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:
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:
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!