Motif Investing Review: Get Up to $150 Cash Back!
Motif Investing is a newer broker on the online brokerage scene. 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 started roughly four years ago and has been growing like crazy ever since. 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 Investing 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 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 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 more say over what they’re investing in – which I love to see. 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. 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 Investing has close to 150 pre-made motifs to 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. I will note they offer both equity and fixed income motifs to choose from.
Straightforward Pricing: The pricing with 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.
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.
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 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.
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 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 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.
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 accumulate 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 as it would be with any brokerage as you can easily rack up fees with most brokerages.
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 to use.
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. The one caution I would give is to make sure to not be too active within your selected motif as you wouldn’t want to impact your return with the trading fees – though Motif does make it very clear how to avoid doing so.
With that being said, I 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. They also offer low minimums to start, as low as $250 to invest in a motif.
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?
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