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

This Motif Investing review covers my experience using the theme based broker. Open a new account with Motif Investing today and get up to $150 cash back!

This Motif Investing review is an update for 2016 after having used the platform for several years. Motif Investing is part robo-advisor part DIY platform. The hybrid approach allows Motif to be somewhat unique in the online brokerage space and allows them to serve a broad client base.

Motif Investing started with the idea of giving investors more control over what they can invest in by offering a theme-based approach to investing. This, along with their low minimum account balance requirement, makes Motif a great option for those who want to invest in the stock market.

I manage most of our investing through Vanguard though like having a small play account on the side for more active trading. I use the Motif platform for that capacity.

Motif Investing Background

 

Motif was started by Hardeep Walia who is a former Microsoft Executive who moved into the investing realm. It was funding from Goldman Sachs and others that allowed them to open for business. Many in the finance industry have also taken notice with Motif Investing being named #4 in the CNBC “Disruptor 50” for helping revolutionize the finance industry, as well as being named the most innovative company in the personal finance space by Fast Company.

Motif Investing started with an approach that is a bit different in the investing world. Their aim is to give investors more say over what they invest in – which I love to see. Motif also believes that investors are paying too much for their investing. That’s music to my ears and could not agree more. I’ve provided a brief video below that goes a little more in depth to see what makes Motif different. With that out of the way, let’s move on to the Motif Investing review.

 

Motif Investing Features

 

You Create Your Own Fund: The basic premise with Motif is that you create your own fund based around a specific theme. You select up to 30 stocks or ETFs of whatever area you want to focus on and buy shares in that motif for a flat $9.95. I will give the disclaimer that you will likely end up with fractional shares though shouldn’t be an issue for many. I often got asked in my past job if there were options for socially responsible investing or funds that focused on a certain niche industry. In most situations those presented very limited options and Motif Investing provides a solid way to take care of that.

They Offer Pre-made Ones As Well: What if you don’t have a specific kind of focus you want to create? Simple – Motif has close to 150 pre-made motifs you can choose from. They have a very straightforward interface that allows you to find pre-made motifs. You simply log in to your account and you can search by different sectors and industries to see what pre-made motifs are available. These motifs can be as simple as the “Growing Dividends” motif or ones as exotic as “3D Printing” or “World of Sports.” Some of the motifs are pretty unique, but there are also many mainstream ones to select.

Straightforward Pricing: The pricing at Motif Investing is straightforward and easy to follow. You pay a flat $9.95 per motif. The nice thing about the motif is that if you choose to remove or change up a certain stock in your motif you can do so for $4.95 per trade or a flat $9.95 for unlimited changes. Honestly though, I’d just create my own motif without having to pay extra to customize a pre-made one.

Trading Alerts: This isn’t a terribly unique feature, as many other brokerages offer trading alerts. However, the new trading alerts feature at Motif Investing allows you to keep a closer eye on your investments when not logged in to your account. You can set alerts that are tied to a specific holding, or an entire motif. Whenever the selected item reaches your set value you will receive an alert to notify you. On top of this feature, Motif Investing now offers single stock trading. For $4.95 per trade, you can now trade individual stocks with Motif. This places Motif as the lowest priced broker out there, along with TradeKing and Optionshouse.

Extensive Social Network: The other nice feature about Motif Investing is they have an extensive social network. They have one in-house that allows you to share investing ideas with others and they also allow you to invite friends of yours from your social media networks. Social media is becoming more of a player in the online brokerage space and Motif Investing has done a great job implementing it. You can also use this to get royalty payments from Motif if someone buys a custom motif you’ve created!

New Horizon Motifs: Motif Investing recently launched their new Horizon motifs. What makes these motifs great is they are no fee motifs that are comprised of low-cost ETFs that are considered best in class for their respective asset class and are completely customizable. The Horizon motifs are based on your specific risk tolerance, timeline and amount to start investing with. You would pay a fee to do that with Betterment – there is no charge with Motif.

