This Motif Investing review can help you find the best motif investments and save money on fees
About a year ago, I started seeing Motif Investing reviews pop up all across the investing forums. Investors were raving and financial advisors weren’t happy at all.
I wrote it off as just another online investing site but got curious when a friend told me how much money he was saving through his motif investments. Most people don’t worry as much about saving money when investing. It’s about making money, right?
The average investor earned just 2.6% annually in the ten years to 2013 and spending too much on investing fees was one of the biggest culprits.
Even paying just $10 per stock trade on the cheapest online investing sites can add up. Fidelity estimates the average investor makes 80 trades a year…that’s $800 in fees!
That’s where Motif Investing comes in as one of the best opportunities for investors I’ve seen in a long time.
I’ll start here with a quick description of Motif Investing before laying out how to get started and highlighting some of the best motif investments I’ve found on the site.
Investing in the Stock Market with Motifs
After talking with my friend, I started looking at some of the Motif Investing reviews on other blogs.
I came across a review of Motif Investing on another blog. The website is an online brokerage just like Betterment or TDAmeritrade, where you can invest in individual stocks, funds or other investing themes. Launched in 2012, it’s one of the newer investing sites but with a really interesting concept.
Motif Investing allows you to create your own group of stocks in a fund, similar to a mutual fund or exchange traded funds. If you haven’t heard of these, the idea is a group of stocks around a common investing theme or investing idea. You might have Motif investments that holds stocks of a specific type of industry like internet stocks or one that holds stocks of companies that will benefit from the aging population, i.e. healthcare, recreation and senior living.
By investing in the entire group at once, you lower your risk because you aren’t as worried if one particular stock plunges. Even if one company goes bankrupt, it might only be about 3% of the group so you can still make a solid return on the others.
The website offers more than 100 motifs, some created by Motif Investing and others created by other investors. You can invest in these or create your own fund specifically for your needs.
Investing in a motif costs $9.95, similar to the commission on most other online websites, and you can invest in as little as $250 in each fund you choose. You get instant exposure to all 30 stocks, something that could cost upwards of $300 on other sites if you were to buy each stock individually.
That’s really the power of Motif Investing and most investors don’t even know about the website. You can invest in up to 30 stocks at once for just one commission instead of paying 30 commission fees on another investing site.
There are no annual costs or expenses for the account. As an incentive, Motif Investing is offering a bonus of up to $150 on new accounts. Invest in one motif within the first 45 days and they’ll deposit $50 into your account. Invest in three motifs and you earn $75 or invest in five motifs and you earn $150 for your account.
Basically, they are going to pay your $50 in commissions ($9.95 times five) and give you a $100 bonus. You’ll get exposure to 150 stocks in five different funds, enough to diversify your portfolio if you choose a good mix of funds.
Customer service is excellent. I opened my account early last year and received three phone calls asking if I had any questions on investing or if they could help in any way.
For new investors or those not experienced with investing in the stock market, it might take a little time to really understand how to invest in funds. Besides the idea of diversification and lower risk, it’s a much cheaper way of investing in the stock market.
It’s also, in my opinion, a much smarter way of investing in the stock market and is one of my recommendations for investing $1,000 right now.
A lot of investors lose money because they fixate on company-specific details and ‘picking’ the next hot stock. There are investors like Warren Buffett that have been investing in the stock market for decades and have a difficult time doing that. Some would argue that it’s impossible to consistently pick individual stocks that are going to ‘beat’ the market.
A smarter strategy is to invest in larger ideas, themes that have the power of the economy and demographics behind them. These are things like, which stocks will benefit from the aging population or the revolution in U.S. oil production. Your investment doesn’t depend on how management runs one specific company but on a larger trend that will drive a whole group of companies for decades.
You can browse one of the 100+ motifs or create your own around a theme. You can change how much is invested in each stock, favoring some while limiting exposure to others. All motifs show you how the group of stocks has done over the last week, three-months, one-year and five-years. One way I use Motif is to find the best investment ideas through funds created on the site. You can browse existing funds to get ideas on which stocks to add to your own.
