Motif Investing: Does It Really Work?

Motif Investing was a platform that aimed to give investors more control over their investments by offering a theme-based approach. It was a hybrid service, combining the control of an online brokerage with the convenience of a robo-advisor. The platform was founded by former Microsoft Executive Hardeep Walia and was well-suited to investors who wanted to transition from traditional human advisors to robo-advisors. Motif Investing ceased operations in April 2020, with existing accounts being transferred to Folio Investing. The platform was popular for its low minimum investment requirements, low fees, and ability to customize portfolios.

Motif Investing ceased operations in 2020

Motif Investing was an online brokerage platform that allowed investors to pick ideas to invest in, with more control and in a low-cost way. It was founded in 2010 by Tariq Hilaly and former Microsoft executive Hardeep Walia. The platform allowed investors to create their own motifs from scratch and share them with others. It was a hybrid service, acting as a robo-advisor and also giving investors control like an online brokerage.

In April 2020, Motif Investing ceased operations and notified users via email that their accounts would be transferred to Folio Investing. Motif Investing had raised around $126-$127 million in funding since its launch and had $604 million in assets under management between individual accounts and institutional clients. However, the company's decision to shut down operations was likely influenced by the pandemic and economic crisis, which impacted smaller players in the fintech industry.

The closure of Motif Investing highlights the challenges faced by smaller independent digital wealth managers in a competitive and rapidly evolving market. As Kashif Ahmed, president of American Private Wealth, noted, the size and scale of larger firms can be difficult for smaller companies to compete with over time.

While Motif Investing is no longer operational, its impact on the industry and its efforts to empower investors with more control and lower costs are worth recognising.

Motif's unique theme-based approach

Motif Investing is a unique theme-based investment platform that empowers investors to buy groups of similar stocks in one transaction. The platform offers a range of pre-made themes, called motifs, which are bundles of up to 30 stocks and ETFs that follow specific investing themes or industries, such as biotech, cybersecurity, mining, and retail. Investors can also customise their own portfolios by creating their own motifs from scratch and sharing them with others. This level of customisation and control over investments is a key differentiator for Motif Investing, allowing investors to pick ideas that align with their interests and values.

The platform is particularly attractive to those who want to transition from traditional human advisors to robo-advisors, offering a basic set of features that are standard among robo-advisors, such as automated investing. Motif Investing's robo-advisor, Motif Blue, offers a subscription service starting at $4.95 per month and charges no commission on trades from recurring investing and rebalancing.

In addition to its unique theme-based approach, Motif Investing stands out for its low capital requirements and relatively low fees. There is no minimum account balance required to use the platform, although investors must deposit at least $300 to invest in a motif and $2,000 to trade on margin. Motif Investing also charges a flat fee of $9.95 per motif trade and $4.95 for a single stock trade, which is significantly lower than the fees charged by traditional stock brokerages.

Overall, Motif Investing's theme-based approach, customisation options, low capital requirements, and relatively low fees make it a compelling option for investors who want more control and transparency over their investments.

Motif's fees and charges

Motif Investing offers some of the lowest trading fees in the market. The platform offers a pay-as-you-go trading plan, allowing investors to buy or sell individual stocks for $4.95, while motifs are available for $9.95. Motifs are bundles of up to 30 individual stocks or ETFs, making the price per stock lower than $4.95.

There is no minimum account requirement, but investors must deposit at least $300 to invest in a motif. To trade on margin, a minimum balance of $2,000 is required. Motif does not charge any management or advisory fees.

Motif Blue, a subscription service, offers commission-free trades from recurring investing and rebalancing. The service is available for as low as $4.95 per month.

The platform fee is directly related to the cost charged by the clearing agent for executing transactions. Qualifying accounts with a balance below $10,000 and no commission trades in the previous three months are assessed a quarterly account platform fee of $10.

There is a $95 account termination fee for closing and/or transferring an IRA or Roth IRA account. Motif Investing also charges a Financial Industry Regulatory Authority (FINRA) transaction fee (TAF) on all covered stock and ETF sales. This fee is charged at a rate of $0.000119 per share, with a minimum charge of $0.01 and a maximum of $5.95.

It is important to note that Motif Investing ceased operations in April 2020 and is no longer accepting new accounts. Existing accounts were transferred to Folio Investing.

Motif's suitability for retirement investing

Motif Investing is a unique online brokerage that offers a theme-based approach to investing. It empowers investors to take control of their investments by allowing them to pick a theme or idea they want to invest in. These themes, or "motifs", are essentially bundles of up to 30 stocks and ETFs that follow specific investing themes or industries, such as biotech, cybersecurity, mining, or retail.

One of the key advantages of Motif Investing for retirement planning is its low cost. Motif does not have a minimum account requirement, although you must deposit at least $300 to invest in a motif. The company's robo-advisor service, Motif Blue, offers an average annualized return of 16.3% as of October 6, 2016, and charges a low monthly fee of $4.95. Motif Blue also offers commission-free trades on recurring investments and rebalancing. Additionally, Motif Investing supports Roth IRA, Traditional IRA, and Rollover IRA accounts, which can be opened and maintained for free (although there is a $95 account termination fee).

The ability to customize your portfolio is another benefit of Motif Investing for retirement planning. Investors can create their own motifs from scratch and share them with others through the Creator Royalty Program. This program also allows investors to earn $1 each time someone purchases a motif they created. Motif Investing provides a high level of transparency, allowing investors to have a clear understanding of what they are investing in.

However, it is important to note that Motif Investing may not be suitable for everyone. In April 2020, Motif ceased operations and transferred its accounts to Folio Investing. Additionally, while the low minimum investment requirement makes it accessible, the $300 required to invest in a motif may still be a significant amount for some individuals.

Overall, Motif Investing can be a good option for retirement investing due to its low costs, accessibility, customization options, and support for various retirement accounts. However, it is always important to carefully consider your own financial situation and goals before making any investment decisions.

Motif's reviews and comparisons

Motif Reviews and Comparisons

Motif Investing is a hybrid service that gives investors more control than a traditional robo-advisor, but also offers the option to automate investing through its Motif Blue subscription service. Motif Blue provides market commentary and commission-free trades for a low monthly fee of $4.95.

Motif's flat fees of $9.95 to trade motifs and $4.95 to trade stocks are very competitive compared to other robo-advisors, such as SigFig (0.25% fee), Betterment (0.15-0.35% fee), and FutureAdvisor (0.5% fee). Motif also has a low minimum investment of $300, making it accessible to new or inexperienced investors.

Reviews highlight that Motif's online interface is straightforward and comprehensive, allowing users to make informed decisions without needing to understand the complexities of investments. Motif's Creator Royalty Program also lets investors create and share their own motifs, earning $1 each time someone purchases their motif.

However, it's important to note that Motif ended operations in April 2020 and is no longer accepting new accounts. Existing accounts were transferred to Folio Investing.

As an alternative, M1 offers a similar service to Motif, allowing users to construct their own portfolios or select from premade portfolios. M1 also provides lower rates when borrowing against your portfolio and offers a digital checking account with a debit card and cash back on qualified purchases.

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