Update 4/19/20: Multiple sites (RI, …) are reporting that Motif Investing is shutting down [accounts are being transferred to Folio investing].  Perhaps they couldn’t successfully compete in a lower/no fee brokerage world.  Maybe the end began some time back when they stopped investing in marketing promotions.

This is a guest post by reader Don L, it’s probably one of the most thorough posts I’ve read so give it a go. 

DoC has written about Motif Investing in the past. In this post, I will:

• Tell you why I believe the Motif investment bonuses can be viewed like bank bonuses (closely equivalent to bank bonuses and available nationwide), and
• Breakdown the current promotional offers

Making an Investment Bonus Nearly as Safe as a Bank Bonus (Low Risk Execution Strategyⁱ)

Invest in Money Market Funds

To complete this bonus, you need not invest in high risk assets.

You can invest in money market type investments. The ETFs available can lose value (prices float, are set by market trading) but on any regular day only move fractions of a percent in price.

A motif is a portfolio that you build and trade as a unit. I built the following motif (“Prime Money Market Fund” [if interested you can use it tooⁱⁱ]):

It’s an equally weighted allocation across the full ETFdb.com universe of money market ETFsⁱⁱⁱ.

In addition to the low risk nature of money market like funds, by putting multiple funds within the motif (portfolio) you lower the risk of principal loss even further.

Buy Motif One Day, Sell the Next Day

To trigger my bonus, I purchased the Motif on Monday and sold it on Tuesday.

In this case you only accept a day’s worth of price movement.

You may be able to buy and sell on the same day and still trigger the bonus, but I didn’t want to risk it. I thought it best to allow the trade some time to settle.

Invest the Minimum Required Amount

As with all deals, only make the minimum required investment; this places the smallest amount of principal at risk.

A minimum Motif investment is $250 (smaller minimums apply to other trades – more info below)

Breakdown of Current Deals

Two general promotions are currently being offered:

• $100 1-Trade Offer (Refer-a-Friend), and
• $150 5-Trade Offer^iv

$100 1-Trade Offer (Refer-a-Friend)

The Offer

• Open a Motif Investing Account
• Fund with $1000 (must remain for 45 days)
• Execute one Motif Trade (minimum of $250 investment)
• Bonus ($100) posts within 75 days

The Rules (Fine Print)^v

• Funds must post within 10 days of account opening
• Non-retirement accounts
• Must be at least 18 Years Old

Net Bonus (Cash ~$130, Value ~$122)

Following the strategy above you actually need to make 2 trades, one trade to buy the motif and a second trade to sell the motif; each trade costs approximately $10^vi. So the net bonus is:

$100 (New Member Bonus) – $10 (Buy Commission) – $10 (Sell Commission) = $80

But the advantage of the refer-a-friend bonus, is that the referrer (the referee? – the person providing the referral link) also receives a $100 bonus. If you make arrangements with your trustworthy friend (counterparty) to split his side of the bonus 50/50 this adds another $50.

$80 + $50 (Half of Old Member Bonus) = $130

I would also subtract an opportunity cost for the interest that your $1000 could have been earning in a 5% promotional account for around two months – approximately $8. To get a net value of the bonus of:

$130 – $8 (Lost Interest) = $122^vii

This calculation doesn’t take your time into account, but the account opening and funding process is smooth, and it only took me a total of about 15 minutes to complete the steps above^viii.

If you would rather look at it as a return on your investment you would earn about 13% in 2 months (or annualized rate of around 108%)^ix.

In a quick summary table:

$150 5-Trade Offer

[Warning: I have not personally completed this deal – I successfully completed the $100 1-Trade Deal above]

The Offer

• Open a Motif Investing Account
• Fund with $2000
• Execute 5 Motif Trades
• Bonus ($150) posts within 75 days

The Rules (Fine Print)^xi

• Funds must post within 30 days of account opening
• Non-retirement accounts
• Must be at least 18 Years Old

Net Bonus (Cash ~$100, Value ~ $83)

An interesting element of the $150 5-Trade deal is that it can be completed (fully liquidated) in 5 trades. The key is to buy the same motif twice and sell the total purchase once (for instance Buy $250 of Motif A, Buy $250 of Motif A, sell $500 of Motif A) [in this example you would still need two additional trades to trigger the bonus]^xii. So the net bonus is:

$150 (New Member Bonus) – $50 (Commissions for Five Trades) = $100

If we also subtract an opportunity cost for the interest that in this case your $2000 could have earned in a 5% promotional account for about two months (approximately $17), we get a net value of the bonus:

$100 – $17 (Lost Interest) = $83

If you would rather look at it as a return on your investment you would earn about 5% in 2 months (or an annualized rate of around 34%)

Additional (Possibly Riskier) Bonus Triggering Strategies

[Warning: I have not used these strategies, I do not know if they will trigger the promotional credit]

The terms of the $150 5-Trade Offer seem fairly locked down:

A motif trade is defined as a completed purchase or sale of a motif for $9.95 commission. Individual stock trades will not be considered as part of this offer.

But the terms of the $100 1-Trade Offer appear more open to using lower cost options to complete the deal.

Modification #1 – Purchase one ETF, Instead of One Motif – Net Bonus (Cash $140, Value ~$132)

ETF/Stock trades are cheaper at $5^xiii, than the $10 Motif Trades.

When a potential new member receives a referral link, they will see the following message:

Your friend will receive $100 for each friend that opens a new Motif Investing non-retirement account via the referral link, funds it with at least $1,000 and executes one motif trade.^xiv

But when the link is generated the current member sees the following language:

You will receive $100 for each friend you refer that opens a new Motif Investing non-retirement account, funds it with at least $1,000 and executes one motif or single stock trade.^xv

I followed up with Motif Support on this discrepancy and they seemed to state that ETF trades would qualify for the $100 1-Trade Refer-a-Friend Bonus.

This would lower the commission cost to only $10 (2, $5 Trades [Buy, Sell]), for a net bonus value of $132.

An additional element to consider is that when buying single ETFs no $250 minimum Motif purchase limit exists, you can buy fractional shares – so you may be able to trigger the bonus by only investing a few dollars in one money market like fund. For instance, you can buy 0.1 shares of BIL (SPDR Barclays 1-3 Month T-Bill ETF) for $4.57 + Commission.

By only investing in one money market like fund versus a motif (portfolio) of money market like funds you may increase your price risk a small amount, but this factor should be far outweighed by the lower commissions and the reduced principal at risk (fractional shares).

Modification #2 – Find a Commission Free Motif to Trade

At times it appears Motif, promotes a Motif of the Week, which you can trade commission free (here’s another example^xvi).

Additionally, Motif is currently offering no commission Horizon Funds.

So if you are able to catch one of these deals you may be able to eliminate your commission cost completely.

But:

• By stacking deals this may violate Motifs T&C. I would say there appears to be more promotional risk with this strategy.
• Additionally, a promotion may not be running during the window you need to complete a trade.
• Also of importance, the promotional motifs generally have much more price risk than money market like funds.

Additional Info

• No Hard Credit Inquiry^xvii
• No Account Minimum Required
• No Credit Card Funding
• SIPC Protection

Final Thoughts

Thanks for reading. Please share your experiences and ideas in the comments below, perhaps we can make this post into a comprehensive guide.

If you would like to proceed with the refer-a-friend option, the author of this post would be happy to work with you and split his portion of the referral bonus (please contact Don at [email protected]).

Thanks again to Don for writing this guide, since he was so thorough and willing to split the referral bonus with people I’d kindly ask you not to share your referral details in the comments. I’d just assume that you won’t get the extra $50 and then be happy if/when it does come along as an added bonus.