Morning hustlers :) Welcome to my Motif Investing review.
So one of my goals for this blog in 2015 and going forward is to try out a lot more financial products out there and then report back to y’all if I find they’re kosher. I tend to stay within my nice comfy bubble of companies and services I love, but the problem with that of course is I never learn anything new. And worse, miss out on some pretty cool $hit out there!
In fact, two of the last three companies I tried out I’m now obsessed with:
That would have really sucked to overlook those. And who knows how many others I haven’t tried yet??
So going forward I’m going to try and be a better financial blogger and keep y’all abreast of things, while upping my own game in the process. And this is why I said “yes” to do a Motif review and participate in a little blogger competition going on sponsored by Motif Investing ;)
The “Grow Your Dough” Throwdown
If any of you know Jeff Rose (GoodFinancialCents.com), he arranges these awesome movements where he gets a lot of bloggers to write about a particular financial topic. Sometimes it’s around debt, other times it’s life insurance, and this time around it’s investing.
Or more specifically, to show how easy & cheap it can be to invest.
So 20 of us personal finance bloggers are having a nice little competition to see how far we can grow $500 in the stock market :) Most of them are getting all strategic and trying to find the killer performers to win by year’s end (PT Money won last year w/ a 33% increase!), but instead I decided to use it as an opportunity to learn more about dividend investing… And will probably lose in the process, haha.
But I ain’t no fool! I invest for the long haul, bitches… No short term gaming for me ;)
Why Dividend Investing?
I read a lot of early retirement blogs, and while there are a ton of ways to gain financial freedom (real estate, investing, entrepreneurship), it seems most of these guys favor the dividend investing route. Which is owning stocks of companies who give their shareholders some extra money every few months (dividends) to share in the profits. I accidentally, I mean on purpose, already get dividends by investing all my money into Vanguard’s VTSAX index fund, but I want to learn more and see if it’s something I should be pursuing more.
I also haven’t had a brokerage account since I dabbled in day trading back in my idiotic youth, so this gave me an opportunity to finally open one back up and start diversifying my investments. 100% of everything I own right now is in retirement accounts (SEP Ira and ROTH Ira), so this will be my first taxable account to start managing again.
I’m scared and excited at the same time :)
I HATE the thought of dealing with taxes on all this stuff and messing with the simplicity of my system, but again I know I need to wise up on this stuff or else all my millions will be tied in retirement funds I can’t touch until I’m old and gray!! And how are you supposed to retire early on that?? (Yes there are ways to convert stuff strategically over time, but that’s for a whole other day. And for someone much more intelligent like Mad Fientist to enlighten us on ;))
What Is Motif Investing?
Because with Motif you can invest up to 30 stocks at one time and only pay a single transaction fee: $9.95. Which means we can all create our OWN “funds” based on our strategy super cheaply and easily. These funds are called “motifs,” and then anyone else with a Motif account can check them out and learn or invest in them too. It’s all rather cool and unique.
To put this in perspective, I wanted to invest my $500 for this “competition” into 10 individual dividend stocks. So instead of paying $9.95 x 10 = $100 and losing 20% of my funds off the bat (!!!), I was able to do it for only $9.95. And then I named it “My First Dividend Portfolio” in case others are interested in it too (you can make these public or private btw – you don’t have to share anything).
So, in a nutshell Motif Investing allows you to invest in a bunch of stocks or funds all at once, and you don’t have to pay a handful of fees to do it. It’s simple and easy, and there’s only a $250 minimum to open up an account, and there are no maintenance or inactivity fees at all. The Motif team also shares their own strategic “motifs” as well, for those looking to go a certain route (like a group of stocks/funds by industry, target date, Vanguard indexing!, or even dividend-focused. Even though I didn’t listen to them and did my own, haha…) They’ve been around for a while it looks like as well.
You can learn more here if interested: MotifInvesting.com (that link will give you up to $150* if you end up signing up btw – a nice start to your account!)
What Dividend Stocks Am I Investing In?
I’m glad you asked :) Since I haven’t the first clue where to start, I decided to ping my good friend Jason over at DividendMantra.com to help mantra me ;) Here’s what I emailed him:
If you were starting your dividend portfolio from scratch, where would you put $500?
I’m playing in this “investing challenge” with a group of other bloggers, and while they’re all trying to strategize to have the most $$ by the end of the year, I’m gonna use this as an opportunity to start my first taxable brokerage account instead to be the groundwork for early retirement :) And I really like your dividend approach!
So, if you were starting all over again knowing what you know now, where would you put your first $500?
And here’s what he sent back:
Hey, bud. Thanks for writing and considering me!
I won’t make any claims as to short-term performance. I’m a long-term investor, so I’m investing for the next 20-40 years with most of these stocks. But I’m more than happy to participate and see where things go.
