M1 Finance Dividend Portfolio | How To Make Easy Passive Income!

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so in this video today we are going to be building a mock dividend portfolio and m1 finance just so you guys can understand how does that work with earning dividends with m1 finance and why are there a lot of dividend investors flocking to this free investing app now that being said if you guys at the end of this video do decide that you want to sign up for m1 finance I do have a link in the description below to do so it is an affiliate link so if you do use that link at no additional cost to you I do earn a commission so if you feel like giving back to me for putting this video together that is very much appreciated but it is not required if you don't want to and then one other thing I want to mention really quick I just finished up a completely free 30-minute video training outlining how to use m1 finance as a complete beginner so watch you guys through the entire process step-by-step of opening an account with them funding the account everything in between and everything you need to know to get started with m1 finance that is also going to be linked up down in the description below but that being said let's go ahead and open up my m1 finance account we're gonna build a mock a dividend portfolio and then we're gonna talk about what exactly happens as this portfolio earns dividends okay so here we are inside the m1 finance app this is my simple portfolio that I put together here starting with $100 just for demonstration purposes for the app but it's definitely not a dividend portfolio a couple of these stocks do pay dividends like Microsoft Apple and the Vanguard 500 fund but they're not high dividend stocks so if you're looking to earn dividends through m1 finance you basically have two options number one you can invest in one of the expert PI's or expert portfolios that have a high dividend yield or option number two you can build a portfolio from scratch with high dividend stocks and I'm going to show you guys both of these right now so let's assume for example you just want to invest in a prebuilt portfolio that pays a high dividend while m1 finance offers over 30 different expert PI's that are completely free to invest in including income earners right here that's a right here income earners choose a portfolio focused on dividends and income returns so if we open that up here there are a number of different options here as far as dividend earners you have some bonds as far as a more conservative approach to income you have bank balance sheet I'm actually not familiar with this portfolio what this one entails but then you also have a domestic dividend ETF or blend of funds or you have a global dividend blend of funds here so let's say for example you want domestic dividend you could select this right here and it's going to tell you exactly what this portfolio is so it says here the m1 domestic dividend PI provides exposure to US companies with larger than average dividend distributions the PI was built for people seeking continuous dividend income from US companies dividends provide income investors with cash flow so as we can see here the total expense ratio of these funds is going to be point 1 1% and if you click on targets here we can see exactly what they're investing in it looks like 83% is in a vanguard dividend fund and the other two I'm not familiar with it's another ETF out there and this overall pays a dividend yield of 1.8 4% we'll take a look at another one here let's say you want global exposure here this is the global dividend fund for income earners this one has it looks like five different funds in here and the dividend yield for this fund is significantly higher at three point three seven percent with a slightly higher expense ratio so there are expert PI's built into this app specifically designed for people looking for dividend income and so this is where you would find that primarily under the income earner section of this app now option number two is to build a dividend portfolio from scratch where you pick your investments you pick the stocks or ETFs and then we'll talk about what happens as that portfolio earns dividends so now we're going to go ahead and build a dividend portfolio from scratch on m1 finance and we're gonna do so right over here and essentially what we're going to do is pick five dividend stocks to add to this portfolio just for demonstration purposes so there's a couple of stocks I have in mind that pay high dividends and we're gonna add them to this portfolio and obviously guys I'm not telling you to invest in these companies or not invest do your own due diligence for sure on these companies and do your own research I'm simply just throwing them in here for educational purposes to show you how the app actually works so first of all AT&T is one of the biggest companies out there for dividends so we'll add that one to the portfolio they have a very consistent dividend Altria that's a tobacco company some people don't like investing in them I personally wouldn't but they do pay high dividends so we'll throw them in here as well next we'll add Southern Company which is a utility company and then we're also going to add Wells Fargo which is a bank obviously and they pay a high dividend and I'm purposefully trying to grab companies from different industries as well for some diversification here and then fifth and finally we're gonna add ExxonMobil to this portfolio so we have you know a couple of different industries here and then we'll go ahead and click done now automatically they're going to split the money evenly across these five stocks and that's exactly how I'm going to leave it let's say for example I was looking for an individual stock dividend portfolio I have done my research on these five investments I've decided I want to invest in them then I would have you know 20% of my money going to each of these five stocks so that's exactly how I want it and I'm gonna go ahead and click Save and now this has created this dividend portfolio for me and will go ahead and name it as such now what's gonna happen at this point if I actually funded this portfolio and added some money it's going to just be split up across these five investments so let's say for example I funded this with $1,000 well about two hundred dollars would go into each of these five stocks and the reason you're able to do this is because of a feature called fractional shares where you're not purchasing whole shares of AT&T or ExxonMobil or Wells Fargo you're purchasing as little as one ten thousandth of a share which allows you to have a diversified portfolio without worrying about that share price and then if you guys are curious what the yield is of this portfolio you just jump over to the details tab and you can see right here this would have a dividend yield of five point one three percent now that's a pretty high dividend yield and obviously you'd want to do more research on these companies before you invested in this portfolio but I just wanted to show you what it looks like to actually build a portfolio and it'll show you right here what your dividend yield across that entire portfolio is going to be now that being said what actually happens when you earn dividends now we're gonna jump back to my actual portfolio and I'll show you guys what happens so like I said a couple of these investments here in this portfolio actually do pay dividends and we can see that by going over to the activity section of the app so as you can see here I've earned dividends from Apple as well as Microsoft and the Vanguard 500 ETF and those dividends have gone towards my cash balance held on the sidelines and that is viewable by looking at your portfolio right here so this is a portfolio worth 116 dollars and 30 cents like I said I started with $100 and if I click on the arrow right here it shows my cash balance of $1.00 in 10 cents with auto invest turned on and so what that means is that as I earn dividends those dividends go towards the cash balance held within my account and with the auto invest feature turned on once that cash balance exceeds ten dollars it's going to be spread evenly across my portfolio and they're going to try to bring me back to my target allocations so that is how that auto invest feature works and it's a little bit different than a stock level dividend reinvestment where the exact dividend goes back into the exact stock instead all of your dividends accumulate together and once that balance exceeds ten dollars its invested across your entire portfolio that is why I call it a portfolio level dividend reinvestment and the other thing Emelin finance is going to do as you add more money to your portfolio or as your dividends are invested is they're going to do their best to attempt to bring you back to your target allocations because as you have money in the market each of these assets is going to perform differently at different times so as you can see here I've done exceedingly well with Apple and Microsoft and not so well with Amazon and so as a result I'm underweight in Amazon and overweight in Apple so my goal was to have 30% in Amazon and I have 27.6 and my goal was to have 10% in Apple and I have 12.3 so if I were to add more money to this portfolio m1 Finance would try to bring me back to that target allocation of 50 30 10 10 so as you add more money to your portfolio or as you earn dividends in that balance exceeds $10 it's going to rebalance your portfolio or they're gonna do their best to bring you back to those target allocations but anyways guys that's gonna wrap up this video that is how dividends work on m1 finance that is how to build a dividend portfolio and like I said you have a couple of different options there you can build your own custom portfolio from scratch and choose your ETFs or stocks or you can invest in one of the pre-built portfolios with an income oriented approach like I said if you guys want to check out that completely free 30-minute m1 finance video training that is linked up in the description below as well as a link to sign up for m1 finance if you decide to use it but thanks so much for watching this video guys I hope you enjoyed it and I will see you in the next one


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