 

Motif Investing

 

 

Advantages of Motif Investing

 

Can Be Great for Secondary Investing: The thing I love about Motif Investing is they offer a good option if you’re looking for a secondary investing channel. I believe they can also be a good option for someone new to investing and has little money to start investing with as they allow you to open an account with as little as $250.

No Hidden Fees: One of the biggest things I like about Motif Investing is they have no hidden fees. Fees can be a drag on investing returns and hidden fees are horrid at best. This puts Motif in the ranks of Scottrade or Etrade as being able to invest without the fear of getting hit with some sort of random fee. This also includes no maintenance or custodial fees.

Instant Diversification: Diversification is something overlooked by many investors and to their own detriment. Having the ability to put up to 30 stocks or ETFs in a bucket provides a great way to get instant diversification without much work at all.

They Offer Active Rebalancing: If you select one of the pre-made motifs, Motif actively monitors it for rebalancing needs. Remember to be careful about rebalancing too often as you should really be looking at a semi-annual or annual interval for rebalancing a portfolio. That being said, it’s a nice little feature Motif Investing offers and if you choose to go with the rebalancing you pay $9.95 for the trading involved.

Great If You Have A Specific Focus: Like I said prior, if you have a specific and specialized theme or niche you’re looking to invest in, Motif is the place to go.

 

Motif Investing

Disadvantages of Motif Investing

 

No Dividend Reinvestment is Offered: The biggest disadvantage I see with Motif Investing is they do not offer dividend reinvestment. This may not be an issue for all as some investors prefer cash as opposed to a reinvested dividend. With that in mind, Motif Investing does offer a class of dividend specific motifs. What I like about this offering is they have motifs made up of companies that have not cut dividend payouts for the previous ten years, those that have increased dividends each of the past five years or those that are considered high yield dividend payers. If none of those motifs fit the bill and you do want a dividend focused motif you always have the option of creating your own through Motif.

Motif Investing has seen the draw dividends have for many investors and have made a great attempt to meet that need. I will also add that it wouldn’t surprise me to see this feature added in the near future as they know it’s something many investors want. They saw the need to offer single stock trading, and added the feature, so it wouldn’t surprise me to see DRIP offered in the near future.

This Motif Investing review covers my experience using the theme based broker. Open a new account with Motif Investing today and get up to $150 cash back!

Motif Investing Review – my take

 

To be honest, I have been pretty impressed with Motif Investing in my experience over the years. Motif makes it fairly straightforward to open an account and the platform is intuitive. Having used a variety of broker platforms currently and in the past I would rate Motif as ahead of the curve when it comes to ease of use and navigation through their platform.

I think for the right person, Motif Investing can be a great option, especially as a supplement to what you’re already doing elsewhere in terms of investing as well as for someone new to the stock market.

I also believe Motif provides a great way to supplement your investing with a smaller portion of your portfolio. This is particularly the case if you want a way to invest in a certain specialized niche or market that you’re unable to find elsewhere and are comfortable with the risk associated with that.

If you’re considering opening an account with Motif Investing, make sure to check out my Motif Investing promotion code post to see what they’re currently offering for new accounts. Motif Investing offers very low minimums to start, as low as $250 to invest in a motif.

 

Open a new Motif Investing account today and get the limited time promotion of $150 cash back!

 


 

After reading my Motif Investing review, what do you think of this style of investing? Do you have a small portion of your portfolio that you allocate to invest in certain sectors or niches?

 

Summary
Review Date
Reviewed Item
Motif Investing
Author Rating
5
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I'm 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 regularly contribute to GoBankingRates, Investopedia, Lending Tree and more. 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.

42 Comments

  • I like the concept here, but since we are looking specifically at dividend investing, I don’t think this would work for us. Great review, John – nice and thorough!

    • John says:

      Totally agreed Laurie. If dividends are your main thing then there are generally better options out there for you.

    • Jack says:

      You can always withdraw dividends from Motif. They have several Motifs with emphasis on dividends. The $9.95 in and out and $4.95 rebalancing are an attraction. They have loads of my money.

