Many people have emailed me asking me to review Motif Investing. The reason it’s taken a little while is because I decided to try it out for myself to give you my honest thoughts. I had been using Betterment but now Motif Investing is part of my portfolio.
Motif Investing was founded to be disruptor; it has revolutionized the finance industry by giving investors more say over what they invest in. They do it in a way that’s easy and low-cost.
In a nutshell, Motif is a low-cost brokerage that allows you to invest in groups of investments called “motifs”. Each motif has twenty to thirty stocks that follow a particular theme. This is pretty cool, because I used to do this on my own and pay per trade. Now I can get a group of high-yield dividend stocks and just pay one time. Here are some of the themes:
- Lots of Likes on Facebook (never heard of this one until Motif)
- Healthy and Tasty
- Recession Resistant (might be a good idea to add this to your portfolio)
- Biotech Breakthroughs
- Utility Bills
You can also create your own fund. Just select up to thirty stocks or ETFs of whatever area you like and buy shares for the flat $9.95 rate.
Advantages of Motif Investing
Low Cost and No Hidden Fees
Once you decide what motif you want, you pay one flat fee of $9.95 per transaction. With Motif, there aren’t any management fees and no activity requirements. It’s really that simple. This puts a lot of investors at ease since they don’t have to worry about getting hit with some random fee.
If you choose to remove or change a certain stock in your motif, you can do It for $4.95 per trade or just pay a flat $9.95 for unlimited changes. In nearly all cases, it’s probably best to just pay the ten bucks and forget about it. That way you if anything changes, you won’t rack up a bunch of $4.95 charges.
Let’s say that instead of buying a motif, you decide to buy thirty stocks from E-Trade. I have nothing against E-Trade – I just like keeping my money rather than paying it to a brokerage. You would end up paying $299.70 (30 x $9.99 = $299.70). Hmmm… would you rather pay $9.95 or nearly $300? It’s an easy choice.
Easy to Get Started
The number-one thing that investors need to do to get on a fast track to retirement is just getting started. People see the high account minimums of other brokerages and put off investing for another month… or two… or seven. Because compound interest will allow you to exponentially grow your money, it’s critical to get started as soon as possible.
There is no deposit amount required to open an account with Motif Investing, but you’ll need to deposit $300 to make a trade. Compared with the multi-thousand dollar minimums of brokerages like Fidelity and Vanguard, this is great!
Motif will even give you $150 if you open an account today.
Tons of Features
To say that Motif has some nice features would be an understatement. Here are some of the features offered:
- Flat Rate Pricing – I’ve already covered this; you pay $9.95 regardless of how many stocks/ETFs are in your Motif. If you want to break it down a little more, the cost per stock (with thirty stocks in a motif) is an ultra-low $0.33 per stock traded.
- Available Accounts – they offer Individual, Joint, IRA, Roth IRA, Rollover IRA, and Trust accounts.
- Single Stock Trades – if all you want is to buy and sell single stocks, Motif might not be your best choice. I would look into something like Robinhood, which is free. However, if you really want to trade single stocks, commissions are $4.95 per trade.
- Tons of Ready-Made Motifs – there are over 9,000 pre-made motifs to choose from.
- Trade Alerts – you can get notified of price changes in the motifs you own. This is nice, because it means you don’t have to check your investments every second of every day… not that you should anyway… wink, wink.
- Horizon Motifs – these are just like target-date funds, which allow you to create a stock/bond ratio that matches your investment horizon.
- IPO Stocks – with Motif, you have access to J.P. Morgan IPO stocks. I personally believe that most IPOs are bad investments, but if you see one you like and want to take a chance, you can do it.
- Mobile App – you can use their app right from your Android, iPhone, or iPad.
- Scheduled Transfers – you can make it so you automatically invest. My philosophy is to make investing as easy and as painless as possible so you have no excuse to get it done. You can set up recurring transfer for bi-weekly, monthly, quarterly, etc. Again, it’s “set it and forget it”.
- Real-time Data – you get real-time access so you can see your investments, down to the fractional share (yes, they give you fractional shares too!) and penny.
- Full Visibility – investors are becoming more caring, and that’s a good thing. People care about what they’re invested in. With traditional mutual funds and ETFs, your money could be supporting polluters and gun makers. With Motif, you can keep your investments consistent with your personal values.
If you have a specific niche you’re looking to invest in, Motif is the place to go. At the same time, having the ability to put up to 30 stocks of ETFs together is a great way to get instant diversification.
Note: You should be diversifying across industries and sectors. Having thirty different oil stocks is NOT diversification. If the oil industry gets hurt, your money will be wiped out. Diversification means having some utility stocks, some oil stocks, some tech stocks, etc. Putting all of your money into one industry or sector is the biggest mistake I can see one making with Motif. If you can truly diversify, you’ll be good.
Rebalancing is one of the most important things you can do with your stock portfolio. It guarantees that you buy stocks when they are low and sell them when they’re high. Thank goodness Motif Investing is low-cost, because rebalancing can get ridiculously expensive with other brokers.
If you select one of the ready-made motifs, Motif actively monitors it for rebalancing needs. You can truly “set it and forget it”.
No Dividend Reinvestment
Motif Investing does not offer dividend reinvestment. As I mentioned before, the high-yield dividend motif is my favorite, but there’s no way to automatically reinvest the dividends. This may not be an issue for all investors, because some people prefer the cash.
Honestly, I wouldn’t be surprised if they added this feature in the near future because it’s something that many investors want. I prefer to automatically reinvest my dividends, but this isn’t a deal-breaker for me.
No Complex Orders
This isn’t a big disadvantage, but I figured I should point it out. If you’re looking to get involved in more complex investments such as options and futures, Motif Investing isn’t for you. But for the majority of people who are just looking for a cost-effective way to invest in stocks, it’s perfect.
Frequently Asked Questions
How do I get started?
Make an account, deposit your minimum balance, and select/create your motifs!
Is Motif SIPC insured?
Yes, Motif Investing is SIPC insured.
How does Motif make Money?
Motif makes money from the commissions charged on investment behaviors, such as buying/selling Motifs ($9.95) or buying/selling individual stocks ($4.95). They also have new Motif Premium services, which are $9.95 and $19.95.
How many people use Motif?
At the time of this writing, nearly 300,000 people use Motif.
I’m very impressed with Motif Investing and I will definitely be adding to my portfolio. I’ve used several broker platforms in the past and I rate Motif Investing very high. I’ve been missing out for several years and I’m late to the party, but it’s definitely a wonderful investing platform.
Motif Investing is especially good if you’re looking to invest in trends or a particular sector. The pricing is extremely competitive and tax efficient (if you don’t constantly trade the stocks, of course). It’s also cool how you can customize your motif so you aren’t limited to the pre-created ones.
I feel as if Betterment makes investing automatic and idiot-proof, while Motif gives the user a lot more control. Motif works for new investors as a primary trading method and experienced investors can use it for secondary trading. Used correctly, a Motif investor should be able to achieve better returns for less money.
Be sure to create your Motif Investing account today and get your $150!