Motif Investing vs ETFs: Digital Finance Tech

Mint.com, you finally — finally — provided a relevant offer that piqued my interest. Instead of offering ways to deal with the debt-that-i-do-not-have, you shared an investing company I had not heard of yet — Motif.com, and enticed me with an offer for $150 to sign up, and sign up I did.

The general concept of Motifs is that, much like ETFs, they provide you the opportunity to diversify in a specific industry without buying a ton of individual stocks. But instead of being limited to existing ETF funds, they offer “Motifs” — themes with a group of stocks that they recommend looking into for investing. You can also customize the Motif so you can make it more to your liking and still pay the same fee for buying the diversified batch of stocks. Instead of boring ETF themes they can be very niche, such as the high-performing “fracking” theme (see screenshot below), yet enable you to diversify within this motif for a $9.95 trade fee. That’s quite high compared to the cost to buy an ETF at Vanguard or even Sharebuilder (where I enjoy autotrades for $3.95 to buy), but it does provide some interesting means to go after short-term growth.

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It’s also interesting that they clearly want to encourage people who sign up to buy on Margin. I’ve never purchased on Margin before, but it’s something I’ve been curious about and I wouldn’t mind putting a small amount of money into learning more about this aspect of investing. Basically you put in an amount (say $5000) and they loan you an amount on top of that to buy your investment with. The loan is indeed a loan, and it requires you to pay interest on it which can add up over time. It appears Margin trading is designed for short-term, day trading types. But I’ve been investing for a while now and I want to get a little more active without being stupid about it.

The information provided offers solid insights into the industries or themes — here’s a sample blurb from the site on a beauty motif — “While consumer spending per capita rose approximately 3.2% in 2012,1 sales in the US beauty and personal care market increased 3.4%, mostly from a boost in demand for personal care products.2 But those traditional sectors are so last year: The industry could start seeing an additional boost from a variety of sources, including pharmaceutical companies focusing on skin repair and rejuvenation5, as well as “cosmeceuticals” – cosmetics that purport to provide health benefits beyond the traditional purpose of just looking good.3 In addition, the market for anti-aging skincare products could see continued growth, as new devices and at-home treatments come to market. According to Mintel, more than one-third of American women would be open to trying an anti-aging device, while 40% of US women have used or would be interested in in-home treatments.4″

So the site is useful with or without trading. I’m loving their UI and information — as I drill down into the information on the Fracking Motif I see that they have a list of stocks in the different areas which are involved in this industry — services, contract drilling, fluid logistics, chemicals, etc. Then under each area are companies like Halliburton, National-Oilwell Inc., et al, which are top performing companies for those elements. What’s cool (/scary) is that you can go in and adjust the weighting of each stock in the Motif or even add your own, so you can really make a customized ETF. The downside is it’s expensive and unless you get amazing returns really isn’t worth it.

In any case, if I trade 5 trades and put $2000 into my account I can make a quick $100 and learn a little bit about Margin trading. I don’t want to spend more than $5000 on this account, but it could be a fun hobby for a while. I really love the information Motif provides on these different industries and growth sectors — even if I don’t end up investing in Motifs I can still buy individual stocks over on Sharebuilder for the relevant trends. I just won’t get the same amount of diversification (unless there’s a matching ETF) vs what I’d get on Motif.com, so I think it’s a reasonably good idea for my next fun investing project. I’ll keep you all posted on how it goes, it takes them 2 days to approve my account and then I’m off to the races.

 

 

 

 

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One thought on “Motif Investing vs ETFs: Digital Finance Tech”

  1. Hi Joy: Motif investing sounds interesting if you want to customize the standard ETF investing approach and

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