Motif Investing Account Review: Brokerage Fees, IRA Investments, Pros and Cons, Mutual Fund Offerings

Motif Investing Review - Pricing

  • Stocks/ETFs: $4.95 per trade
  • Creating or rebalancing motif: $9.95

Motif Investing Overview

Motif Investing is a unique broker in an online investment industry. Headquartered in Silicon Valley, the firm offers distinctive investment products aptly named motifs. Some of the firm's famous investors include Foundation Capital, Norwest Venture Partners, Goldman Sachs, and Ignition Partners. It is definitely a company that everybody needs to check out.

Introduction to Motifs

A motif is a basket of up to 30 stocks or ETF's. Each motif has a certain investment theme or market strategy. This unique investment vehicle gives investors access to a variety of tested and proven financial strategies without the traditional high fees. 

Motif Investing offers its clients a distinctive system of investing which has several stages. First, the trader looks for market trends, global events, or trading ideas that could create financial opportunity. Then Motif Investing finds all relevant securities and intelligently weights them. In the third step, the user personalizes his portfolio: he adds or deletes stocks or ETF's until he has the exact investment he wants. In the final step, the investor buys one motif containing up to 30 stocks or ETF's.

Investing Classics are motifs intended to mold the core holdings of portfolios. One example is a motif that follows the investment theory of prominent Ivy League fund managers who favor an overweight in real estate and inflation-protected debt securities, with smaller holdings in U.S. and international stocks. 

  Target Date Models are motifs geared toward clients who have a specific time horizon for retirement. At Motif Investing, customers can choose from eight diversified retirement portfolios, each with a different target date. These portfolios have a certain date assigned that reflects an investor’s current age and the number of years until retirement. As the investor approaches retirement, the proportion of stocks to bonds gradually changes in favor of low-risk and conservative assets, such as short-term debt instruments. At the target date, growth securities account for approximately 25% of the motif, while fixed-income assets and short-term Treasury bills represent 60% and 15%, respectively. 

Motif Investing Review

Motif Investing Review

Other motifs invest in ETF's that group uncorrelated assets, like gold and bonds, to create a "permanent portfolio", similar to the approach popularized by financial expert Harry Browne in the 1970s. Another motif is modeled on the investment theory made popular by Vanguard's founder Jack Bogle and his loyal followers of "Bogleheads".

Additional motifs include bear market strategies, technical analysis, and green-technology investing.

Motif Investing Review

Trading Fees and Account Minimums

Buying and selling shares of a motif incurs a $9.95 charge. This trading fee is for all stocks and ETF's within the motif. For example, if the motif had 30 shares, the average fee would be $0.333 for each stock. Traders can rebalance the number of shares within a motif at any time. Rebalancing positions within a motif is also a $9.95 charge.

Buying or selling shares of an individual stock or ETF incurs a very low $4.95 commission. This fee will be charged whether an investor trades shares of an individual stock or ETF inside or outside a motif.

The broker has no minimum deposit requirement to open an account. The minimum investment amount in a motif is $250.

Motif Investing Advantages

Buying a motif means that traders own the underlying shares of the securities in the motif, and can freely adjust them. This of course is a major advantage over ETF's and mutual funds.

Another advantage motifs have over funds is that there is no cost of owning motifs. With ETF's and mutual funds, investors pay a management fee annually. Over time, fund fees can really add up. There are no management fees for motifs. 

To help traders communicate with each other, Motif Investing has a social network. Investors can chat about trading ideas, and pose questions to each other. Users can invite others to join their own investing circle.

Other Motif Investing advantages are:

  • Few fees, compared with other brokers
  • Unique system of generating investing ideas
  • No account minimum with a low minimum motif investment of $250
  • Low cost of building a diversified portfolio
  • Social networking for traders
  • No-fee IRAs
  • Motifs for retirement (Target Date motifs)
  • Very low margin rates
  • Fractional shares are available
  • Motifs have no management fees or expense ratios
  • Accounts have no inactivity or maintenance fees

Motif Investing Complaints

  • The biggest Motif Investing complaint is that investing in bonds, options, and mutual funds is not available
  • Investment approach is somewhat complicated
  • Extended hours trading isn’t available

Motif Investing Review Summary

Motif Investing is an attractive way to invest and comes with a reasonable fee structure, although it may not be for everyone. While some people like the trading system, others have found it to be overly complicated. An account can be opened with no opening deposit, and there are no closing fees, so it is worth taking Motif Investing for a test drive.

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Motif Investing Reviewed by on . Rating: 5
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