Anyone use Motif Investing?

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TheTimeLord
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Anyone use Motif Investing?

Post by TheTimeLord » Sat May 20, 2017 7:01 pm

Has anyone ever use Motif Investing?
https://www.motifinvesting.com/motifs#catalog=overview
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

optionengineer
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Re: Anyone use Motif Investing?

Post by optionengineer » Sat May 20, 2017 7:19 pm

I used it before I became a boglehead. I can't recommend it though, because it forces you to take market orders on all the orders that you place within a "motif," which over time could lose a lot to slippage. And I felt it tried to make investing too much like a game, which in my eyes always leads to what they want - over trading, and rarely leads to good performance for the investor.

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arcticpineapplecorp.
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Re: Anyone use Motif Investing?

Post by arcticpineapplecorp. » Sat May 20, 2017 7:24 pm

Paul Merriman and Chris Pederson started doing so recently:

http://paulmerriman.com/motif-investing/

You can invest in his ultimate buy and hold portfolio there. And his foundation (which provides investor education) gets a very small portion of every trade. This does not affect you; the cost is the same regardless of whether his foundation gets a cut or not. He also acknowledges readily on his podcast that he does not advocate trading with Motif, only rebalancing once a year. Therefore the amount his foundation would receive over a lifetime of only annual rebalancing would be very little.

Downside is to keep costs down, you'd lump sum your annual investment at the same time you'd rebalance to avoid two charges of $9.95. You shouldn't be dollar cost averaging every two weeks (if you get paid biweekly) because you'd pay $9.95 every time you add money. So Merriman recommends (for Roth IRA for instance) dumping the year's contribution in in January and rebalancing at the same time to have annual costs of $9.95.

Am I correct in seeing that they don't charge for the expense ratio in addition to the $9.95? If you lump sum and don't rebalance or add money, you could actually pay NO costs per year? Is that right?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

greybus
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Re: Anyone use Motif Investing?

Post by greybus » Sat May 20, 2017 8:42 pm

Motif is functioning like a brokerage. Your cost to trade the basket of ETFs is $9.95, but you would still be paying the expense ratio on the underlying investments (the expense ratio is taken from the returns before you see them, and is transparent to you. You'd pay the ER no matter where you buy the fund).

Merriman has composed various iterations of his portfolio that use ETFs/MF that trade for free at various brokerages (http://paulmerriman.com/vanguard/, or http://paulmerriman.com/fidelity/. In these cases, your cost to trade would be zero, but you would still be on the hook for the underlying expense ratio in the investments (although you would not see that fee come out of your holdings, as it is transparent to you).

What Motif is doing for you is the convenience of buying all of the funds all at once, at the pre-specified percentages. If you wanted to DIY, you'd have to maintain a spreadsheet and calculate how much to purchase/rebalance/etc in each fund/ETF. So essentially, you're paying for convenience.

If you lump-summed and never rebalanced or added new money, then yes, you'd only pay the $9.95 once and wouldn't pay any additional commission fees after that. But the ER would still be coming out of the investments.

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cookymonster
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Re: Anyone use Motif Investing?

Post by cookymonster » Sat May 20, 2017 9:21 pm

I invested about $3,000 with them in order to collect a $150 bonus. I didn't like their platform and promptly got out. They do not seem that easy to work with in keeping up with cost basis and tax forms.

JohnnyM
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Re: Anyone use Motif Investing?

Post by JohnnyM » Fri Feb 09, 2018 7:34 am

https://paulmerriman.com/?powerpress_pinw=17404-podcast
Above is a 1 hour podcast re Motif vs. M1
Some of us have individual stocks as their "play" fund (I don't any more, I'm all index funds as soon as my final 3 positions sell) - geez M1 is the way to do individual stocks!

M1 is NOT for the "safe cash portion" of your portfolio so keep that at a different broker.
M1 trades are free vs. Motif.
M1 is fine for dollar cost averaging , Motif not really (trade fees).
Motif is increasing their trade fee from $10 to $20 this month (unless you trade at the market open 9amEST, then is $10).
M1 trades at 9amCST = 10amEST.

Re the concern of the bid-spread, is at about 34:15 of the audio podcast.
Re how do they make money & is the business model sound long term, it is around 43:00 of the podcast.

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