  • I first heard about Motif investing a little over a year ago as Peter at Bible Money Matters was telling me about it. I think it can be a good way to invest because many times people are looking to invest in a specific market or area.

    • John says:

      I agree DC, I think it could be a good way for some – especially if you’re wanting something very specialized and are comfortable with the associated risk.

  • This is a really interesting approach. I think it could be good for people who want to experiment a bit with where they invest. Sadly, I’m not yet at that point.

  • Jason says:

    Great review! My wife and I are expecting our first, and I’m looking for a place to create a “newborn savings ETF”. An account where the grandparents can make a donation to every Christmas (instead of useless gifts). The challenge though is some of the stocks that I’d like included (like AAPL) would prohibit them from ever being able to purchase a single share within a year. That said, this seems like a great option for them to take a $100 gift to the baby, and spread it across 10-12 stocks (with partial shares). Or am I mis-reading the capabilities of Motif?

    • John says:

      Thanks Jason! That sounds like a great idea and way to get started early! You’re dead on, the money is put in and it allows you to create your own fund essentially by selecting the stocks you want to be a part of it – and ending up, initially, with fractional shares of each. Thanks for stopping by!

  • Todd Smith says:

    Good review, as a Motif investor I can affirm that everything you say in your review is accurate. The only negative I have experienced is that currently, when you re-balance a motif, it will result in the sale of some stocks in the motif, which may result in a taxable event. It would be great if Motif offered an option to re-balance using only stock purchases and no stock sales (and so no taxable events).

    • John Schmoll says:

      That’s a great point Todd! That is certainly something to consider and could lead to a surprise if not done in a retirement account. Thanks for stopping by!

  • Rahul says:

    Thanks John. The thing about investing is, all my life I’ve heard how you want to diversify. What Motif offers seems counterintuitive to all of that programming. Am I missing something?

    • John Schmoll says:

      That’s a great question Rahul. You’re correct in that you do want to diversify. Motif actually allows you to do that in that each motif you set up can essentially be an index fund – one either you’ve created or one they’ve created. They can hold up to 30 stocks, so you should be able (generally speaking of course) to diversify. Thanks for stopping by!

  • cynna says:

    I am currently using the Motif Investing (MI) site, and I agree with your review. The route I took with MI was to open an account with $8K and just sort of play a bit – with the intention of both having some fun and leaning a little.

    Before I executed my first trades, and even before I opened my account, I created a login on MI and then reviewed literally all of the motifs that the pre-built. I watched them for a couple of months and decided which I wanted to purchase.

    With 8K in the account I started customizing and buying motifs. I created one on my own, but I did not publish it for public viewing. After 6 months my total account value has increased about 8% percent but the dollar value of my account has not increased. That may seem odd but you pointed out that fees for modifying the motifs can eat into profits.

    So if you have a compulsive need to rebalance, buy and sell and play too much fees will add up.

    With that said, I have been having a blast with MI and I am happy that I can create my own investment motifs and customize others and see how them perform.

    I will mention that I have other investment accounts that are seriously and vigorously managed. MI is where I get to act like an investment manager on my own behalf and I love it!

    • John Schmoll says:

      Thanks for all the insight to your experience Cynna, I appreciate it as it’s great to hear from those using the platform.

      Glad to hear that things are going well overall for you with MI and sounds like you’re using them pretty much like I’d recommend most use them for.

    • gibbs says:

      I am one of those with a constant need to rebalance. As soon as I get a notification on my phone that a rebalance is available, I can’t stop thinking about it until that little notification flag is gone. What I have done is turn notifications off on my phone for this app and instead, I set a reminder on my calendar for every six months to take a look at the available rebalances. Works much better for someone like me…

  • Julie says:

    Can you explain how dividends/earnings would be directed if I chose to set up a Roth IRA with Motif? Wouldn’t they have to have some sort of reinvestment structure, based solely on the nature of the Roth? I would not want to set up an IRA if I were going to be taxed and penalized on cash payouts. I’m interested in the Horizon ETF line where I can do a small direct Roth IRA rollover and “set it and forget about it” for the long run. Thanks for your helpful post.