The stock I’m picking might not outperform other picks over the next 12 months. I have no idea about that. But if I were starting all over again and had to pick just one stock today, it would be Johnson & Johnson (JNJ). It’s my largest investment and I’m confident with its long-term prospects. It’s just an incredibly well-run company. The valuation is a bit on the high side right now, which is partly why I’m unsure of how it’ll perform over the short term. But I can’t imagine being unhappy with this investment looking back on it 20 years from now.
So that’s the stock I would recommend for someone just starting out. Provides above-average yield, and has traditionally beaten the market over long periods. Plus, its volatility is low and will provide downside protection in case the market starts correcting aggressively.
If you’re looking for me to pick a stock that I think will outperform others over the next 12 months, which, again, is not something I typically aim to do, I would pick Philip Morris International (PM). Great yield, the valuation appears fair, and there’s a lot of upside potential, in my view.
So I don’t know if that’s the one you want to enter in the contest, but invest in JNJ. Or you’re more than welcome to use JNJ since maybe some readers might balk at PM since it’s a tobacco company. But I would pick PM right now if someone were challenging me to a contest for performance over the next 12 months.
Either way those would be my picks for their respective purposes. :)
It’ll be interesting to see how it turns out!
I’m certainly not a guru or anything, but I think I’m doing well so far. I’m probably going to earn $7,000+ next year in dividends, which, at 33 years old next May, puts me on pace for financial independence by 40 (where I want to earn $1,500 per month in passive income). So things are moving along.
What a thoughtful (and helpful) response right? That guy lives and breathes this stuff and is just incredibly nice. You can file it under favorite blog #2 if you’d like, right below Budgets Are Sexy ;)
Anyways, if you’ve been paying attention, you’ll know I invested in 10 stocks instead of only 1 or 2. Now why is that when Jason only sent me the two? Well going back to the initial purpose of playing along and trying out new things, I wanted to better test out this Motif Investing and see what it’s like to pick up a handful of stocks and create a portfolio.
So in the end I *did* listen to Jason – both of those stocks are in my new portfolio! – but I took it a step farther and invested in TEN of his largest holdings of dividend picks as listed in his portfolio he shares with the world. Now I can track and learn more :) And I have no shame in copying…
My First Dividend Portfolio!
Here’s what this “First Dividend Portfolio” of mine now looks like:
Here are the 10 dividend stocks I invested in:
- Unilever (UL)
- Coca-Cola Co (KO)
- Philip Morris International (PM)
- BHP Billiton (BBL)
- Kinder Morgan (KMI)
- Wells Fargo (WFC)
- AFLAC (AFL)
- Vodafone Group (VOD)
- General Electric (GE)
- Johnson & Johnson (JNJ)
Interestingly enough I have been invested in these guys before, just without realizing they were dividend-worthy (can you tell I’m not an investing expert? :)). We’ll see how it plays out over the years, but currently we’re in 10th place. Even though, again, it doesn’t matter in the end…
The Purpose of All This…
To recap, the purpose of this little competition (at least for me) is as follows:
- To share, and test out, a cool new company out there
- To learn more about dividend investing!
- To start my first taxable brokerage account
- To have fun :)
I won’t be straying away from my indexing anytime soon (or, ever), but sometimes it’s fun to change things up and let loose a little. Especially if we’re talking smaller amounts of money compared to a nest egg (I’d never invest my $400,000+ into random stocks, whether my friends recommend them or not, haha…). And so far I’m liking the options Motif gives me. In fact, you can even invest in index or Vanguard funds through them if you wanted to!
What do you guys think? Are any of you currently using Motif? What do you think about my first dividend portfolio? :)
We’ll see how far we go down this dividend path, but right now I’m excited for the chance to learn… I’ve been talking about starting a separate brokerage account for months now and we finally have one!
UPDATE #1: Check out the comment down below by “DP” about the official terms of the $150 bonus. Looks like there are some variables that come into play.
UPDATE #2: Motif Investing now allows you to buy single stocks too @ $4.95/transaction. Which is nice, cuz it gives you the ability to house more of your investments with them if it’s something you want.
UPDATE #3: I’ve since pulled my $$$ and went back to indexing 100%… Was a fun experiment/game while it lasted though :)
UPDATE #4: Starting on May 15th, 2017, Motif will begin charging $10 semi-annually on inactive accounts with a balance of less than $10,000.
PS: Just like all the companies I review and use on this site, I’ll get compensated if you sign up through any of the links in this post. Only unlike most others, you can get up to $150* yourself to start playing with ;) So a win all around if it’s something you end up signing up to. (And just like all other reviews too, please ONLY sign up if it’s something you’re comfortable with!)