt good about M1, whats your take now? I put the bulk of my savings in amex hysa
Public is giving 5.1% APY with no catch and m1 plus like feature for no fee and minimums
I use M1 for the Apy savings account and my Stock Pie. Should I take my savings account money and move it to Robinhood ? I also have a CIT accounts which I like
Why do you have Robinhood???
Thanks for the review bro, I was generally confused reading M1’s explanation of their cash account.
Thanks for the video. I guess I was grandfathered in the APY savings account . Are they still honoring that?
Yup
Brendan, Good inside baseball analysis. But the M1 HY Cash Account is really no different from Vanguard's VMFXX or Fidelity's SPAXX. They're all money market funds using cash and cash equivalents as the underlying investments. They can be used like savings accounts, but are not the sam as the old school Passbook savings accounts banks offer. So no big conspiracy here. Regarding the hold on the M1 Savings Account, my guess is that there are some business decisions being made around how to go forward with it since M1 needs bank affiliates or partners to operate it. And they may be working something out with banks.
Everbank is cool. My fin prof showed it to us back in the day. It allows you to hold dollars locally in foreign banks (think CD’s) opening you to exchange rate differences as well as the CD rate.
If the currency rate is working in your favor, you get the CD rate * the currency rate. This is not ADR (American deposit receipt).
Thanks for the info!
How difficult is it to transfer money OUT of the M1 Cash account over to my regular bank?
Not difficult. I moved $5k out last month. No biggie
Excellent video. I think it's time to transfer to Fidelity. Thanks for sharing..
I have money in the Walmart One account which offers a 5% has anyone looked at that
Mysterious fees & expenses
Claims to be FDIC insured but also states "risk of losing the money you invest."
Shows long list of "partner" banks, but it's really only Wintrust.
We are supposed to be responsible for monitoring our money in the partner bank?
Why would I put my money into such an intentionally vague program?
Do better, M1.
I think the vagueness of calling it a "cash" account is more of an industry problem than m1's. If you're familiar with cash management accounts then you know what this is. I dont think anyone really broadcasts the secret sauce of what happens behind the scenes of their cash management accounts.
They could have been more clear about things and helped people along
13:12 so no FDIC insurance... So investment product with poor returns
I actually do have the high yeild savings account
How did you get it?
@@hugovi8294 I simply applied for it the first day it was available
Yeah we are both grandfathered in from before
Mentioning FDIC on these accounts descriptions is misleading and false advertising. Government needs to smack them.
You said nothing about the obvious?
They charge us all $3.00 a month just to use the platform? What a ripoff😡😡😡
These are great videos. I would have never known. Making me want to leave m1 for sure.
Glad you like them!
I knew I should've waited for this video. Guess I'll be moving my money back to Barclays. This whole thing did sound suspect.
I think M1 is no longer credible
I'm probably going to liquidate out of M1 completely and delete the app.
i moved all of the cash i had sitting in my invest account over because it was just sitting there anyway... hopefully the M1 bros dont gamble all my cash away on a hand of blackjack and tell me to go fuck myself
Still gonna use it hahaha lol
Thank you for doing all the digging for us!! 🫡