    • John Schmoll says:

      Great question Julie! How that would work with MI, and every other brokerage as well, is that any cash payout would go into a money market account that’s tied to your account. In an IRA, those payouts are sheltered from taxes so you wouldn’t need to worry with that. The cash would sit there and earn a little bit of interest until you were decide to use it to purchase another holding. Glad to be of help and thanks for stopping by. 🙂

      • Jack says:

        When you use the MI rebalance, you can reinvest your dividends or any other money in your account for no more than the usual $4.95 for an ordinary rebalance. One slight negative is that if you have $10,000 to invest, they only buy something like $9,000 of stock, and leave $1,000 in cash, apparently to allow for price fluctuation during the transaction. The cost saving is still worth it to me. If you are buying several Motifs, the same unused $1,000 can be used as backup toward the next purchase.

  • ninan says:

    Good summary of MOTIF. However, one issue that needs to be addressed is about how good their execution is, especially if the spreads are wide. If you are trading 10 stocks per month you could save $149 per month(10*8*2 – 2*9.95) on MOTIF. However, if their execution is bad and your trades lose, let us say, .2% on trades worth 100,000 you would lose $200.

    • John Schmoll says:

      Great question Ninan. As with any other broker, Motif is audited by their regulators to verify best execution. The other main thing to consider is they’re trading only in stocks/ETFs that are NYSE/NASDAQ listed so there really shouldn’t be any issue with bid/ask spreads. You would also be investing in the singular or multiple Motifs and not trading individual stocks. Hope that helps. Thanks for stopping by!

  • I really like Motif. I’ve built a couple of portfolios and can’t complain. Although there isn’t a DRIP, I think that consistent saving and reinvesting the cash from dividend portfolios can help mitigate this.

  • Pinky R. says:

    Thank you for a great article. I have read up on Motif and am interested in opening an account very soon. My question is: If I stick with the pre-planned portfolios and do not deviate or switch out stocks, can I simply sell the entire portfolio for another one as my personal investing needs change? If so, what sell/re-buy fee’s will I incur?

    • John Schmoll says:

      Not a problem Pinky, glad to help! To answer your question, yes you can sell out of the entire motif as your needs change and would just incur the $9.95 trading fee by switching out entirely.

  • madden says:

    Great article. I see no mention of TAX implications. Are gains/losses reported to the IRS.
    Are TAX software companies on board with how these returns are compiled in your TAX preparations

    • John Schmoll says:

      Thanks Madden! Yea, another commenter mentioned that above and need to add it to the review. 🙂 If it’s in an IRA, of course, there would be no tax implications. However, if you’re in a non-IRA the rebalancing will cause a taxable event that would be reported.

      Yes, you should not run into a problem implementing that with TurboTax, H&R Block, etc.

  • Jonathan frouman says:

    What is minimum trade amount allowed? What is the minimum of the motif size for the small investor?

    • John Schmoll says:

      Great question Jonathan! The minimum with Motif is $250. Motif isn’t tiered, so you should be able to get into any of their motifs at that $250 level. Thanks for stopping by!

  • James says:

    I would think this type of investing is a tax nightmare. Make sales of 4 motifs with 25 stocks each and you have to report 100 stocks!

  • Alexis M. says:

    I’m a college student looking into Motif as a way to begin my investment career so that I have some experience once I get out in the “real world.” Would you have any tips about using Motif for someone without much in the bank account in my situation? For example, a suggested minimum investment amount?

    • John Schmoll says:

      Great question Alexis. Motif is a great way to get started with little money to begin with as well as to get your feet wet with investing. Their minimum opening balance requirement is $250. That’ll allow you to open an account and either create your own motif or select one of their pre-made ones for that minimum amount. You can add more to it from there, of course, but just need that minimum amount to begin with.

