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 Offeriv
$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 $10vi. 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) = $122vii
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 aboveviii.
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 $5xiii, 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 examplexvi).
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 Inquiryxvii
- 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.
i In summary you want to invest the smallest amount, in the least volatile investment, for the shortest period of time.
ii The Prime Money Market Fund is available within the Community Created Motifs Tab. In full disclosure, Motif Investing has a royalty program that pays a $1 (from their standard commission rate – no additional cost to the purchaser) for the purchase of community created motifs. You can create your own Motifs to earn royalties.
iii These funds may not technically be money market funds as defined by a regulating body like the SEC. I use the term to describe a fund that invests in short term high quality debt securities.
iv Technically in the $150 Offer lower number of trades can be transacted for lower bonus amounts, but since the same deposit is required across all bonus tiers, the 5-trade tier establishes the highest net bonus so I will only consider this option in this post.
v $100 1-Trade Refer-a-Friend Details
Please see “New Member Terms Received” End Note below.
vi Motif Trade Commissions are technically $9.95, but it looks like there is a regulatory fee of approximately $0.08 on a $250 sell trade. So for the sake of simplicity I’ll use $10.
vii This is somewhat loose math. I’m sure someone on the Internet can correct me with a proper NPV calculation.
viii You must wait for the ACH to transfer before you can trade. So you will have to login at least twice to generate the bonus. And of course wait the approximately 2 months for the bonus to post.
ix Again this is somewhat imprecise math. I use 2 months or 60 days, when principal can be removed after 45 days, while the bonus make take as long as 75 days to post. It is approximate, I believe reasonable to use for comparison purposes.
x Quick Summary Table – Column Details
xi $150 5-Trade Details
xii Fat Wallet Comment ; Fat Wallet Comment #
xiii Technically $4.95, but again a tiny regulator fee probably applies
xiv New Member Terms Received
xv Old Member Terms Displayed
xvi Sample Motif of the Week Promotion
xvii I chose a cash account [vs. margin account] during setup and received no hard credit inquiry. Motif Customer Support confirms no credit pull regardless of account type opened.
Don L Thanks for the heads up on this. The Motif e-mail was in my SPAM folder. Like Illa J I have had an account for a while. I have about $5K total, various amounts in 3 different motifs, as of today. Each Motif is about 20 different fractional shares of common stocks.
I cannot see paying $20 a month to have Folio manage this small account. None of it is IRA, so I can cash out and walk, but this really bites selling out now, when a couple of months ago my portfolio was worth $6K. So much for buying low and selling high. To be fair, I did end up making money, but still.
They are allowing transfers to other brokerages, but, does anyone have any knowledge of what would be a good option? I have no allegiance to doing what they would like for me to do… I hate fees. I would rather just eat the loss upfront. I know it’s pennywise and pound foolish, but I have no patience for this stuff.
So, does anyone know if I can just transfer these Motifs to SoFi, or Schwab, Fidelity, or Etrade, Vanguard, and not pay out the butt in fees? (I listed these specifically because I have accounts with each) Oh yeah, I have Robinhood, Webull, and Stash… I’ve had Betterment and Wealthsimple in the past, and probably a couple of others, but I never do transfers.
My investment style, I buy something, and I keep it until I am ready to sell – normally many, many years down the road. This is a first for me… being told to take my toys and go elsewhere. I never once rebalanced my Motifs in the 7 years I owned them. (hence I probably was not a profitable customer for them)
I plan to hit Reddit and see if anyone is discussing this, maybe find out what the scoop is, but wondering if the DoC crowd has any recommendations?
I think it’s really crappy there is nothing on the webpage, or even inside the Motif account saying they are shuttering. No messages that I see anywhere. Even the referral program is still alive! LOL
Gadget thanks for confirming the shutdown email.
I’m going to have defer to the rest of the community, because I’m not sure what the best option is for you. [Everyone might not have seen this update because I think some special characters in the post might have blocked the RSS feed]
I would assume though that you should be able to transfer out your stock in kind (with out selling) to another brokerage (one that you currently have) or possibly to a new brokerage to earn a signup bonus.
Just initiate an ACAT transfer. I think even the fractional shares should transfer correctly, but double check with the receiving side to be sure.
Folio’s $75 ($100) flat fee for transferring out is pretty much the industry standard, nothing to worry about and little chance to wiggle out of it from their end either (you can ask the receiving side to reimburse you if the total dollar amount is big, but a big account would naturally dwarf the $75 fee in any case).
As to where to, since you mentioned your plan of holding for long periods and trade infrequently, it doesn’t matter. I’d choose a big one like Schwab/Fidelity/Etrade(morgan stanley)/Vanguard that’s not in immediate danger of going down and forcing you to move again;)
Thanks for the update Doc, didn’t see the e-mail from Motif given that it was buried with an 8 p.m. on a Friday night send date.
