Motif Investing Strategy–Is It a Less Risky Alternative?

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If you consider yourself a novice investor or someone who wants to get started investing but is either uncomfortable or unfamiliar in choosing which stocks to invest in, there is a relatively new and very affordable way to invest in stocks called motif investing. Read this review to find out what motif investing.com is all about and decide for yourself if this is how you want to either get started investing or to diversify your existing investment portfolio.

What is a Motif?  How does it work?

Before I get into motif investing, it is necessary to understand what a motif is. A motif is defined as a group or basket of up to 30 different stocks or exchange-traded funds (ETF’s) that have a common investment theme or represent an innovative trend. Examples of different motifs include casino gambling, precious metals, and recycled steel. Simply put, you open up an account, choose a motif that represents something that you care about, and pay a flat fee to invest whatever amount of money you desire to in that motif. Once you have invested in a motif, you can monitor how well the individual stocks within that motif are performing. If you wish to remove any stock that is not performing according to your liking you can do so by replacing it with another stock.

The Origin of Motif Investing

The concept of motif investing was started by Mr. Hardeep Walia, Founder and CEO of Motif Investing in June 2010. This company is ranked within the top 30 companies in CNBC’s Disruptor 50 list. During an interview, Mr. Walia stated that he wanted to make it easier for people to invest in stocks and ETF’s that reflect their passions and interests. Since every investor is unique, Motif Investing has over 100 motifs for investors to choose from. An investor also has the option of designing his/her own motif if the existing motifs are not to his/her liking. The following video explains in more detail how motif investing works.

Key Features at Motif Investing.com

No charge to open an account. You can also have more than one account, such as an IRA and a cash account

Low cost flat fee to purchase a motif. Each motif costs only $9.95. The minimum investment in a motif is $250.

Investors have more control over choice of which stocks/ETF’s to invest in. Investors can either keep all of the stocks within a motif intact or they can customize–remove or replace a stock(s) in that motif for a low fee of $4.95 per trade. If you really know your stocks, you also have the option to build your own motif from scratch where you can earn a commission of $1 each time someone else chooses to purchase your motif.

No management fees. Unlike a mutual fund, there is no fund manager in charge of the stocks in the motifs.

What does a Motif Look Like?

Each motif has a brief description describing the concept or thought process behind the creation of that motif. Here’s one example:

Quick View of a Motif Courtesy of Motif Investing.com

Quick View of a Motif
Courtesy of Motif Investing.com

In the above example, for each motif, they give you a snapshot of what the top stocks are inside that motif as well as a pie chart showing by percentage the type of stocks contained. If you want further details about a particular motif, you can get it by clicking on the box “see full details”, which results in the following:

Gambling Motif Details courtesy of Motif Investing

Gambling Motif Details courtesy of Motif Investing

Inside the full details page, they show you a graph of how the motif is performing compared to the S&P 500. They also allow you to share your thoughts about this motif with other investors as well as how this motif was built. I like the fact that they are very open in terms of providing lots of information to help you decide whether or not you want to invest in a particular motif.

Is Motif Investing a Less Risky Alternative?

I think the answer to this question is yes. Here’s why:

Group of stocks can be bought at low cost

Not because less risk does NOT mean no risk (any investment in stocks involves some risk) but because the opportunity to invest in a group of stocks that represent your interests is given at a lower cost. Remember, you just pay a flat fee of $9.95 per motif. If you were to buy the stocks within that motif individually, it would cost you more in fees. You also do not have to spend a lot of time going through lots of different stocks to decide which ones to buy–unless you want to. Instead, you can just select from more than 150 different motifs based on what your passions and interests are.

More control over how your money is invested

I like the fact that motif investing gives investors more control over how they want to invest their money. Even if you are a novice investor who knows little or nothing about the stock market, you have a chance to make money because you do know what your passions and interests are.  You can do a filtered search on the motif investing website based on your passions and interests. From the results of that search, you can either trust the stocks within a motif and choose to purchase it as is, or customize it to your liking by either adding or deleting some stocks. If you are an experienced investor, you could take it one step further by creating your own motif from scratch–meaning selecting different stocks (up to 30). They make it easy for you to do so step by step.

Since I consider myself a novice investor, I decided to open a cash account and make the minimum investment in one motif. Before I bought the motif however, I customized it to my liking before I bought it so I could avoid paying the $4.95 fee for adding and removing stocks within the motif. So far so good; my customized motif is doing well. I chose to invest in motifs because I wanted to diversify– I already have IRA’s and mutual funds and wanted something else.

