Motif Investing in a Nutshell
Motif has been one of the most prominent up-and-comers in the latest generation of investing apps and platforms. As a service, Motif is part robo-advisor, part DIY portfolio building platform. Though Motif uses plenty of AI and machine learning, it’s a platform that leaves much of the heavy lifting to the user (on purpose!).
Through their unique model, users can trade stocks and ETFs in bundles of up to 30. These are called “Motifs”, and cost $9.95 to buy or sell. The ability to trade 30 stocks or index funds for less than $10 is pretty mind-blowing, and this is Motif’s central value. Now in its fourth year, Motif is constantly adding new features according to industry trends and user request. Motif was listed in the CNBC Distributor 50 in 2014 and 2015. For all the details you could ever want, read on below.
The Motif Story
Motif was founded in 2010 by Hardeep Walia, former Microsoft executive and budding investment entrepreneur. Goldman Sachs pitched in early investments, and the company really started to come into its own in 2013. Today Motif is one of the most recognizable names in cutting edge investment platforms. Their service has strong appeal to new and experienced investors, and their unique model is both educational and fun to use (as well as extremely profitable, if you use it right).
Motif’s Unique Methods
Motif investing is built around the crazy-low price they charge for ETFs and stocks. ETFs and stocks are grouped together in bundles of 20 to 30. These are known as “Motifs”, and they buy and sell for just $9.95 (a $250 minimum account deposit is necessary for first-timers). Let’s take a moment to let that sink in. Through many other online brokers, buying a single Exchange-traded Fund (ETF) might cost you $9.95. To be able to buy unlimited quantities of 30 stocks/ETFs in a single bundle is a tremendous value proposition, and Motif’s biggest selling point.
Motifs are so-called because the stocks and indexes they contain are grouped around ideas, sectors, industries, or trends. You’ll find Motifs built around just about anything you can think of: Businesses With Lots of Facebook Likes, Bio-Tech Innovations, Cancer, 3D Printing, High-Performing Dividend stocks, etc. There are more than 9,000 ready-made motifs currently available, each with their own perks and performance histories to explore before purchase.
You’d think that with 9,000 options to choose from, you’d have no trouble finding a Motif that works for you. But you’re a special snowflake with unique demands. Motif has two customization options for you. 1) You could customize an existing Motif. That’s $4.95 to replace a single security, or $9.95 for unlimited shuffling. All users can also customize the allocation balance of any Motif’s securities for free. 2) You could build your own Motif from scratch. This costs $9.95, just like buying one of Motif’s ready-made offerings.
Custom user Motif’s can be made available to the general user base. Anytime someone buys, rebalances, or adjusts a Motif you created, you get royalties. Motif also has interesting promotions going on right now, including up to $150 in free money for new users. We’ll cover the parameters for unlocking these funds a little later. For now, we just want to emphasize that at this point in our Motif review, we’ve identified unique features that make Motif a valuable resource in the modern investment landscape. You should really try it.
Motif Frequently Asked Questions
Before we get into the meat of the review, let’s look at some of the most commonly asked questions about Motif from the web.
How Does Motif Work? Users buy bundles of stocks and ETFs called Motifs. It’s a great way to achieve diversity or sector-specific investing, without spending very much money.
How Much Does Motif Cost? No Motif investing review would be complete without costs. $9.95 for most purchases and sales. Free Horizon Motifs (specific retirement-focused ETFs). $4.95 for individual stocks. No fee for withdrawal.
How Does Motif Make Money? Motif charges commissions on various investment behaviors, like buying or selling Motifs ($9.95), buying or selling individual stocks ($4.95), and on their new Motif Premium services ($9.95/$19.95).
How Many Users Does Motif Have? About 250,000.
How to Use Motif. Make an account, deposit your $250 minimum balance, and go to town.