Had used Motif for quite a few years and a little sorry to see them go – would prefer at this point to move out my ~$3K and deposit an equivalent sum into Betterment. However, with my Motif investments residing in two separate community built “motifs,” requiring $9.95/motif to sell out ($20 total), vs. practically unlimited trading under Folio at $5/mo, it would seem to make more sense and to save ~$15 total to wait until the changeover occurs and then to sell out – assuming an equivalent market, etc.
I can’t see how Motif Investing would ever make money. They required small deposits to make outsized bonuses. Small deposits = small accounts = small revenues.
The bigger story here is that venture capital, which has been in decline for a year, has ground to a halt since February. All these cute little fintech startups like are going to disappear unless they can become self-sufficient really quick.
I hear you, especially on the VC Money part.
I would say the biggest percentage of promotional money in the space has always come from the big banks (Chase, Amex, BoA, …) but the VC promotional money used to supercharge growth was significant.
The bigger story is not that cute IMHO.
VC: Buying lottery, perhaps 1 out of 500 will win back 1000x
Founders/CxO: Will coast on VC money obtained via our flashy PPT and plans until we crash
Early Employees: No capital but also want to buy the same lottery as VC, so buying with their life (years of time, is essentially life), if this one folds might try another one, will start working for an established company when too old (and still hasn’t hit the jackpot)
See the trend? Few really cares whether the “company” survive, everyone is keenly aware that the “company” is expected to, and meant to, disappear, in most of the cases. Thus people are just playing their roles to further their own interest, a ‘divergence of interest’, if not conflict of.
Oh wait… I found you again Don L Guess you’re another reader 🙂
🙂
Pretty sure that all $ bonus promotions for Motif everywhere are gone.
Received an email that Motif is going to start charging a no trading activity fee:
“We will assess a Platform charge of $10 semi-annually on low balance accounts with no trading activity.
Funded trading accounts with less than $10,000 in combined securities and cash, with no commission trades in the last six months, and without a established recurring ACH will incur this fee.”
I dropped my balance to $0, which Motif support says should avoid the fee. Will a zero balance cause my account to be closed – I would guess that’s probably fairly likely at some point.
***** Important Update *****
The $100 Refer-a-Friend program is being sunsetted/phased out.
Received an email entitled, “We’ve made refer-a-friend even better” – which is a near certain sign they have made the program much worse. The referral program now only provides Motif BLUE status for 3 months.
I can no longer generate the $100 referral emails, so I’ll have to bow out of this game.
You might still be able to find working links online through a google search.
Sorry, all the best
Everyone in the process, who signed up under the refer-a-friend program should still be good.
They are starting to block future signups.
This is the new program:
https://www.motifinvesting.com/faq/how-does-the-referral-program-work
Added this to the post
hey Don, just sent an email.
Bonus posted yesterday, and Don noticed before I did and emailed me to confirm my info for referral bonus transfer. He sent me half of his referral bonus within the same day of confirming the payment details. Thanks to Don for writing this and the great offer and follow through, and to DoC for putting up the article.
Motif also has a $150 IRA Bonus with a qualifying transfer
https://www.motifinvesting.com/offers/open-motif-ira
HT (Reader Raja)
Q. Can I earn the IRA bonus in addition to the investment bonus?
Yes (per an email with Motif Customer Support)
Q. Do I want to earn the IRA bonus too?
Probably not.
The $150 bonus (tax free or tax deferred depending on IRA type) and a no trade requirement are nice.
But, if you plan to open the account primarily for the bonus there is a $95 transfer and closure fee for a Motif IRA [https://www.motifinvesting.com/faq/is-there-a-fee-for-transferring-a-motif-investing-ira-acat-to-another-firm?ali=1] (there is no fee to close the Motif taxable brokerage account).
Additionally, many brokerages charge a fee to transfer IRA assets out [http://www.bargaineering.com/articles/beware-broker-transfer-out-fees.html]
With these two fees you may not have any profit to compensate for the addition work required to setup the account (ACAT Form) and the additional capital ($5,000) required to trigger the IRA bonus.
* Motif Promo Date Bug – 45 Calendar Day Requirement *
It looks like Motif has a bug in their date logic around the 45 calendar day requirement.
Bonuses will go into an Ineligible State if funds are removed shortly after meeting the 45 day requirement and bonuses will not auto post.
Motif will manually post these bonuses, if you contact them through email.
From 3 data points, not sure what the true programmed minimum days requirement is, but if you can float the funds about another two weeks (~60 days, 2 months) the bonus will auto post.