When you’ve customized the motif how you want it, you buy with one click.
Why do I need Motif Investing for investing in the stock market?
But if there are already mutual funds and ETFs, why would you need to invest in motifs?
After the initial commission to invest in the motif, you won’t pay any fees on your investment. Mutual funds are notorious for charging high annual fees, nearly 1.2% a year on average. Even the cheaper alternative in exchange traded funds charge an average fee of 0.63% a year.
It may not seem like much but most fund managers struggle to match stock market returns anyway and end up lagging the market after fees.
It’s one of the reasons I’ve heard a lot of complaints from financial advisors and other stock market advisors about Motif. Investors are making an exodus to the website, ditching their advisors and unfair commissions. Motif Investing is changing the way Main Street investors put their money to work.
Another reason to use motifs for investing in the stock market is the ability to customize motifs for your own needs. You can fit a motif around your own risk tolerance and time horizon. This isn’t possible in managed mutual funds or ETFs.
There are a couple of drawbacks to Motif Investing. The site doesn’t offer as many research tools or reports compared to other platforms. I have kept my E*Trade account open for access to reports from Standard & Poor’s and Credit Suisse but am now investing in the stock market mostly through Motif.
The website also doesn’t offer banking services or a dividend reinvestment plan. It is a relatively new platform and I imagine these services will be offered in the future. I didn’t use the banking services at E*Trade anyway so it doesn’t bother me.
What Motif lacks in research tools, it completely makes up with its social network investing. The social community allows investors to comment and share their own research on the motifs. I found 24 comments in the discussion of a Motif around a rising rates scenario, including comments from the founder Hardeep Walia. The comments include links to research and news that really help to analyze an investing strategy.
An interesting new set of motifs that everyone will want to check out are the horizon models. These are groups of stocks and bonds to match your time horizon for money. Say you want to make a down-payment on a house in a year but don’t want to let your money sit in a savings account. The one-year conservative horizon motif holds 63% of the fund in relatively safe bonds with smaller portions in real estate and stocks. There are also horizon funds for five- and 15-years with moderate and aggressive plans.
I plan on covering some of the existing motifs and creating my own motifs in future articles. I’ll talk about how different motifs may be more suitable for different investors and how to construct a motif around a theme that fits your own needs.
Any investing in the stock market needs to start with your own personal investment plan that looks at your specific goals and risk tolerance. I would also recommend everyone check out the top 10 investing basics to make sure you get started right and how to avoid the top 10 investing myths.
Motif Investing is an interesting new twist on investing in the stock market but you still need to decide if you need the risk in your portfolio. It’s not for everyone but can help you benefit from higher returns in stocks if you set a plan and avoid bad investing behaviors.
What I like about Motif Investing
I’ve been investing on Motif for almost a year and the benefits go well beyond the low-cost investing. The biggest benefit is that you are less likely to worry about individual stocks in your portfolio. Since you group stocks together in a fund, the fund value will not rise or fall as quickly as any one stock. It means you freak out less about your investments and can concentrate on more important things in life.
- Low-cost investing and instant diversification
- Pre-build Motif funds for just about every investing theme
- Easy rebalancing and reinvesting without high commissions
Motif Investing Complaints
- No automatic dividend reinvestment available
- Lacks research and analyst reports you get on other platforms
My Motif Investing Funds
I started investing on Motif earlier this year and have created four Motif funds around some of the most important investing themes. The funds have done extremely well and I don’t feel the stress of losing money like I do investing in individual stocks on other platforms.
On any given day, some stocks in each group are rising while others are falling so the overall value doesn’t vary as much. It’s a great way to invest besides one of the best ways to save money. You can click through to Motif Investing and search for the funds to see how they are doing and the different stocks in each.
My favorite fund is the American Future Fund, a group of 10 stocks and four ETFs within energy, healthcare and agriculture. These three investing themes are going to be a big part of our future and the companies involved could see big gains. The fund has returned 23.7% so far this year, beating the 13% return on the S&P 500 by a long-shot. It’s a long-term idea and I expect the fund to do very well over the next couple of decades.