How Good is Motif Investing/Can You Make Money With Motif? We think Motif is great. It really does offer some extraordinary value. You’re looking at a rave, bud. Because there are so many different Motifs to choose from, there’s nothing like an “average user return” we can tell you. Some Motifs perform extraordinarily well (like Precious Metals with over 30% returns this year). Others perform poorly. Depending on your strategy, your portfolio might look like a stock-picker’s choices, or a conservative array of index funds.
Digging Deeper into the Motif Investing Review
By now, you understand the basics of how Motif works. But there are tons of other details you’ll experience when you make your account. I’ll try to lay these out now as clearly as possible.
So let’s say you’ve just started your account. Rather than putting in the minimum $250 account balance, you opt for $900. This is because it you have to invest a minimum of $300 in any given Motif. You want to start out with three. You choose one built around high-growth Vanguard ETFs, one built around High-dividend stocks, and another that gives you holdings in the High-Speed Transit industry.
You spend some time exploring each motif and decide that you want more of one ETF and less of another. This process is called balancing. As time goes on, your securities will perform in various ways, taking your Motif out of balance. You can ask Motif to rebalance your motifs each quarter for $9.95, or you can keep an eye on your portfolio and do it yourself. Remember, buying and selling costs $9.95, as do adjustments of individual Motif content. Balancing is always free.
Later on, you decide to start your own Motif based on your knowledge of Medical Technology companies in Austin, Texas. You handpick 25 company stocks and package them together in a Motif. Before you buy, you can “Backtest” your selected securities, to see how they would have performed together over the past months or years. If you are satisfied, you can complete your order, and even make the Motif available to other users, using Motif’s Creator Royalty program. A little later in our Motif investing review, we’ll take a look at how a few real Motifs performed last month.
Potential users will definitely want to know which Motifs are the most likely to succeed. You could easily do this research yourself from within the Motif platform, but that’s why we do Motif reviews. Here are some examples of the best returns Motif has to offer, any of which would be a no-brainer for a first-time Motif user.
Gold Bear – This is a novel strategy that worked out like gangbusters for users who bought up this Motif. This Motif was based on the idea that, because gold has been priced at all-time highs, gold bear inverses could be had for next to nothing, and would pay off big for the buyers. This month, that proved true, with investors scoring 33.5% returns this month!
David’s Craft Beer Motif #9 – After (presumably) eight tries, someone named (presumably) David nailed the composition of this smash hit Motif. Cashing in on America’s craft beer craze, this Motif relies heavily on stock in Craft Brew Alliance Inc. That portion alone showed massive, 100%+ growth since the Motif was created. Overall, the Motif brought in one-month returns of an impressive 19.4%.
Alzheimers and Dementia – With the Baby Boomers getting up in years, America is coming to terms with the high cost, and terrible emotional toll, of Alzheimers and Dementia. These diseases are the subjects of intense study across multiple disciplines. Those invested in this Motif saw 14.3% returns, just this month, invested in many of the companies which are driving the advancements in these complex medical mysteries.
Motif’s Creator Royalty Program and Social Media System
The Creator Royalty program is pretty simple. Your custom Motifs become available on the general Brokerage Catalog. The program gives you a visual dashboard where you can see every time someone watches, buys, adjusts, or sells your Motif. Most of these actions cost $9.95 for the user performing the action, and Motif gives you some of that money as a royalty.
This is a good time to bring up Motif’s social media aspect. When your Motif goes live, you might start to see people leaving comments about it and giving it ratings. It’s possible to do this with all Motifs, and you may be surprised how insightful user comments are. I’ve made spontaneous purchase decisions on more than one occasion just because another user had something interesting to say about a Motif that I had not heard before.
You can make friends with other users, or bring over your own from your friends on Facebook. These friends can be grouped into Circles, a la Google+. You and your circles can have private conversations. At all points of Motif social, you’ll have the ability to decide who gets to see your investment behaviors and comments, and who does not. Older brokerage sources are starting to incorporate social elements to their platforms, but Motif has used SM from the ground up and it’s social is much more robust.
