Motif Investing Review 2021 – Low-Cost Themed Diversification

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Editor's Note: On April 18, 2020, Motif announced that it would be shutting down. If you're looking for a stock broker, you can find our list of favorites here.

Motif InvestingThere are some online brokerage firms out there that provide you with the chance to invest on your own at a reasonable price. One of the more novel brokerages is Motif Investing, a discount brokerage that helps you invest based on themes. It's like building a mini-ETF.

Motif has ranked for two years in a row as a CNBC Disruptor 50.

Commissions & Fees - 8.5
Customer Service - 8
Ease of Use - 7.5
Tools & Resources - 7.5
Investment Options - 6
Account Options - 6

8

Motif is a competitively priced stock broker that creates investing "themes" to diversify your portfolio. However, since it offers mostly rudimentary features, experienced, active traders might find it lacking.

What Exactly is a Motif?

CEO Hardeep Walia states Motif Investing is like combining the investment experience of Peter Lynch with the diversification of Jack Bogle. You invest in groups of investments that share similar characteristics. Each motif features between 20 to 30 stocks or ETFs that can be said to follow particular themes. Examples include “Healthy and Tasty,” “Utility Bills,” “Recession Resistant,” and “Biotech Breakthroughs.”

There is even a “Lots of Likes” motif that focuses on companies with the most Likes on Facebook. It's an interesting twist on the theme of “asset allocation,” since you can choose from a number of different “asset classes” to create a one-of-a-kind portfolio.

You can look for motifs using different criteria, such as exploring by industry or looking for themes based on current events. It's also possible to screen motifs by looking at daily change, one year return, and popularity. The screener allows you the chance to find just what you're looking for in an investment.

Motif Investing is quite cost-efficient as well. You get access to each of the stocks in the motif for one flat fee of $9.95 per transaction. No matter how much you customize a motif. There are no management fees, and no activity requirements. However, the fact that you can get 30 stocks or ETFs at once, for less than $10, is a big deal. Anytime you trade a motif; you just pay the flat transaction fee.

If you want to buy more of a particular stock or ETF in one motif, without purchasing another entire theme, you will pay $4.95 for each. The same applies if you decide to sell shares of an individual stock or ETF inside a Motif. The cost is $4.95 per stock/ETF.

There's no deposit amount required to open an account with Motif Investing, but you need to deposit $250 to make a trade. If you want to buy on margin, you will need to maintain a minimum balance of $2,000. Motif Investing is a member of FINRA and SIPC insured.

Motif Investing Features

Minimum Investment$0
Stock Trades$4.95
Options TradesN/A
Mutual FundsN/A
Investment TypesStocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, Cryptocurrencies, Futures
Accounts Types
  • Taxable
  • Joint
  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • SEP IRA
  • SIMPLE IRA
  • 401(k)
  • Solo 401(k)
  • Trusts
  • Limited Partnerships
  • Partnerships
  • Coverdell
  • 529
  • Custodial
  • Non-Profit
  • Annuities
  • Checking
  • Savings
  • Money Market
  • CDs
AccessWeb Based, iPhone App, Apple Watch, Android App, BlackBerry App
Broker Assisted Trade$45
Virtual Trades
No Fee ETFs0
Customer ServicePhone: M-F 9A-6P ET; Text: M-F 9A-6P ET; Email
  • Single Stock Trading — Single stock commissions are $4.95 per trade.
  • Many Pre-built Motifs — There are over 9,000 motifs by the company and community. If you like one you see, you can customize the motif to your liking.
  • Create Your Own Motif — Add up to 30 stocks and/or ETFs to create your own custom theme.
  • Horizon Motifs — Similar to a target-date fund these motifs allow you to create a stock/bond ratio per your time horizon.
  • Trading Alerts — Get notified of price changes in the motifs you own.
  • Scheduled Transfers — Set up recurring transfers: Bi-Weekly, Monthly, Bi-Monthly, Quarterly, Semi-Annually, and Annually.
  • IPO Stocks — Gain access to J.P. Morgan IPO stocks.
  • Motif BLUE (New) — Targeting active traders Motif BLUE you pay a monthly subscription fee to save money on more advanced features.
  • Instant Deposits (New) — Up to $5,000 per day is available instantly to trade.

