I’ve written reviews on the free investment tracker Personal Capital, as well as low cost investment services like Betterment. Today I’ll share my thoughts on another new investment service. I hope you enjoy this Motif Investing review.
The Motif Investing Idea
Motif Investing is a company with a lot of big supporters. The founder, Hardeep Walia, is a successful guy who came from a high leadership positions in Microsoft. The board is equally impressive, which has led to a lot of support for the company.
I have to admit, they found a great niche in the investing scene. The service falls somewhere in between stock picking and index investing. This positions them to take advantage of both markets.
The company and its community create portfolios called Motifs with up to thirty stocks or ETFs that represent specific investment ideas. Investors can buy whole portfolios in one trade for only $9.95. You can open an account by going to MotifInvesting.com. There is also an app for the iPhone that you can download at the Apple App Store to browse Motifs and then buy them on the iOS web browser.
Here is a little visual overview of their service and a video from the founder:
This process results in owning a motif. Motifs are a bundle of individuals stocks or ETFs. Each motif can contain up to 30 stocks or ETF’s and is fully customizable.
They sell preset Motif bundles in a wide variety of flavors. Anything from Chinese energy to gambling to online video gaming. Each of these preset motifs holds 20-30 related stocks.
It’s important to note that you don’t have to keep the preset options. You can remove a few of the individuals holdings or change the weighting if you want to own more or less of an individual company. The preset motifs are a sort of template that you can customize and make your own.
If you don’t like the preset options, you can make your own. Pick up to 30 stocks or ETFs, then decide what percentage of each you want to own in the motif. This is definitely a better strategy than trying to pick 1 stock to hold in an investment portfolio. It’s all very easy to do with little sliders and easy to read numbers. You can also choose to share your created motif with the community of other investors.
If you create a Motif and other investors choose to use it, or any variety of it, you will get paid a commission. You also get paid when they rebalance the Motif. This was just announced in beta form, but it is an incredible idea.
Other Motif Investing Features
Investing Made Social
Everyone who uses Motif Investing participate in a unique social network where they comment and share opinions about specific Motifs or investing ideas. You can decide to invite your friends from Facebook or meet other people who invest like you. There is also a privacy section filter which limits who can see your investment activity or commentary. There are three levels of sharing; with the entire Motif community, with your friends, or with smaller circles of people you select.
This is actually a pretty cool idea. If you’re into the community aspect, it could be entertaining and potentially educational. Here is an example of how the community feature looks:
Investors can choose between retirement accounts or normal brokerage accounts. If someone wanted to fund an IRA with a motif, that option is available to them.
They are continually improving the option to share a motif with other investors. This means that you can interact with and choose to purchase other motifs that have been created. Investors can evaluate and discuss all of the motifs that are being shared.
Being able to compare motifs and read evaluations from other investors is a huge plus. Plus, there are a multitude of possibilities that can arise from sharing motifs. And wouldn’t it be great to get paid for sharing your motif?
As I stated above, they just announced a commission program that allows individuals to make money when other people choose to purchase their motif. An ongoing royalty payment, if you will. That’s a huge incentive for investors to participate in the community.
Motif Investing Pricing
The pricing of Motif Investing may be the most attractive part. Being able to buy 30 stocks for under $10 is unheard of. Almost all other brokerage firms charge more than $5 per individual trade. So buying 30 stocks would result in $150 price tag.
Here are the costs associated with buying motifs.
$9.95 per motif trade (buy and sell)
$250 minimum per motif (bundle of up to 30 stocks)
$4.95 to trade or swap an individual stock in an existing motif OR $9.95 to swap out as many as you want.
No maintenance fees
No inactivity fees
Things To Consider
This is not a problem with the company or service, it’s a problem with stock picking in general. If you own 20-30 stocks, and one goes bankrupt, or the sector experiences new problems, you’re motif is going to be hurting. Owning just a few stocks results in additional investor risk.
On the other hand, you can choose to own index ETF’s inside of a Motif. So they have allowed investors a way to get huge diversification. In offering this, they have allowed investors to choose between stock picking and index investing. The choice is ultimately yours.
Dividends cannot be reinvested as of now. If a company allows dividend payments in stock, you can use that option, but cash dividends cannot be used to purchase more shares of a company. This means you must receive dividends and that they are taxable in the current year.
Motif Investing Review Summary
Overall, I think Motif Investing is a good company that offers an interesting idea. I certainly wouldn’t recommend an investor start picking random motifs as his core portfolio, but choosing motifs is a much better idea than trying to choose individual stocks.
For owning multiple stocks and ETFs, Motif Investing offers a very good, very low cost solution.
The company is offering $150 in free money to new investors at this time. You can access that offer here -> Motif Investing Bonus
Please let me know if you have questions or if I missed anything in my Motif Investing review!
If you enjoyed this article, sign up for FREE updates!
I'm Jacob - co-founder of this blog, husband to a wonderful wife, PhD student in financial planning, and an opinionated money saving master! I'm glad you're here and I hope you stick around. Connect with me on Twitter and Google +