Motif Investing Review: Pros And Cons, Pricing, And More
As an investor, you have a wealth of option available to you when it comes to trading. There are a ridiculous amount of platforms out there, some far better than others. The one brought into question in this article is Motif Investing.
On the outside, Motif looks similar to plenty of other platforms. A closer look reveals that this company has a different take on investment portfolios and the values behind them than most. You may have heard industry professionals rave about the site, but does it live up to the recent hype?
Choosing the right brokerage to invest with is quintessential if you want to get the most out of your stocks. In this article, we’ll break down every aspect of Motif to help you decide if this trading option is right for you.
What Is Motif And How Does It Work?
Motif was founded in 2010 by former Director of Corporate Development and Strategy at Microsoft Hardeep Walia. With a BS in Economics and Engineering as well as an MBA from Wharton School of Business, Hardeep managed investments and acquisitions for Microsoft before founding Motif.
This company is backed by the likes of JP Morgan and Goldman Sachs. Having reached immense success within the past few years, many investors are looking at portfolio diversification in a different light.
Motif Investing falls into the online broker category, but they operate a little different than you might expect. They create a group of 30 stocks or ETF’s around a central theme called motifs. These stocks are listed on all major U.S. exchanges and generally focus on a particular idea, theme, or value.
So, you could have a motif built around new housing construction, used cars or anything else you can think of. The possibilities are endless, allowing you to pick and choose the types of industries you feel most comfortable investing in.
Many investors center their motifs around hot trends, particular trading strategies, their investment style or something wholly unique that they’ve come up with on their own. If you aren’t feeling very creative, you can always choose from over 150 professionally pre-built motifs in major categories like Global Opportunities and Income Strategies. The site also features upwards of 180,000 motifs made by customers.
The benefit to using these motifs is creating an investment portfolio that aligns with your values. After viewing stock in a particular category, then adding or removing any selections you would like. You can also change a stock’s weighting in any motif or choose to build from scratch.
Once your motif is built, you can execute your trades in real-time during market hours. Users can also add motifs to a watchlist that tracks performance and value, which helps you secure a trade at the best possible time based on your own insights.
Finally, investors can sidestep the complications of buying foreign stocks through American depository receipts. These are issued by a bank or brokerage, and trade on U.S. markets while representing shares in foreign companies.
What Makes This Service Unique?
Aside from the unique platform, several other things help Motif Investing stand out. The first is their social aspect. An account on Motif grants access to their social network where you can find ideas from other investors or post your own insights into the world of trading.
You might find discussions revolving around pulling out of a particular market, why a particular stock could take off, or new companies that are worth a look. The network also allows you to invite friends from Facebook and send friend requests to other Motif users.
There is also somewhat of a royalty program on the site. If you create a custom motif and someone else buys it, you’ll earn a dollar. The same goes for any user that sells or rebalances one of your motifs. There’s no limit to how many royalties you can earn, and the rate of $1 stays the same for any transaction.
Royalties are paid out at the end of the quarter. So, if fifteen people decided to use or rebalance your motif, then you’ve made an extra fifteen dollars as passive income.
Motif also offers automated Impact Portfolios. The asset allocation of your portfolio is derived from risk tolerance and time horizons, with underlying investments differing according to your chosen values. Corresponding value-based MSCI stock index determines your stock, real estate, and commodities portion.
Avoiding the entire MSCI index, Motif offers direct ownership in the largest companies within each index. While that creates slightly less diversification, this method does avoid expenses and fees. As for bonds, that portion of your portfolio is made up of standard index ETFs used by robo-advisors.
How Much Does Motif Cost?
There’s no cost to create an account on Motif Investing’s website. You won’t find any hidden costs, and there are no account management fees to worry about. As you might imagine, however, trading stocks is never free.
Motif collects a $9.95 commission on their motifs whether you create one with two stocks or the full thirty. So, filling out your motif is highly advised to make the most of that fee. It costs the same amount, $9.95, to rebalance your account and $4.95 to buy or sell individual stock.
Before making any investments, though, Motif requires that you have a minimum of $250 in your account. They recommend at least $300 to cover their commission and any intra-day stock price shifts. Funding your account is as simple as linking it to your bank.
Motif does offer a commission-free model called Horizon, but there are entirely different fees associated with that platform. You will also need a minimum balance of $2,000 if you want to trade on margin. However, the investing platform allows you to purchase or sell as little as 0.01 shares.
Premium services include Motif Blue, which offers automated investing. Users can buy into chosen motifs at a set frequency without paying a commission fee each time, paying a $19.95 monthly subscription for real-time trades instead. Blue comes with unlimited next market open trades and three real-time trades each month.