As always, you should do your research and/or consult with your tax accountant or financial adviser if you are still unsure if motif investing is for you. I am not a financial adviser and I cannot give you financial advice. I am just giving you information about a relatively new method of investing in stocks and my opinion about it. Please feel free to leave any questions or comments below; I will gladly respond.

Have a great day!

Deidre

Source: www.motifinvesting.com

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10 thoughts on “Motif Investing Strategy–Is It a Less Risky Alternative?

  1. Pauline says:

    Hi
    I am one of the people that you describe – I have always wanted to invest in the past when I had the money to do it but like you say I was a little uncomfortable doing it.

    This sounds like a really good idea and a good way of having a selection of stocks. My husband used to get company shares and I really miss not having them any more – the thrill of it was exciting!

    • Deidre says:

      Hi Pauline,

      Nice to meet you and thanks for your comments. I admit that I was also uncomfortable investing in stocks because there are so many and I really did not know good stocks from bad stocks and I the idea of trying to understand how the stock market works was very intimidating to me. The whole idea of motif investing has simplified the process of choosing which stocks to invest and has also made it more affordable. Have you checked out motifinvesting.com yet? What do you think?

  2. Roopesh says:

    Hi Deidre
    What an awesome idea! I never ever heard of motif investing, until I came across your site.

    What I particularly love about this form of investing, is the level of transparency that it offers.Just looking at the graph, give you an idea of the trends of the motif.

    Is there any app to do motif investing? Can anyone from any part of the globe do motif investing, or are there restrictions?

    Thanks for this, enjoyed it.
    Regards
    Roopesh

    • Deidre says:

      Hi Roopesh,

      They do have an app for the site. It is called Motif and is available on Google Play for free. I am not sure if you can get an account if you are outside the US. Go to motifinvesting.com to find out more information. If they allow investors from overseas, are you considering giving it a try? If so, would like to hear about your overall experience with it. Thanks for commenting.

  3. Henry says:

    Seems like a relatively new company.
    So, it’s definitely the first time for me to read about Motif Investing Strategy.

    Instead of investing “randomly”, the fact you can have more control & invest into something you’re passionate about yourself as well catches my attention.

    Low price point to enter is usually always a good deal for everyone – In either case whether you’re novice or expert – Curiosity is part of human nature.

    Thanks for pointing out that investing involves risks. But then again, what else doesn’t involve risks in our lives? Pretty much everything does.

    • Deidre says:

      Hi Henry,

      Yes the fact that it allows you to invest into something you really care about as opposed to randomly investing is what appealed to me the most. The affordable flat fee of $9.95 per motif helps as well. Although the minimum investment of $250 into a motif might not be affordable to some people, I think the overall process of choosing what to invest in( individual stocks vs. motifs) is simplified.

  4. Michael Baker says:

    Hi There,

    Great article on Motif Investing, I have been an investor all my adult life, albeit not massive investments but always on the look out for new investment strategies, your article on Motif Investing explained to me the simplicity of getting into this type of investment. By the way, do you have a newsletter I can subscribe to? Would like to be kept informed on all your articles if possible? Regards, Michael

    • Deidre says:

      Hi Michael,

      Thank you for your kind comments. I do not have a newsletter at this time. However, you have given me something to think about–starting a newsletter. In the meantime, I would be happy to inform you when my next article is published; just PM me your email. Just curious, after having read my article, is motif investing sound like something you would consider getting into?

  5. G.C.Horton says:

    This is the first I’ve heard of the Motif Investing Strategy. I appreciate that you point out that all investments incur risk. That’s just the nature of investing.

    It appears to me that Motif Investing does diversify risk which is a solid risk management strategy. Another key, in my experience, is to only invest money that you will not need in the near future.

    By committing to staying in the market for the long haul, you can ride out the dips and take your gains at the top of the market.

    • Deidre says:

      Hi G.C. Horton,

      I agree with you that any investing that is done in the stock market should be done with monies that is not needed right away. It really comes down to how much risk is one willing to take in terms of which stocks to buy and when to buy them and sell them. Motif investing in my opinion, simplifies the process of deciding which stocks to invest in by arranging them into categories based on one’s beliefs and ideas. Therefore, I think this is a great way for novice investors to get their feet wet so to speak in the world of stocks.

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