As with all my funds on Motif Investing, I combine ETFs with individual stocks to get extra diversification and the opportunity for higher returns.
My Dividend Stocks for Growth and Cash Flow group balances high dividend yields with the opportunity for price appreciation as well. The fund holds shares in 12 companies and three ETFs, mostly in dividend-paying sectors like financials, energy and utilities. The combined group pays a 4.4% dividend yield and beat the stock market by 3.4% so far this year.
My Ready-Made Retirement Fund on Motif Investing is a collection of nine stocks and seven ETFs across different asset classes like stocks, bonds and real estate. The fund is perfect for my long-term retirement goals because the different asset classes help to smooth gains and losses and keep me on track. The fund has only beaten the stock market by 0.4% so far this year but pays a higher dividend yield and with less risk since it owns bond funds and real estate.
I created The Warren Buffett Way as a fund to track the 13 biggest investments by Warren Buffett. I also invest in two ETFs around value stocks and dividends to help diversify the fund and provide for a little higher cash return. The fund has jumped 15.2% this year with some of Buffett’s top picks surging like USG Corporation (57%) and IBM (28%).
I wrote out a more detailed review of each fund on a page on My Stock Market Basics, outlining how I picked the investing themes and all My Stocks and Bonds in the funds. These four funds give me access to some great investing themes across hundreds of stocks and I can reinvest in each for one commission without buying each stock individually.
Motif Investing Review of 3 More Great Funds for Theme Investing
There are more than 100 Motifs available on the investing site, most constructed by professionals working at Motif. The funds give you instant access to every investing theme imaginable and the ability to diversify your exposure to different stocks in the theme.
I’ve listed a few of the most popular Motif Investing funds here but would love to hear your favorites.
Precious Metals holds shares of 20 companies in gold, silver and platinum including retailers and miners. I like investment in miners better than holding the physical commodity because you collect dividends beyond the price appreciation. The precious metals motif has jumped 105.9% over the last year, beating the stock market by more than 90% over the period.
The Social Networking motif fund taps into the changing internet world with 14 stocks of social networks, gaming and review websites. Besides owning shares of huge players like Facebook and Twitter, the fund gives you access to other sites in China and high-growth stories in mobile gaming. The fund has returned 42.7% over the last year and could have a long way to go over the next couple of decades.
Bonds aren’t paying squat anymore and investors have been forced to look for yield in stocks. The High-Yield Dividends fund on Motif Investing gives you access to 12 companies with high payments but without sacrificing safety. The motif fund has appreciated 38.1% over the last year and pays a 4.9% annual dividend.
Best Motif Investments for 2017
These motif investments did really well last year and could be ready to repeat in 2017. I’ve added a table of the motif funds here but it’s easy enough to search and filter through the investments on the site. Whether you pick your own stocks on Motif or invest in a pre-made fund, you’ll save on investing fees and get the diversification you need to reduce risk.
|MOTIF Investments||Stocks in Fund||# of Stocks||Dividend Yield||One-Year Return|
|Commodity Giants||Metals & Mining Companies||9||0.4%||144%||Check out this fund on Motif|
|Technology||Consumer Tech and Hardware Stocks||5||0.7%||130%||Check out this fund on Motif|
|Brazil Large Cap||Emerging Markets||5||1.8%||130%||Check out this fund on Motif|
|It's a Steel||Steel and Industrials||11||0.9%||126%||Check out this fund on Motif|
|Dividend Dragon||Dividend Stocks||9||16.4%||61%||Check out this fund on Motif|
|High Yield Dividend Income||Dividend Stocks||5||12.8%||47%||Check out this fund on Motif|
|Highest Yield REITs||REITs||27||11.4%||36%||Check out this fund on Motif|
I’ve tried to cover the why and how in this Motif Investing review but need your help to uncover the best Motif investments for different investing themes. I’m convinced that Motif Investing is one of the best ways to save money on investing fees and have moved most of my own money to the site. I’d love to hear any questions or comments you have about investing on Motif.