Customizing Your Motif

What if you don't like all of the stocks/ETFs in the theme you've selected? Motif Investing allows you to customize it. You customize your motif before you buy. After you purchase a motif, you can add more stocks/ETFs, or sell the shares you don't want.

For example, the “Recession Resistant” motif offers some solid dividend-paying stocks. You can switch some of the stocks that you don't like with a dividend aristocrat. Unfortunately, dividends aren't reinvested automatically, so you will have do it manually.

You can also customize the weighting in your motif. You can switch up how your money is distributed within the motif. This feature gives you a little more control over how your overall portfolio looks.

The service is a bit clunky when trying to customize, but it still works reasonably well. And, of course, one of the big selling points is the cost. You can essentially create a personalized ETF, but you don't have a management fee to pay (even a small one); you just pay your flat rate for trades.

Another unique feature of Motif Investing is the ability to create a custom motif, and can share with others. If individuals use your theme, you will get a royalty commission. So not only can you show off your investing expertise with others, but can make money doing so. Every time someone purchases or rebalances a motif you've built from scratch, you will get $1. Granted you won't make bank from doing this but still a neat feature of their service.

Motif BLUE (New)

Motif BLUE is a new monthly service that gains you access to more advanced features with Motif. Based upon the features, Motif is targeting more the active trader. Depending upon how much you trade per month, these plans could save money compared to competing services. Motif currently has three options available.

  • Motif BLUE Starter – $4.95/month
  • Motif BLUE Standard – $9.95/month
  • Motif BLUE Unlimited – $19.95/month

Some of the new features I question the value added (like market commentary), though the three free trades, automated recurring investments, and automated rebalances could make the $19.95 worth the monthly fee. Keep in mind with Motif each trade is $4.95 and with three free per month equals $14.85, not including the other features listed.

Motif has a special promotion via their refer-a-friend program – Get Motif BLUE 3 months for free.

Horizon Motifs

Motif Investing recently introduced commission-free Horizon Motifs. So with these motifs you do not pay the $9.95 commission. These motifs are similar to retirement target date funds.

All you do is select the time horizon, and Motif Investing does the rest. If anything they are now more like the robo advisors Betterment, Wealthfront and FutureAdvisor where you are letting a service create your asset allocation. Target-date funds have their issues but do open up Motif to a much wider audience of investors.

Motif Investing Screenshots

    Motif Investing Pros & Cons

    Pros



    Easy Way to Diversify
    —Great service to diversify into specific sectors and investment ideas with small amounts of to invest.

    Low-Cost Trades
    —It's $9.95 per initial trade. After that it's $4.95 when modifying the motif.

    Custom Motifs
    —Use the pre-made motifs, or roll your own. You can get paid for each person who uses your publicly created motif.

    Cheap Single-Stock Trades
    —Buying or selling a single stock/ETF is one of the lowest in the industry at $4.95 per trade.








    Cons



    No Automatic Dividend Reinvestment
    —Currently, Motif Investing cannot automatically reinvest dividends.

    Lacking Social Features
    —Features are missing in the social section like the ability to search.

    No Complex Orders Available
    —Cannot perform a limit order on a motif or single stock trade.









    Summary

    Overall, Motif is a great way to invest, and a unique service in the traditional brokerage firm space.

    Motif Investing is especially helpful for those who are looking to invest in trends, or who want to exposure to a particular sector.

    The pricing is very competitive and tax efficient (if you don't trade stocks in and out of your motif). It's a great way to diversify with small amounts of money to invest. It's nice that you can customize your motif, so you aren't limited to only the pre-created motifs.

    Currently, the only disadvantage of Motif's service is the lack of automatic dividend reinvestment, so I would not recommend the service for any dividend stocks.

    Disclosure: I have an account with Motif Investing for reviewing purposes, and have $2,600 invested.

