How much do you know about investing? If you needed to build a balanced, diversified portfolio of investments, would you even know where to begin? What if you wanted to take advantage of a certain trend by investing in the companies behind that trend? Could you do the research necessary to find those companies and pick the ones that are best suited to taking advantage of the trend? Yeah, me either.
Motif Investing; Investing in Patterns
That’s where Motif Investing (affiliate link) comes in. They’ve done the research for us. They know how to build a portfolio of investments that is poised to take advantage of a new trend. And, they’re sharing that knowledge. They’ve created motifs that you can invest in. In their own words: “A motif is a carefully researched and balanced grouping of up to 30 stocks that combine to give investors diverse exposure to a single big idea.” But, what does that mean? Well, let’s say you think the economy is going to continue to stink for the next several years. You know that as the economy goes down, places where you can buy stuff cheaply do well. How about a motif called “Discount Nation” that is an array of discount retail stocks? What if you also think that when the economy goes down, things like gambling, alcohol, and tobacco pick up, and the companies that produce those things do well too? The “Seven Deadly Sins” motif might be for you. Check out the description they’ve given it.
Even in tough times, consumers continue to partake in things that may not be considered particularly virtuous. From cigarettes to sex, burgers to Botox®—consumer indulgences require products and services from a wide range of publicly traded companies. Some luxuries see reduced demand during tough times. But smokers could keep smoking, drinkers keep drinking, and the lustful keep…lusting. Bad habits are hard to break. And when times are rough, who wants to even try? Nobody can predict the markets, but consumers are only human. And economic conditions may not be able to defeat their appetites for sinful stuff.
Funny! You’ve got to have an account, and be logged in to see the individual stocks for each motif. I couldn’t resist, so I signed up just to see what was in the “Seven Deadly Sins” motif. It’s got 25 stocks in it. I recognize almost all of the names, like Anheuser-Busch under the Gluttony category, and Sturm Ruger & Co. under the Wrath category.
Investing with Motif Investing
Motif investing might be something to look into. It looks like they’ve got a pretty low minimum investment of $250 per motif with a fee of only $9.95 for the entire motif. If you tried to replicate the above motif, you’d have to buy 25 individual stocks, and even at the $4.95 I’ve seen at a few discount investing houses, you’re going to spend a ton more to achieve the same diversification. In a way, it’s a bit like an ETF or mutual fund, but without the added expenses of either. Plus, unlike an ETF or mutual fund, you own the shares of the individual stocks, not the shares of the ETF or mutual fund.
The motifs are also customizable. You can adjust the weighting of the motif to lean a little more heavily on one stock or another, and can even add or remove stocks to the motif to fully customize it to your liking. Each gives you a simple way to buy a little diversification as is, or you can customize it to fit your liking. I like that.
I don’t necessarily like that there is a minimum investment, but I’m sure it’s in place to keep their costs as low as they can. They also don’t reinvest dividends, which would be nice to see since they’re already doing fractional shares, but, I do like the fee structure. $9.95 might seem a bit much, but when you consider that you’re buying up to 30 stocks at a time, it’s really a pretty good deal. Plus, once you own a motif, you can sell/buy individual stocks within the motif for $4.95 a trade. They’ve got IRA accounts available which is nice.
If investing seems like a big confusing mess to you, you might want to check out Motif Investing. I like the idea, and having some knowledge behind the stock picking is always a good thing. I’m not sure that too many seasoned investors will be picking up the idea, simply because most of them know how to do their research, and usually have a set way they go about investing. Maybe I’m wrong, but that’s the way I see it. It’s a cool tool for beginners.
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Interesting idea, I’d never heard of this group before I will check it out. However if one wants a balanced portfolio, depending how much you have to invest, you could easily build one using 3-4 no load index mutual funds or the same number of ETFs. Minimums and transaction costs will vary by custodian so do your homework.
I have been studying investing 2 times a week with my step father since March. So far so good. Started selling covered calls. Cross your fingers. 🙂
I love the idea of Motif for investing – am truly frightened of the stock market, but for some reason, the approach of themed investment groupings (and not mutual funds) is very appealing to me. I’m surprised to see that Zulily is down this year – I thought I had personally spent enough on grand baby clothes for them to make a nice profit!