‘Motif investing’ refers to low-cost theme-based ETF investing and is the brain child of Motif Investing CEO Hardeep Walia who launched this service in 2012 for US-based investors. It is a way of investors to pick and choose areas that they would like to invest in, without having to make costly individual stock purchases.
How does Motif Investing work?
The way motif investing works is you sign up to its online platform and then you choose what motif you would like to invest in. Each motif features between 20 to 30 stocks or ETFs that can be said to follow particular themes. These can range from ‘Wearable Tech’, ‘Online Gaming World’, ‘Gay Friendly’ and ‘Caffeine Fix’ to ‘Too Big To Fail’, ‘3D Printing’, ‘Recent IPOs’ and many more. Once you have chosen the motifs you want to invest in, you can add and remove stocks in each motif to ensure that you are happy with all the securities you are invested in.
A minimum deposit of $250 is required to start trading and if you want to trade on margin you need to deposit a minimum of $2000. The company charges you a flat commission of $9.95 per motif purchase. There are no additional management or hidden fees associated with Motif’s service. This is a big selling point for using Motif as high fees (especially when investing in mutual funds) are a performance killers long-term.
Furthermore, Motif Investing has recently launched a recurring money transfers feature, which lets you add money into your portfolio of thematic ETFs automatically. This way you can use a ‘set it and forget it’ approach to investing and benefit from the power of compounding interest. As the more funds you regularly put into your portfolio, the more interest you will gain on the new funds added AND on the interest earned from all the funds in your portfolio. Automatic portfolio pay-ins are an excellent way to build wealth through investing over the long-term.
Motif Investing also actively rebalances portfolios for their pre-made motifs, adding another hands-off approach feature of its investment service. There are also a range of available accounts including Traditional IRA, Roth IRA, Rollover IRA, Trusts, Individual and Joint.
A nice mix between active and passive investing
In my view Motif Investing is an investment service more suited to those who are looking to take a more active approach to managing their investments, as it gives you the option to buy and sell a range of different thematic ETFs, and also add and remove stocks in each motif you invest in, all at a very low cost.
However, you can also take a more passive approach. Once you have chosen the motifs you would like to be invested in, you can set up automatic payments into your portfolio and let Motif handle portfolio rebalancing.
Motif Investing provides just the right mix of active and passive investing while keep trading costs to a minimum.