    Readers: What do you think of Motif Investing theme concept?

    Larry Ludwig

    Larry Ludwig was the founder and editor in chief of Investor Junkie. He graduated from Clemson University with a bachelor of science in computers and a minor in business. Back in the ’90s, I helped create some of the first financial websites for firms like Chase, T. Rowe Price, and ING Bank, and later went on to work for Nomura Securities. He’s had a passion for investing since he was 20 years old and has owned multiple businesses for over 20 years. He currently resides in Long Island, New York, with his wife and three children.

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    19 Comments

    1. I just closed my account. I think their customer service is not that great (on the best day), but I am specifically writing to let everyone know that Motif charges an account closing fee of $95. That is unheard of, as far as I know in the investment industry. What is worse is that they do not tell you this anywhere and you can only find out when it’s too late. When I received my withdrawal check, it described the fee as a tax deduction, but a Motif representative later clarified in an email that it was an account closing fee.

    2. MOTIF is awesome. If you are good at picking stocks (like me) then motif will save you money on fees and flexibility. I have been waiting for Motif for a long time – it’s highly recommended.

    3. Not sure why this article lists “complex orders” as a lacking feature in the Cons list. That’s inaccurate — with single stock trades, Motif allows a Market or Limit order and duration conditions (Good til cancel), just like any brokerage. Motifs can also be customized to your liking, so if the “Home Improvement” seems too heavily skewed in favor of Home Depot, they allow you to adjust that or even add your own stock idea to the Motif basket.

      The only problem I’ve seen is that sometimes one of the stocks in a Motif is set at like 1%, so even if you’re investing thousands of dollars, there’s really no point in owning $20 or $30 worth of shares in a company. I mean, saying “My Google stock went up 10% today” doesn’t mean as much when that means you’re only $3 richer. So yeah, I’d say keep those stocks in the Motif at at least 10% unless you’re investing 10 grand or more at a time.

      I’ve been a customer for a couple weeks now, and they’re pretty nice. Their customer support is quick and seemingly well-paid (i.e. you don’t get generic broken-English responses from a $6/hr person right off the unemployment line). I even asked if I could set up a beneficiary/POD account (something many brokerages surprisingly lack), and they sent the form over and got me set up right that day. Impressive!

    4. Next to trading stock options, Motif investing is a terrible idea.I followed the IBD and lost at least 20 percent of my portfolio and never recovered it (even after having in there for a long time. Furthermore, you can only use IBD within Motif if you continue to subscribe to IBD, so you get double charged, at least. Its ridiculous.

      1. i just started
        what is wrong
        i paid onoy 5 dollars for as many stocks i want
        yes if you want more complex things maybe this isnt for you
        but for people who domt habe thousands to buy its great

    5. RE: Motif Investing

      The brokerage house is a standout for being delinquent in sending out 1099 forms in a timely fashion. I have been in receipt of a 1099 from every other investment company I have worked with, present and past, by the 15th of Feb, the latest. The sole except being Motif Investing. Their 1099’s barely make it to me by the end of the 2nd week in March!
      This 2015, is the second and LAST year I do biz with them

    6. Great product for the regular guys who do low volume trades. you can design your own portfolio and publish it with a flat fee when you need. Similar trade on regular brokerage account will cost a great % in fees alone. Only fix need is able to do place ‘Limit’ market orders which i think will be fixed soon.

    7. Personally think motif has limitations that make it very hard for me to justify moving my portfolio. I dabbled a bit before which was a good decision in the end.

      1) There is no automatic re-investment of dividends. This is a problem because the dividends are paid in cash and you need 250.00 to make a minimum purchase. So unless you add more money (which they charge you to withdraw) to buy more stocks (regardless of market factors) it just sits there and does nothing. If you want your money to do that you can put it under your mattress.

      2) No ‘limit’ orders, you can only place market orders, if you rely on them for data you are placing open market orders on information that is 15 minutes old, YIKES!