Horizon Motifs are one of the most compelling new value propositions in the entire Motif platform. Horizon Motifs are bundles of ETFs used for retirement-target investing. Users select options marked “Conservative”, “Moderate”, or “Aggressive”. The difference between Horizon Motifs and regular Motifs is that these are free to buy and sell. Motif selected the ETFs involved because they were low-cost and high-performance. As long as you don’t monkey with the composition of these ETFs, you won’t incur any fees at all (other than the typical taxes associated with buying and selling stocks. More on that later).
Horizon Motifs seem to be an attempt to offer the same sort of value that Betterment offers its users, with its “Set it and forget it” retirement target model. Horizon Motifs are actually cheaper than Betterment’s 0.15% to 0.35% annual fees. But Horizon Motifs don’t offer some of Betterment’s features – like automatic dividend reinvestment – so there are important differences. Still, there is no cheaper way to buy the ETFs represented in these Motifs. If you’re happy with how they are composed, and you house them in a Motif IRA, you should be very happy with the money you’ve saved.
Motif Account Types
This is a good time to talk about Motif’s account types. They’re pretty simple and straight-forward:
- Joint/Individual Accounts. These are normal, taxable accounts.
- Traditional/Roth/Rollover IRAs. These are tax-protected accounts. Tax-free trading, combined with Motif’s other savings features, makes Motif very affordable indeed.
Motif Premium Services
Motif Premium is currently in Beta, but it already offers some great features that more than pay for the services (for most users). Right now, we’ve got:
- Motif Premium Rebalance ($9.95/month). Automatic rebalancing, additional commentary and advice from Motif, special 800 number for advanced customer service, extra webinars and events. (Hint: automatic rebalancing is the best feature on that list.)
- Motif Premium Autoinvest ($19.95/month). All of the above features, as well as automated recurring investments in up to 3 Motifs FOR FREE! Also, real time stock and ETF quotes and three other free trades per month. (Hint: if you’re an active user, this option more than pays for itself.)
Pro-Tips and Details for Getting the Best Value Out of Motif
- Fractional Shares: Motif users will have them after trading even a few times. This won’t be a big deal for most people, but we had to mention it.
- The Motif App: Sexy little trading app for Android, iPhone, iPad, and Apple Watch.
- $150 Bonus!: New accounts with at least $2,000 qualify. More funds are unlocked as you perform more trades, up to $150 for five trades in your first 45 days.
- Trading Alerts: Get notified when market conditions are in your favor, through the Motif app and general platform.
- Dividends: Motif offers no automatic dividend reinvestment (DRIP). While this bums some people out, it’s likely that this feature will be added soon. Currently, Motif helps users get around this most of the way by making dividend withdrawals free. If you reinvest those funds in new Horizon ETFs, you won’t have spent any extra money reallocating those funds.
- Diversification: Just because a Motif contains 30 securities doesn’t mean the user is diversified. 30 stocks in the High-Speed transit industry represent a very niche investment. Motif won’t automatically make you diversified. That’s up to the user. Choose Index Funds and broad ETFs to achieve real portfolio diversity.
Motif Investing Customer Reviews
Final Thoughts on Motif
This concludes our Motif Investing review. Motif rides the line between robo-investor and traditional broker very nicely. Whereas robo-brokers like Betterment make investment truly automated and idiot-proof, Motif gives a lot more control to the user. On the other hand, they don’t offer the exhaustive options of old-school brokerage houses. The features that make up the Motif platform were chosen to offer the most value to both new and experienced investors, without providing a bunch of confusing options that almost nobody uses. We think they made great choices is almost every case.
Motif can work for new investors as a primary trading method. It’s also useful for experienced investors for secondary trading, as Motif’s cost model is truly mind-blowing. For any kind of investor, the concept of grouping securities by concept or industry is really interesting. Motif is a great place to test hunches and watch as market trends unfold before your eyes. With some research and care, a Motif user should be able to achieve amazing returns for less money than they’d spend elsewhere. It can’t do everything, but that alone makes Motif a brokerage option to be reckoned with. We recommend it wholeheartedly.