Other costs include fees for accounts with lower than $95 and a 0.25% annual fee on Impact Portfolios. These portfolios require a $1,000 minimum balance.
(Other Motif Reviews)
Motif Investing has garnered a lot of attention from professionals in the industry, and their reviews are overwhelmingly positive. Most note the uniqueness of Motif’s platform, while others point out the obvious benefit of diversifying your portfolio.
As these reviews become more in-depth, sites like InvestorJunkie and FrugalRules point out that the commission is cheap compared to the costs of using a broker, allowing entry-level investors to get their feet wet without too much of a commitment.
On the downside, several reviewers noted that there is no dividend reinvesting available on the platform. Others decided that this was not a good platform for anyone picky about choosing their stocks since most are bought in pre-packaged motifs.
As a company, Motif Investing holds a B rating with the Better Business Bureau. All of their complaints have been resolved to date.
How Motif Compares To The Competition
Motif Investments, unlike like similar platforms, does not offer investment advice. Users are left to make judgments for themselves, deciding to buy or sell based off of their own insights. It’s Impact Portfolio isn’t as great as Wealthfornt’s or Betterment’s, and the diversification there could be better.
That being said, their value-based investing approach makes them highly distinguishable. Motif Investing is capable of satisfying numerous types of investors from those favoring ETFs to stocks and U.S.-listed securities. The ability to purchase a dollar amount allows for fractional shares, which is excellent for small-dollar investors.
Their motif trading strategy is wholly unique, allowing investors to build diversified fund with stocks that align to their values and interests. The level of customization available on those motifs is something nor found elsewhere in group trading or buying.
Their commission is low when purchasing the full 30-stock motif, making each share almost an exact 33 cents each. If you’re looking to invest more, then you can save plenty by opting for Motif Blue. From flexibility to diversity and hands-on-investing, Motif definitely stands out from the competition.
Finally, Motif doesn’t have many trading tools that investors can use. There’s no diverse search, analysis tools, or a variety of order options. That’s fine if you know what you’re doing and get your information elsewhere, but it doesn’t help Motif to become a standalone trading option.
What We Think
We believe that Motif Investing is an excellent option for particular investors looking to create a diversified portfolio that aligns with their values and interests. The cost is excellent whether you opt for a subscription or not, and the ability to customize each motif ensures your money goes to the companies and industries you want to support.
Whether you opt for the monthly Blue subscription or simply pay the commission, you’re getting your money’s worth as long as you make wise choices. You’ll need to do your research on particular industries and trends before getting started, but that’s not a bad thing. There’s nothing wrong with educating yourself about the stock market.
When it comes to finding a platform to trade on without a lot of cash to do so, Motif is an excellent option. Their real dollar system allows for fractional shares, which can work to your benefit if you don’t have the dough for a full share from major companies like Amazon or Netflix.
This is not the place to secure dividend stock if you plan on reinvesting your earnings, which many do to increase their share in a company. You can still reinvest your dividends, but you have to do so from your account and pay the commission fee. Keep in mind that additional shares from a dividend are credited to your motif.
The lack of tools on the site can make this tough for anyone new to trading stocks or anyone who likes to stay on top of their investments. That might just be part of their more hands-on approach, but not every investor likes that design.
If you’re looking for commission-free ETFs, mutual bonds without transaction fees or trading option, then you’ll probably want to find a different brokerage. If you wish to invest in the companies that align with your values while staying hands-on with your portfolio, the Motif is the place to go.
Coupons And Deals
We weren’t sure that we’d find anything for this section with Motif, but it turns out there are incentives and ways to save money. The first thing we found was a $150 in trades after you make an IRA transfer of $5,000 or more. Some sighs featured varying percentages off certain priced orders, but these coupon sites were not secure and reeked of spam mail.
We’ve said it before, but it never hurts to reiterate the need to stay safe when looking for coupons online. There are hundreds of sites out there claiming to offer discounts that are simply fronts for cybercriminals to steal your information. Never pay for a coupon, never enter any personal information outside of an email address, and avoid unsecured sites without the proper SSL certificates.
A few verifiable promotions we found include the ability to receive one month of Motif Blue for free for every friend you refer that open an account. Your friends need to use the link you provide, which utilizes a specific cookie to identify your referral. So, have them enable cookies on their browser before signing up.
On a funny note, Groupon thinks that Motif’s price of $9.95 for thirty stocks is an ongoing sale. There’s also a “sale” on their site to join Motif for free, which anyone can already do.