If you’ve not heard of Motif Investing before, then you’re likely not alone as they’re a new player in the online brokerage scene – starting nearly two years ago. After doing some background research of what they have to offer I thought a Motif Investing Review would be in order. That said, if you’d like to check out any of my previous reviews, you can do so below:
To be completely transparent, I do not have an account with Motif. I believe it’s important to disclose that, but my experience in the online brokerage industry allows me to dig in a little deeper to see some things that others may not see.
A brief backstory on Motif Investing, they were started by Hardeep Walia who is a former Microsoft Executive who moved into the investing realm. It was funding from Goldman Sachs and a few others that allowed them to open for business. They started with an approach that is a bit different in the investing world and are geared toward giving investors a greater say over what they’re investing in. With their backstory told, let’s get on to the Motif Investing Review.
Motif Investing Features
You Create Your Own Fund: The nuts and bolts behind Motif is that you essentially create your own fund. You can 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, but the point is you control what you want to invest in. I often got asked in my past job if there were options like socially aware funds or funds that focused on a certain niche industry. In many occasions, those presented limited options and Motif Investing provides a solid way to meet that need.
They Offer Pre-made Ones As Well: What if you don’t have a specific kind of focus you want to create? Simple – Motif Investing has roughly 100 pre-made motifs to you can choose from. They have a very straightforward interface to use to narrow down ones to choose from if that is your desire. I will note they offer both equity and fixed income motifs to choose from.
Straightforward Pricing: The pricing with Motif Investing is very straightforward, in that you pay $9.95 per motif you choose to invest in. 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.
Extensive Social Network: The other nice feature about Motif Investing is they have a fairly 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 has done a good job of taking a unique spin on it.
Advantages of Motif Investing
Can Be Good for Secondary Investing: The thing that I like about Motif Investing is that they offer a great option if you’re looking for a secondary investing option. As they do not offer mutual funds or options, they lack a full arsenal but I believe you can use that to your advantage if you’re looking for an investment option outside of your main portfolio.
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.
They Offer Active Rebalancing: If you select one of the pre-made motifs, they actively monitor it for rebalancing needs. Remember to be careful about rebalancing too often as you should really be looking at a semi-annual or annual internal for rebalancing a portfolio. That said, it’s a nice little feature they offer 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 Investing allows for that. While this type of investing can and does lead to a certain risk, this is something not many other brokerages are offering.
Disadvantages of Motif Investing
No Dividend Reinvestment is Offered: One of the bigger disadvantages I see with Motif Investing is they do not offer dividend reinvestment. For some this may not be an issue as some prefer the cash, but many others will see it as a drawback. Considering that you’ll likely be investing in fractional shares, this has the potential to make it more difficult to build up to whole shares.
It Could Be Easy to Rack Up Fees: I did note that there are no hidden fees, but that doesn’t mean it’s not easy to rack up fees. Like I mentioned earlier, you can change specific stocks in your given motif, but that comes with a $4.95 trading fee. If you decide to change out of four or five stocks, then your fees will start adding up. That is something to be mindful if you’re considering Motif investing.
My Take on Motif Investing
Speaking honestly, I was a bit intrigued when I started doing research on Motif Investing. All of the other brokerages I’ve reviewed I’ve either used personally or have extensive knowledge of and that was not the case with Motif. I think for the right person, Motif Investing could be a good option, but only as a supplement to what you’re already doing elsewhere in terms of investing. The argument would go that much of the same intent could be accomplished by investing in the right low-fee ETFs like you’d see at places like Vanguard. And, you know what, that argument is definitely right to a certain extent. Much of the same thing could be accomplished through that approach and believe that approach is a very solid one to take.
With that said, I believe that you can supplement that style with a small portion (say 5-10%) of your portfolio and Motif provides a good option for those looking for that as an option. This is particularly the case if you’re looking for 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, they do offer promotions – one offers up to $150 for bringing in an account. They also offer low minimums to start, as low as $250 to invest in a motif.
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?