REVIEW: Motif Investing

Continuing our series of investment product reviews.  Next up is Motif Investing.  If you read my previous review on Betterment, I hope the following analogy doesn't lose you: investing with Betterment is like cooking with only 2 ingredients - Bonds and Stocks.  You can change the proportion of each ingredient you toss into the pot but that's about it.  So what if you like a little more flavor?  Let's take a look at Motif...

What is Motif Investing?

Motif Investing is a relatively unique online brokerage that allows you to trade existing or create your own investment "Motifs" which can contain up to 30 stocks and/or ETFs, essentially allowing you to become your very own mutual fund/ETF manager.  Why would you want to do that?  Well I can think of a couple of reasons: 

  1. Your preferred combination of stocks is not offered as a pre-existing ETF/Mutual Fund.
  2. You want to save more $ - ETF/Mutual Fund companies aren't charities, they take a cut of each share for their work in managing these products.

What types of investment products does Motif offer?

Motif Investing currently offers traditional taxed investment accounts and IRA accounts (Traditional/ROTH/Rollover) and Trust accounts.

Sample Motifs

Sample Motifs

How does Motif work?

1.  You open an account and deposit your funds.

2.  You select existing Motifs or create your own Motifs.  If you choose to create your own, you can add up to 30 stocks or ETFs to one Motif.

3.  You can buy or sell that Motif as one unit.  For example, if you had McDonald's, Chipotle, Dunkin, Starbucks, and Panera Bread all in a Motif called "Food and Drinks," you can trade all of the included stocks in one transaction.

How much does Motif cost?

1.  Motif charges a transaction fee of $9.95 when you buy and sell Motifs, with a minimum of $250.  Which means your actual cost per trade can range from $0.33 per equity if you have 30 stocks/ETFs in a Motif to $9.95 if you only put 1 stock/ETF in your Motif.  Occasionally Motif will make certain Motifs available without a fee.

2.  Motif also recently launched a BETA stock trading service which allows you to trade individual stocks/ETFs for a $4.95 transaction fee.  

3.  Motif also makes money on margin and fees.  See details here.

My personal experience with Motif

I have been using Motif Investing since June of 2014.  I created all of my own Motifs except for "High-Yield Dividend" which I purchased when it was a promoted Motif with $0 transaction fee.   I have a total of 6 Motifs containing 2-26 stocks/ETFs each.  My returns range from -1.6% to +33.3% for a combined +8.1% total.  The best part of this is that any gains or losses are entirely of my own doing and I cannot blame a third party for the performance of my investments as many are tempted to do when things go south.  The Motif web user interface occupies a happy middle ground where it is relatively easy for beginners to get oriented, yet advanced users will be able to find many tools that is expected of a full-featured brokerage.  

Pros and Cons

  • Pros 
    • Low cost - when creating a Motif, your cost per stock/ETF trade can be as low as $0.33 per equity.  Selected pre-existing Motifs can occasionally be traded for $0 transaction fee during promotions.  Even individual stock/ETFs can be traded for $4.95.
    • Easy Diversification - creating a Motif is easy and pain free.  Or if you're lazy, there are hundred of pre-existing Motifs you can trade.
    • Dollar based investing - you can choose to purchase a set dollar amount of a stock/ETF instead of buying whole shares.
  • Cons - There is really only one negative I've identified with Motif Investing, unfortunately it's a HUGE one: the lack of an automatic Dividend Reinvestment Plan (DRIP).

Conclusion and Sign-up Bonus

Motif provides a relatively unique service among the ever-expanding online brokerage space.  It removes the middleman and puts you in charge of your own investments.  If you subscribe to Modern Portfolio Theory, then Motif offers you an extremely low-cost way to diversify your risks.  When compared to Betterment, Motif adds a small amount of complexity and demand on your time, but it's definitely worth it.

Sign-up Bonus: White Coat Money will receive referral credit if you sign up with link #1 below.  Thank you for your support!

  1. If you have $1,000 to invest, you can get a $100 bonus when you make your first trade if you sign up via this link.
  2. If you have $2,000 to invest,  you can get the following bonuses if you sign up via this link.
    1. $50 if you make 1 trade within 45 days of account opening.
    2. $75 if you make 3 trades within 45 days of account opening.
    3. $150 if you make 5 trades within 45 days of account opening.

Future Proof, MD

Dr. Bo Liu is an aspiring radiologist-in-training and the founder and editor of the White Coat Money Blog.  He has an interest in interventional radiology and helping his medical colleagues get ahead in this mad world of medicine and money.  When he's not crushing the list at the PACS station or typing up your next favorite blog post, you can usually find him at the local badminton club, movie theater or the most recently opened restaurant.