This post was originally published on July 28, 2013
Maybe your very first thought was diversification. Your account is still small and you won’t be able to buy more than 5 stocks at this point and that makes you uncomfortable. You know that experts recommend at least 30 stocks in your portfolio to reach a decent amount of diversification.
But how can you buy 30 individual stocks when you just started saving and investing and all you can save is $100 monthly? What if you would have an opportunity to build your very own mutual fund of stocks you want to own?
Well, today you have that opportunity and it is very simple. And you do not need millions to do it. You can start your own mutual fund with just 250 dollars (it’s like buying your first position in a mutual fund, right?).
You can build your own mutual fund
Yes you can build your own mutual fund and it will not cost you anything and you do not need millions or billions to start your own mutual fund. I found this opportunity thanks to my friend and fellow investor Wayne Bow who sent me the link to a great service which would allow it.
A broker which allows you creating your own mutual fund is Motif Investing. And how does their service work?
Once you open an account, which is for free, you can create your own mutual fund, which is called a Motif. You can add 30 of your favorite stocks into the motif (portfolio) and you can create as many motifs as you wish. And more on that, the broker will give you a bonus up to $150 to trade with.
Want to make 150 dollars right after opening an account?
If you open an account, Motif Investing provides you with up to $150 bonus. If you deposit for eaxmple 1250 dollars and make 5 trades, you will have 12% profit right there!
|Get up to $150 when you start trading at Motif Investing. Learn more.
I already did it myself and will be reporting my progress soon.
I created my own dividend growth stocks motif. I added stocks I want to invest in, but my current taxable or ROTH accounts do not allow me buying them all. With Motif investing I could create my own motiff of all stocks I like and I will be able to buy them all.
Here is a screen of my own dividend stocks mutual fund:
Dividend Income Motif – Part 1 – Click to enlarge
Dividend Income Motif – Part 2 – Click to enlarge
How it works?
Once you created your own motif (your own mutual fund) and funded your account, you can start buying your motif. The minimum investment to buy a motif is $250. For each motif purchase or sell you will pay $9.95 commission, which is in line with other brokers. If you want to be purchasing individual stocks (outside of the motif) then the fee is $4.95 per the stock or ETF.
When you buy a motif, you will be buying fractions of all stock inside your motif, the exact same way as you are purchasing your mutual funds in your 401k. For me this is an excellent idea how to stay diversified even with small money.
You can be buying not only your own motif, but you can also buy motifs of other investors. You can create as many motifs as you wish and be buying them all. So although one motif is limited to 30 stocks, you can create two motifs or three motifs and be buying 30, 60, or 90 stocks and their fractions as long as you reach your dividend investing goal.
And of course you can set your own desired allocation in each industry or individual stocks within the motif and you can always change that allocation to reflect your market anticipation. Isn’t that a cool idea?
The broker allows you opening all sorts of accounts such as individual, joint taxable, IRA, ROTH IRA, Rollover IRA, etc.
I think this is a great idea how to invest your retirement money in stocks you want the same way as if you invested in a mutual fund. I liked this idea a lot, so I opened an account with Motif Investing and I will invest with them. I will report on this blog how that investing worked.
What do you think, is it a good investing idea?