Motif Investing Review ? Create Your Own Custom ETF (+$50 ...

Ready for a start-up online brokerage site with a twist? It?s called Motif Investing. As a motif is a ?dominant theme or central idea?, here you can invest in a group of up to 30 individual stocks that fit into a theme like ?Housing Recovery? or ?Lots of Likes? (companies that have the most Likes on Facebook). You can buy the entire basket of stocks with just one $9.95 commission, with no ongoing management fees. The minimum motif investment amount is $250.

My initial impression was that it felt a bit too trendy and gimmicky to recommend as a long-term investment. Indeed, I don?t really care how many Facebook Likes a company has, and I doubt I would buy stocks based on my love of pets or my political views. It?s just not my style.

But if you take a step back, since they let you customize the basket, anyone could essentially make their own ETF/mutual fund with zero expense ratio. You?re can?t track a broad index like the S&P 500 this way, but if you do have a basket of stocks that you buy regularly, this would be a cost-efficient way or doing it. You can also set the relative weighting of each of the stocks in the motif.

Personally, I might try creating a basket of dividends stocks that hopefully will provide a long-term stream of growing income. For example, take the SPDR S&P Dividend ETF (SDY) that holds 60 highest-yielding stocks of the S&P 1500 that have raised their dividends every year for the past 25 years. It?s a nice idea, but it leaves out some good companies and the 0.35% expense ratio eats up 10% of the original yield of the underlying companies. Why not hold them directly and keep the 0.35% as extra return for yourself? Right now, as it seems like you have to customize an existing motif, I think the ?Dogs of the Dow? or ?Bullet-Proof Balance Sheets? motifs are the closest.

In many ways, this is similar to the unlimited plan at Folio Investing, but Motif Investing has the potential to be a lot cheaper ($10 per motif trade with no minimum trade requirement vs. $29 every month for Folio) and is closer to a ETF in that they do real-time market trades. Motif also uses dollar-based trades, using fractional shares to keep everything organized. You can still do regular real-time trades of individual stocks for $4.95 per trade. No maintenance fees, no inactivity fees. Currently there is no automatic dividend reinvestment, you have to reinvest the cash yourself.

Right now, Motif Investing is offering a $50 cash bonus when you open a new brokerage account with $1,000+. The terms and conditions are quoted below. You can get the $50 by funding with $1,000, no trades required, the funds must arrive by 9/5/12 and stay there for 50 calendar days. If you think about it, a guaranteed 5% ROI in 50 days is pretty good all on its own. They even allow you to get more than one bonus per household if you use different registrations (i.e. one individual, one joint with spouse).

*The $50 cash offer applies to new Motif Investing brokerage accounts opened between 7/16/12 and 8/31/12 and funded with at least $1,000. Each customer may receive only one $50 cash offer for NEW accounts of the same type opened under that customer?s name. A customer may qualify for additional $50 cash offers by opening other new accounts with a completely different registration, such as a joint account with a spouse. This offer is not valid for retirement accounts, such as IRAs, and cannot be combined with any other offers from Motif Investing. The new funds must be posted to the account by 9/7/12, and must remain in the account for 50 calendar days. The $50 cash offer will be credited to the account within 60 calendar days of receipt of the required minimum funding. This offer is not applicable to employees of Motif Investing and their respective family members. Motif Investing reserves the right to terminate this offer at any time.

Find more in Deals & Offers, Investing | 7/18/12, 9:25pm | Trackback

Source: http://www.mymoneyblog.com/motif-investing-review.html

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