Motif Investing Review - Thematic Portfolios for Beginner Investors
Motif Investing is an incredible platform for the novice investor and seasoned pro alike.
The unique concept of thematic portfolios allows you to choose what niche you would like to invest in, and assists you through the process of building a portfolio that best suits your needs.
Prior to opening up your Motif account and gaining access to the rapidly changing financial markets let’s dig deep into Motif’s platform and general concepts to help you make the first move.
Motif Investing allows you to put together a basket of stocks which is called a Motif.
The ability to pool up to 30 stocks into a single Motif is truly a gift to the novice investor. There is no easy way to do this in a standard brokerage account unless you have the capital to do so and this is exactly where the power of Motif Investing lies.
On top of the returns of your portfolio you can also rake in some additional cash through the Creator Royalty Program. Through this concept other users are able to review a Motif you created and choose whether or not to invest in it. If the decide to do so, you will receive a royalty.
Aside from creating your own Motif you can choose from a wide variety of other Motifs that the platform offers.
To a new investor it may be difficult to put together your first Motif but if you fall into this group of people there is nothing to worry about since these pre-made Motifs are put together by industry professionals to best suit your needs.
If none of the Professional Motifs catch your eye the site offers Community Created Motifs.
These are simply Motifs put together by other users. To some people, this might be a great route to take because you know that an investor similar to you put together a specific basket of stock into their Motif.
Unique Motifs for Unique Investors
The wide variety of Motifs that the site offers is amazing. They provide conservative to aggressive motifs, value to growth, China Internet stocks to American Cosmetics. There is everything for everyone!
Motif Investing gives you the flexibility to invest in something that you believe in, and allows you to take on exposure to similar industries and concepts that you may not have looked into before.
This can go along side with the concept of Motif investing encouraging its users to educate themselves and put together a creative Motif of their liking.
If there are Motifs similar to what you are looking for they might catch your eye and peak your interest. Maybe you head home and do your research or even choose a Professional Motif created by the site to give you exposure to a certain industry or concept of your choice.
Who Should Consider it?
Motif Investing is certainly the perfect place for an investor who looks to capitalize on a certain trend or niche in the market.
Thanks to the low minimums and fees, it is an excellent choice for a new investor - you may not have the capital to throw around at first so the fee structure allows you to invest with a minimal amount of funds.
It is difficult to put together a diverse portfolio with a small amount of cash with a standard retail broker, but Motif Investing makes this possible for you.
If you are looking for a low-cost alternative that makes it easy to build a rather diversified portfolio, then Motif Investing might exactly be the one for you.
Likes & Dislikes
- Low account minimum - Motif Investing allows investors to open an account with just $300! This is nothing compared to the $2500+ that some retail brokers require.
- You have a lot of control - unlike a standard financial advisor, Motif Investing allows you to bring your own ideas to life.
- Very social - You can invite your friends and send them messages about your investments.
- You can buy fractional shares.
- No inactivity fees.
- Possibility to invest in latest and hottest IPO's.
- Can be risky - If your chosen niche/industry should experience difficulties, you can lose a lot of money. So, diversification can be a bit of a struggle.
- Cannot reinvest dividends.
- Only open to U.S. investors at this time. European investors might want to look at some other choices like eToro.
- Limited in features - you can't make complex orders nor are there any advanced features.
- Limited investment offerings - can't trade or invest in options nor specific mutual funds.
Motif Investing offers to invest in stocks and ETFs, mutual funds and options are not available.
The account minimum is $300 and there are a few different account types:
- Traditional IRA
- Roth IRA
- Rollover IRA
The fee’s are low along with the $300 minimum investment and to further reduce your fees Motif offers some commission free Motifs called Horizon Motifs.
These are free to trade and free to rebalance if you keep the preset recommended asset allocation.
For a novice investor looking to gain exposure to the markets, Motif Investing provides an excellent opportunity.
Investing in 30 different stocks at might cost upwards of $300 with a standard brokerage account, but Motif Investing allows this for only $9.95.
You can also add new stocks or ETFs to your portfolio at $4.95 per stock/ETF.
There are no inactivity fees nor any other fees. This prevents an investor from making trades they might not necessarily like, but are forced into doing so to keep the account active.
I cannot emphasize enough the advantages of a $300 minimum investing and the ability to invest in 30 different stocks for only $9.95 which is rather low cost and great for any investor.
However, this might not be ideal for the active trader or investor as the order types are kept simple and there is a lack of more complex products like options to trade.
Unlike other brokers, there is no desktop or classic trading platform.
