Motif Investing Review: Get Up to $150 Cash Back!

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Motif InvestingMotif Investing takes investing and revolutionizes it. If revolution and investing sounds like a strange mix, this Motif Investing review will help you see how their approach simplifies investing for beginners and veterans alike.

Motif Investing opened for business in 2010 with two key missions – to help investors find ideas to invest in by using a theme-based approach and to cut investing fees.

I’ve personally had an account with Motif Investing for several years and enjoy using the platform. They have had a number of changes recently – thus want to provide a few updates for 2017. With that out of the way, let’s get on with the review of Motif Investing.

How Motif Investing is Different

Motif Investing was started by Hardeep Walia, who is a former Microsoft executive. He left the tech industry to start Motif as a way to help individuals manage their investing needs. Motif Investing takes an outside the box approach to investing in the stock market. Following are some of the ways Motif Investing is different:

  • Motif offers a theme-based approach to investing through a motif. A motif is a bucket of up to 30 stocks or Exchange-Traded Funds (ETFs). What you’re essentially doing is creating your own index fund.
  • These motifs can be in specialized areas like tech companies to companies run by certain political parties to pharmaceutical companies about to lose a patent on a given drug. You can also create motifs that track a certain index or high dividend-paying stocks.
  • Motif Investing now also allows single stock trading. This is a new feature they added last year for those who want something beyond their standard motif. The commission is a very competitive $4.95 per trade – which is the same price you’d see at TradeKing. This makes Motif one of cheapest options for investing in stocks.
  • If you don’t have a given area you’d like to focus on then Motif Investing takes the heavy lifting out of it for you. Motif currently offers at least 150 different pre-made motifs you can choose from if you’d rather take that approach.
  • Motif Investing now offers trading alerts. This isn’t all that unique, as other brokers offer them but Motif allows you to set up either on an individual security or motif level basis. This allows you to set up an alert so you can make a trading decision on a specific security or buy/get out of a motif altogether.
  • You can now invest in IPOs through Motif. This is thanks to a partnership with J.P. Morgan. If J.P. Morgan has access to an IPO you can get them through Motif Investing for as little as $250. There are considerable risks associated with IPO investing though this is another way Motif is helping democratize the investing landscape for the masses.
  • Motif Investing has an extensive social media presence that allows you to share your investing ideas with others. Honestly, Motif is ahead of the curve when it comes to other online brokers in this area.
  • All that said, what sets Motif Investing apart is their allowance of a specialized focus when it comes to investing. I spoke with investors all the time who wanted to have a specific focus, like socially conscious companies, but had little in terms of options. Motif Investing helps broaden those options and make it possible for retail investors to have access to that.

What’s Needed to Open an account with Motif Investing

There is no industry standard when it comes to what is required to start investing. Some brokerages allow you to open accounts with nothing and others require at least $2,500 to open an account. That is not the case here as you can open an account with Motif Investing for as little as $250!

You read that right, you can start investing in a motif with as little as $250. This is great for the individual who wants to start investing with $1,000 or less and wants a way to grow his or her money. They also offer the usual IRA and non-IRA account options.

 

Motif Investing

Fees

I hate investment fees as they directly impact your return. Motif Investing does not have any hidden fees. There’s no inactivity fees, account maintenance fees or anything else like that.

The cost of trading a motif is relatively low at $9.95. That gets you access to investing in up to 30 stocks and ETFs. If you want to trade out specific stocks or ETFs from your motif, Motif does charge $4.95 per trade out. They also allow an option for active rebalancing which comes at a $9.95 charge. But, since you’d likely only be doing that once per year it would only be something you’d see then which is relatively cheap to do.

I will add that if you believe you’d like to change out several of the stocks within a pre-made motif that’ll be cheaper to simply create your own motif without those specific stocks so as to not run into the $4.95 charge.

Investment Options

As I touched on earlier, Motif Investing essentially allows you to create your own index fund. With that in mind your options are fairly endless, at least in the case that you create the motif yourself.

If you’re going for the pre-made route, Motif Investing has many options to consider. If you’re uncertain of a certain industry or niche you’d want to consider they also allow you to search by specific companies to see what motifs they’re in.

Motif Investing recently introduced something they call their Horizon funds. The Motif Horizon funds are motifs that are made up of low fee index funds. Motif Investing could easily charge a fee on top of this, but they don’t. This is something that sets Motif Investing apart from someone like Betterment who would charge an additional administrative fee on top of what the selected index funds charge.

 

Motif Investing

Motif Investing Review – My Take

I believe for the right individual Motif Investing is a great option to consider. Motif is a viable option for two different individuals. The first is someone who is just starting to invest and has little money to begin with. At $250 as the barrier to entry, that is something many should be able to meet. The second individual is someone who may already doing quite well with his or her investing but is looking for a secondary option to invest a small (5-10%) of their portfolio in to see what they can do with it.

The one thing you do want to be careful about with Motif Investing is the changing out of individual stocks. Since Motif charges $4.95 per event it can be easy to rack up the cost. The other potential issue is with the rebalancing. I love that they offer active rebalancing. However, if you do that in a non-IRA account that will result in a taxable event. Of course, that is something you’d want to speak with a tax advisor on, but is something you would want to be careful of.

I believe Motif Investing is a solid option to consider especially if you’re new to investing and are looking for a way to grow your money and build a solid base or focus on a specialized niche.

 

What do you think of this kind of investing? Is there a specific niche or industry you’d like to invest in but have had challenges finding a way to do so?

 

Open an account with Motif Investing and start investing today! 

 

 

Related: Frugal Rules’ Motif Review

 

 

 

 

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John is the co-founder of Sprout Wealth and the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and would love to help out if you have the need. If you're wanting to learn how to monetize your blog, check out my blog coaching services to see how I can help you take your site to the next level.

18 COMMENTS

  1. Like you said, it’s not for everyone. Personally I wouldn’t use it. I’m a fan of mutual funds (I use American Funds. Despite the fees they have a stunning track record). If I can’t find what I am looking for in a mutual fund, then I am likely being too speculative and trying to chase returns. Instead of spending my time scouring for a better investment, I spend my time earning more money and investing in what I know works.
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      • Those concerns are understandable, and yes 12b-1 fees can seem like a ripoff. But after doing a historical analysis between various American Funds and their no-load counterparts, I found that American Funds actually outperform the no-loads, despite their sales charges and their expense ratios.

        That is my reasoning behind using American Funds. If someone is making money off managing my money properly, I don’t mind paying them a fraction of a percentage to do so.
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        • I understand paying someone if they can manage “your” money properly. There is a very valid time for that. Heck, I very well may do that in the future if need be. However, why pay the fees when there are a good number of lower cost ETFs that can do just as good? My problem with 12b-1 fees is that far too many retail investors have no clue they’re even being charged for them or know that their returns are being impacted by them.
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    • The $9.99 fee is every time you trade a motif. Having said that, when you buy one, you essentially get 30 different stocks, so you are only paying $9.99 just for the motif trade, not individual stocks.

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