      3) Their enforcement of the “25k day trader limit” is basically not allowing you to sell anything unless you wait 3 days. They call it “unsettled funds” which if it is an actual thing, it is not an actual thing that brokers like TDAm care about. At any other broker You can buy and sell whenever you want, regardless of how long you held it or if the proceeds from your last sale was still working it’s way through the system, as long as you do not exceed 4 “round trip” trades in a 5 day rolling period. So If you buy a stock and sell it the same day it is considered “round trip”. If you hold it overnight you are fine. If you want to jump on a quick day trade you are fine, as long as you do not do it too many times. I did not know this policy and was forced to hold on to a leveraged inverse ETF for 4 days!. This wiped out all of the gains I received in my carefully timed purchase, I had no idea until I tried to sell my shares after two days. This is simply unacceptable, plus the way that they explain it, they make it seem like their hands are tied, they are simply enforcing the rules of the FTC.

      4) (last but not least) You have to pay a fee to transfer your money out. This is the online definition of highway robbery. They make it incredibly easy to get money in and buy stocks. Once you start peering behind the curtain you find that they are making their money on the back end which you do not find out about until they already have your money.

    8. I recently signed up for Motif because I am reluctant to put a lot into just a few stocks. Paying $9.95 at TD Ameritrade on a few hundred dollars of a stock purchase is a pretty poor return on investment. I love that I can put so many stocks into a motif and buy them together with just one click. There are stocks in my motif that are worth $50 (not per stock, total). It would have been crazy to pay a separate commission for that. Also, the customer service is really good both over the phone and through email. I couldn’t believe it when I emailed them a question over the weekend, expecting them to answer during the business week, and they answered within a couple hours on a Saturday night!

      There are several disadvantages that you don’t mention that people should probably be aware of.

      In no way I’m a suggesting that this is a bad site. Quite the contrary. I’d recommend it to anyone. But people should probably be aware of the limitations.

      –Only market orders, no limit orders. Also no stop limits, trailing stops, etc. so you have to monitor your investments often. Also, to my knowledge they don’t support short orders.

      –If you want to rebalance while you add to a motif, that’s two separate commissions you have to pay.

      –You can remove single stocks from the original motif for $4.95, but you can’t add additional stocks.

      –Think carefully before transferring your IRA there. They have an IRA bonus now for $150. Unfortunately, the closing costs exceed that. It’s $65 to transfer the IRA out and another $95 to close the IRA account. Even worse, if you want to convert all your traditional IRA to a Roth, you have to keep $95 in your traditional account to avoid the closeout fee. If you ever want to leave the door open to do a backdoor Roth, that’s problematic.

      –Information about individual stocks is very rudimentary. You’ll have to use another source. I personally find Yahoo Finance to be the best source.

      1. Fern,

        You are correct current no market, limit trailing stops, etc. Though not sure how you can implement then when purchasing/selling a pool of stocks/ETFs? Hence why I didn’t mention it.

        1. Yeah, a limit order is difficult when you’re buying/selling a whole group of stocks at once unless they allow you to set the limit for each stock individually. It would be nice to see a stop loss, however, such that if the value of the whole motif drops below a certain price, then all the stocks are sold even if some of the stocks have appreciated while others have depreciated. That way you don’t have to constantly monitor the investments.

          What are the implications of the bid-ask spread when you can’t use limit orders? To what degree can the company use that to their advantage by executing at an unfavorable price?

    9. motif investing is okay. Still missing a lot of features. Once you created a motif (portfolio of stocks), there is no way to add one stock to the motif by adding more $. You would be paying $20 to just do that. It does not have the ability to trade OTC stocks. No dividend reinvesting. Ask a lot of questions before joining.

    10. I recently opened an account with Motif and am finding it very simple to use — an improvement over my standby Vanguard! I also like that the fees are clear and upfront.

    11. Sounds good. But seems like the expense of trading the IBD 50 4 or 5 times a week could hurt a small account.

    12. Motifs are an interesting concept. It’s great that they’re reducing transaction costs and investment minimums so that anyone can invest in equities (and aren’t priced out by high stock prices like Google, Apple, Netflix, etc.). Will definitely check them out especially now that there’s a bonus available.

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