  • Len says:

    I don’t want fractional shares. I dealt with that at Loyal3.They don’t appeal to me. Can’t that be avoided? Currently there are seven stocks I can start with. With so few to begin with, should I even bother? They are all dividend stocks.

    • John Schmoll says:

      I understand that concern Len, I’m not a fan of them myself but there is no real way around it with Motif. If you’re going to do dividend reinvestment, you’ll see that at most brokerages though if you sell out of a holding they should liquidate the partial share at the same price the whole shares sold out. That being said, I would definitely say it’s still worth it in the long run.

  • Luis says:

    Hey there John… I am a teacher struggling to save money. I have been interested in stocks for some time, but after reading a few books and becoming so overwhelmed with stock terminology and how it works, I’ve convinced myself it isn’t for me. Can you help me understand the process and how I can get started. Thanks John!

  • Adam says:

    Please comment on how they execute a Motif trade. Ex: If I have 25 stocks in a motif and want to invest $2500.

    1) Will it be a market order always (buy or sell side) for all underlying stock/ETFs based on weightage ratio. I guess limit order won’t work to satisfy all the limits of underlying stocks in a motif (All or none will be tough).

    2) If market order is answer then how precise is their order execution (compare to reputed online broker like eTrade or TD). A delayed execution can cost investor heavily on volatile day.

    3) Looks like to keep accounting simple better to open IRA/Roth IRA account if somebody wants to do any rebalancing involving multiple securities.

    Thanks for answering

    • John Schmoll says:

      Thanks for stopping by Adam – great questions. I’ve spoken with reps from Motif in the past about some of these.

      That being said, to my knowledge, it would always be a market order. You’re correct in that a AON would be virtually impossible to get through if you have 10 or 20+ holdings in a motif.

      I’ve spoken with them about that second question fairly in-depth. They’re under the same premise that someone like Etrade or TD is and are required to have best execution possible. Given that they now offer individual stock trading it should be expected that they’re even more on top of this. They’re wanting to become more of a broader scope brokerage, similar to the traditional brokerage model, so it stands to reason they’d need to be on top of this in order to have any measurable success.

      Excellent point. Yes, an IRA would keep accounting significantly simpler. I’ve not done a lot of rebalancing in my non-IRA with them, but can only imagine the headache it’d cause if I did.

      Hope that helps – let me know if there are any other questions I can help with.

      • Craig says:

        Thanks, this is a great article. I’ve been thinking about getting into investing via Motif or Wealthfront or other similar service.

        Regarding point 3: Is it really that much of a headache to do your taxes if you invest in stocks (or motifs in this case)? Don’t they just send you a 1099 and you plug that into your tax prep software? (for someone with a relatively simple financial life — job, savings accounts, maybe stocks, not really anything else).

  • Seth says:

    I find it really interesting (haven’t used it yet) as a way to reduce fees. If I wanted to have 7 stocks or ETFs in my portfolio all at different weights doing that in a traditional sense would cost me 7 trades. Here I can set it up with the percentages I want for each one and invest paying only $9.95 in fees. At least that’s how I understand it.

    • John Schmoll says:

      You hit the nail on the head Seth. Motif allows you to set up your “motif” by percentage. So, for example, if you want the top 2 stocks/ETFs to take up 50% of your overall investment you can do that.

  • Barry says:

    Hi John – thank you for your review. Two questions:
    – Does Motif support downloads of trading activity, holdings, realized Gain/Loss via online reports (to Excel preferably).
    – Does Motif support downloads to Quicken or other financial software for managing portfolios?

    These functions might all come from Pershing, their trading back-end. Do users have a direct login to Pershing when using Motif’s services?

    • John Schmoll says:

      Hi Barry,

      Not a problem at all. Those are great questions. Yes, you can download statements, activity, etc. I’ve never tried saving it as an Excel file but normally save them as a pdf file.

      From what I’ve researched, they do not allow for downloads to Quicken though oddly enough they do through Mint.

      I’m not terribly certain on that, to be honest, though would imagine it would be a direct log in.

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