Everything is done through the site, which is not necessarily a problem. This prevents investors from over complicating trades and ideas.
The four main tabs are: account, performance, activity and trading. Trading is where you will be able to put together your own Motifs. A couple of classic features are provided such as price alerts and watchlists.
Overall this is a very simple platform and has minimal learning curve (if any).
Previously mentioned were the Professional Motifs and Community Created Motifs.
These may not be structured the way you want so Motif Investing gives you the ability to customize an existing Motif and swap different stock in or out of your Motif. This gives you a lot more control and flexibility over your investments.
As your knowledge of investments advances you may not like a pre existing Motif. You may be at the point where you want to create your own. Your Motif will then be included in the Creator Royalty Program where you will receive $1 for every time someone buys or customizes your Motif. A taxable event may occur when you re-balance a Motif however.
Customizing or creating a Motif couldn't be any easier - it takes literally a few clicks. You just need to edit some fields such as description and add stocks to your Motif.
The mobile app is available for both iOS and Android.
For the most part it looks almost exactly like the website. This allows you to keep track of your investments on the go and also provides a tailored newsfeed of your liking and the ability to search through different Motifs.
The mobile app along with the web platform give investors a powerful way to keep track of their investments while on the go.
This might be a great choice for someone looking to invest while educating themselves through various watchlists and the tailored newsfeed mentioned above.
One of the most unique features Motif Investing provides is Motif BLUE which is a monthly service that gives you access to some more advanced features that may be more suitable for the active trader or investor.
Motif BLUE program has three different price levels depending on your trading needs. It automatically rebalances portfolios every Monday morning at 9:30am eastern, and only professional motifs are eligible for this service.
The biggest perk of Motif BLUE is the automatic rebalancing which takes the hard work out of being an active investor without taking away from an active portfolio.
On the other hand, there are better, more complex services out there for the active trader and investor. Other services might provide access to more advanced order types and products as well as more frequent rebalancing.
You are just a few clicks away from investing in your first Motif. You can choose a pre existing Motif as mentioned above, or you can create your own.
To build your own you first start by searching for stocks and ETFs that best suit your needs. Then you adjust the weighting by either customizing each selection or allocating the weighting evenly or even by market capitalization.
There is a tool that backtests your Motif over the past year so you can see how it would have performed against the S&P 500. From the trading menu you can track all of your activity, performance, and see your orders and much more.
The process of trading and creating your own Motif is quite simple. After having selected a Motif, you just need to enter the amount you'd like to invest, preview the order and place it. With just 3 simple clicks, it's all done.
The site really provides a seamless way of designing your own portfolio. Significantly easier than any retail broker will ever be able to provide.
Unfortunately there is not much provided in regards to research.
If you check a Motif in more detail there are some related news headlines and the performance of each individual stock, but this is nothing too advanced.
If you then click on a stock you will see some more info and some of the company’s financials, but this is definitely not enough info needed to make an educated investment decision if you are new to the game.
Motif Blue Standard and Unlimited subscribers get access to Motif Capital Market reports and Motif Blue Unlimited subscribers get real time quotes on all pages.
The research is clearly not provided on the platform so I would highly recommend looking elsewhere for research. There are many free research sites out there that also provide you with the education needed to make a simple, educated investment decision. It never hurts to do more in-depth research, even if there is some info provided on the website.
The Motif Blue subscriptions may not be worth paying for either. Other sites provide real time quotes and most stock market or investing sites provide in depth newsletters and research reports.
There is not much educational material offered on the site, but the social aspect can be seen as an education feature.
Other users can leave comments on your wall and you can then share your thoughts with them and other users. There is also a private chat feature where you can have a 1 on 1 talk with another user. This might be a valuable way to reach out to more experienced users for some ideas. The FAQ page covers some more information, which can be viewed here.
The lack of education is definitely something that Motif Investing needs to work on in order to attract some more users. Providing higher quality education could also help Motif Investing create higher quality Motifs for its users.
As more and more users get educated and are able to make wise investment decisions, the Community Created Motifs will slowly become more developed and structured.
Motif Investing Review Final Verdict
Overall Motif Investing is a very unique company. It is definitely an exciting opportunity for casual and novice traders or investors but it might not be an ideal choice for the more experienced and active trader.
Then again, the royalty program could provide the more knowledgeable traders a chance to earn some extra cash. This is truly a valuable platform for investors ranging from Main St to Wall St.
Motif Investing is an incredible platform for the novice investor and seasoned pro alike. The unique concept of thematic portfolios allows you to choose what niche you would like to invest in, and assists you through the process of building a portfolio that best suits your needs.