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

Motif Investing

Motif Investing is an online brokerage that started in 2010 and has seen impressive growth since. With that in mind, I’m doing a Motif Investing Review to go over some of their offerings to see how they differ from other brokers in the industry.

Motif Investing started with the idea of giving investors more control over what they’re investing in by offering a theme-based approach to investments. If you would like to check out some of my previous online brokerage reviews, you can do so below:

With the growing popularity of Motif I decided to open an account to see how they measure with relation to the other online brokerages in the industry. I manage most of our investing through Scottrade and Optionshouse and decided to open a smaller play account with Motif Investing to get a feel of what makes them unique.

A brief backstory on Motif, 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 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.

They started with an approach that is a bit different in the investing world and are geared toward giving investors more say over what they’re investing in – which I love to see. 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 or idea. 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 most situations those presented very limited options and Motif Investing provides a solid way to take care of that. Taking part of the Grow Your Dough challenge, I decided to make my motif one that’s focused on the oil industry.

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 choose your selected motif. 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.” The point is the possibilities are endless.

Straightforward Pricing: The pricing at Motif Investing is straightforward and easy to follow. You pay a flat $9.95 per motif that 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 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.

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 of taking a unique spin on 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 has recently launched their new Horizon motifs. What makes these motifs great is that 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 off of your specific risk tolerance, timeline and amount to start investing with. Whereas you would pay a fee for the same basic thing with Betterment there is no charge with Motif.

 

Motif Investing

 

 

Advantages of Motif Investing

 

Can Be Great for Secondary Investing: The thing that I love about Motif Investing is that 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.

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, Optionshouse or Etrade as being able to invest without the fear of getting hit with some sort of random hidden 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 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: One of the disadvantages 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 actually has launched a class of dividend specific motifs. What I like about this offering is that 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. That said, Motif Investing has seen the draw dividends have for many investors and have made a great attempt to meet that need.

Motif Investing Review – my take

 

Speaking honestly, I have been pretty impressed with Motif Investing in my experience thus far. 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’re wanting 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
Reviewer
John Schmoll
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 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.

25 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!

  • 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.

  • 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. :)

  • 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!

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