The term ‘Motif investing’ has created ripples among the investors, in no time. What exactly does it mean? Motif Investing is the innovation of CEO Hardeep Walia.
He released this service in 2012 for US-based traders. It has developed exclusive financial products known as “motifs.” These are similar to low-cost theme-based ETF (exchange-traded fund) offered by start-ups like WEALTHFRONT.
Role of Motif Investing in Financial Investments
Holding baskets of costly stocks indicates more instability and horrible losses. In such scenario, Motif investing works as a blessing. How? It provides the flexibility to the investors. They can decide on areas that they would like to invest in. Not just that, the investors do not have to make expensive individual stock purchases to be in the game.
Today the sharemarket has become a favourite place for millions of investors. If the investment is done carefully, it can give massive returns to the traders. The returns from the potentially strong stocks are really huge compared to any other asset class. However, one small mistake can put a big dent in their capital. Online robot advisers stepped in to prevent such damages.
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With the initiation of online trading, ideas like online brokerage have strolled in. Motif Investing is one of the distinctive names in the aforementioned field. It is discount brokerage that makes investing and trading in the stock market easier for the individual stock investors. With a proper guidance, they can buy or sell stocks by themselves with just a click of the mouse.
The Salient features
Earning from the stocks is no longer a hassle. Anyone can invest while sitting in the comfort of their home or office. Motif Investing helps the traders invest based on themes. It is similar to constructing a mini-ETF. In short, motifs proffer extensive, low-risk investments.
According to Walia motif investing can be defined as a combination of Peter Lynch’s investment know-how with Jack Bogle’s diversification. The investor invests in groups of investments that have the same kind of characteristics. Motif Investing allows traders to create or buy motifs featuring between 20 to 30 stocks or ETFs following definite themes. “Biotech Breakthroughs” “Healthy and Tasty,” “Utility Bills,” and “Recession Resistant” are a few examples.
Motif Investing is a fascinating investment platform. It systematically merges the roles of an online stockbroker and portfolio executive and puts them together with idea generation and thematic modelling. Investors have the power to adjust the weight of stocks within a motif until they reach their required portfolio.
Simply by depositing a nominal charge, anyone can open an account online. The company charges a fixed commission per motif purchase. If desired, traders can add stocks or ETFs to their already bought motif.
The benefits of Motif Investing
Motif Investing is gaining popularity due to its nominal fee. Here traders have to pay one-time commission amount while purchasing a motif. No additional charges are attached to Motif’s service. With the increasing demand of robo-advisors, there is a cutthroat competition among the online brokerage houses. Since Motif Investing follows most avant-garde of investing, traders with little capital may find it profitable.
The drawbacks of Motif Investing
Financial investments are volatile in nature. There are a lot of risks involved in the whole process. Motif Investing is no exception. To get profits, investors must be aware of well-planned tactics for buying and selling stocks before investing. Short-term investors are the most affected ones here. Mostly they earn little to no returns on their investments.
Returns earned from stocks or ETFs are not subject to reinvestment. Motif disburses dividends as cash flow. Plus reinvesting must be done manually which demands an additional transaction fee. Similarly, investors must shell out a trading fee while changing securities within a motif.