Summary: Motif Investing is a potentially interesting way of investing in many stocks with a small amount of capital -- sort of like creating your own ETF. But for larger investors and for technical traders, it presents some serious issues.
Motif does allow investors to invest a small amount, commission free, in IPOs underwritten by JP Morgan. For traders who wish to get in on IPOs or have strategies that center around this, this could an interesting opportunity.
Motif Investing is only available to US citizens or legal investors.
What It Is[/b]
Motif Investing is a place where traders can create their own "motifs" -- basically their own basket of stocks centered around a given theme. Essentially, it is like giving traders the ability to create their own ETF. Traders can their buy their motif as well as the motifs of other members of the Motif Investing network. Motifs can have up to 30 stocks in them. In addition to investing in motifs that traders themselves have created, individuals can invest in motifs created by others that others have knowingly shared.
Positives[/b]
1. Traders can purchase single shares of stocks at $4.95 per side. This is competitive price that beats many discount brokers. Moreover, traders can use motifs as a way of grouping stocks -- i.e. buying 30 stocks at once - and paying only one commission fee.
2. Motifs can be purchased at a minimum price of $250. This allows traders to invest in a basket of stocks at a low price -- without having to buy all the stocks at full price to gain exposure. Essentially, by investing a small amount in a motif, traders can purchase fractions of a share of many stocks.
3. As noted above, Motif Investing account holders do have access to IPOs underwritten by JP Morgan, so that they can purchase shares at the IPO price. Investments are made in a dollar amount, with a minimum investment of $250. The exact number of shares investors will get can fluctuate, as the IPO share price may fluctuate until the market opens, so traders are asked to commit a dollar amount rather than a specific share amount. Regardless, such an offer is another point by which Motif distinguishes itself from other brokers, as most retail brokers do not provide access at the IPO price.
4. Traders can setup IRA accounts, traditional and Roth, and can rollover their 401(k) plans into Motif. They can also short sell through margin accounts.
5. Traders can create motifs and earn royalties when investors buy that motif. Every time a trader purchases or rebalances a motif you've built, you'll earn a royalty of $1 USD.
6. If you want to transfer your entire account to another broker, Motif will do that for free (the receiving broker, however, may charge a fee, but that is relatively rare). If you transfer only some of your shares, there is a fee of $65. These terms do not apply to IRA accounts; IRA accounts are transferred at a fee of $95. Personally, I view the ability to transfer the entire account for free as a good deal that is better than what most brokers offer.
7. Motif does offer apps for the web, Android, iPhone and iPad, and the Apple Watch. The Apple Watch application is read and notifications only, while the other applications allow for placing trades, rebalancing motifs, and viewing the account status/performance. Having an app for the Apple Watch is probably useless for most customers, but it does reflect a broker that is forward thinking and technologically progressive.
Drawbacks and Dealbreakers
1. Motif does not offer a dividend re-investment program. For those serious about income investing, this may be a dealbreaker. The company does accept dividends issued in the form of stock or cash and credits them to the account owner -- there is simply no automatic re-investment program for such cash dividends.
2. Motif only supports stop loss and market orders; there are no limit orders. For many types of traders, this may also be a dealbreaker.
3. Motif only allows investing in US exchange-listed stocks, ETFs, and ADRs.
4. Mutual funds with another broker cannot be transferred over to Motif.
5. Margin trading is offered, but comes at a rate of 6.5% for those with account balances under $50,000 USD. Other brokers offer more competitive rates.
6. Motif Investing does not offer the ability to transfer shares to the DRS.
Visit Motif Investing
Motif Investing Review: Good for Low Budget Investors -- But Not Much Else
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