Deciding on an online brokerage firm can be challenging, due to the vast number of available choices. However, if you’re seeking larger control over your investment portfolio and moderate trading expenses, Motif Investing might be the best option for you. Be assured that this recommendation is impartial, as I personally don’t hold an account with Motif Investing but have made this point after thorough research.
UNDERSTANDING MOTIF INVESTING
Motif Investing allows you to design a unique portfolio, referred to as a ‘motif’, which can contain up to 30 stocks or ETFs. You can build your comprehensive motif from a broad range of funds for a set commission of $9.95. If you’re interested in socially responsible companies, investing trends or industry-specific funds, you’ll appreciate the bigger selection offered by Motif.
Alternately, you can opt for a stress-free approach and select from over 100 pre-designed motifs for the same fee. These offerings cater to a variety of industry sectors, and even after selection, the platform empowers you to modify your portfolio.
Motif Investing also provides single and joint brokerage accounts along with fee-free Traditional, Roth and Rollover IRAs. The least motif investment is set at $250, so depending on your investment, you might end up with fractional shares. Margin account trading requires a minimum threshold of $2,000.
ADVANTAGES OF MOTIF INVESTING
With Motif, you can explore before investing. After signing up, you’re free to explore their motif catalog and create a watchlist to observe its performance before deciding to open a trading account.
One attractive aspect of Motif is its fee transparency. Beyond the initial motif purchasing fee of $9.95, additional stock or ETF trades within your motif attract $4.95 per trade. There are no management or expense ratio fees. In fact, all those are already accounted for in any fixed-income motifs that accommodate ETFs.
Motif also provides biannual or annual rebalancing of catalog motifs. You’ll be notified if any changes are made to a motif you own and can replicate the same rebalancing for $9.95.
An intriguing feature of Motif is the option to share investment ideas with fellow Motif investors on a specially designated platform, just like a niche social network or a private group. With adjustable privacy settings, you get to decide how much personal data to disclose.
DRAWBACKS OF MOTIF INVESTING
The most significant drawback of Motif Investing is it doesn’t provide dividend reinvestment. Your only options are either receiving the dividend in cash or selecting stocks within a motif that pay in stock dividends.
The investment choices might seem somewhat restrictive as Motif presently only provides stocks and ETFs. There’s no clear indication yet on whether they will introduce options or mutual funds in the future.
Moreover, although the commission fees are surprisingly low, they could accumulate quickly and impinge on any potential profits. Keep in mind that each trade within your motif attracts a fee of $4.95, and to buy, sell, or rebalance a motif, the cost is $9.95 with a minimum investment of $250.
In conclusion, Motif Investing serves as a practical option, particularly if you’re interested in unique investment opportunities beyond your existing investment portfolio held elsewhere.
