The Motley Fool began in 1993 when brothers Tom and David Gardner began printing an investment newsletter in a backyard shed in Alexandria, Virginia. In 1994, an April Fool’s joke gained The Motley Fool a huge amount of attention. In 2002 they kicked off their flagship service, Stock Advisor, and two years later, added Rule Breakers.
The Motley Fool’s name is derived from William Shakespeare’s play “As You Like It”. The court jester, known as the Fool, could speak the truth to the king and queen using humor to instruct as much as to be amusing. The Fool was never afraid to question conventional wisdom.
The Motley Fool pulls no punches when speaking the truth about money and investing. Their goal is to make financial advice accessible to people of all backgrounds and levels of experience.
Their purpose is to make the world smarter, happier, and richer. With over one million members subscribing to their services, they promote the long-term investment in great businesses, as the most effective path to wealth.
To best benefit from their research services, The Motley Fool recommends investors hold 25 stocks for five years or more. This strategy is designed to protect you from the possibility of some stock picks performing poorly.
The Motley Fool has kept its successful stock picking for 20 years now, so the question is not should you follow The Motley Fools’ advice, but which service should they use, let’s compare Motley Fool Stock Advisor vs Rule Breakers?
Stock Advisor picks two stocks on the first and third Thursday of each month. These can be from any sector in the market. Some picks have included Amazon, Walt Disney, and Netflix, which were not performing that well at the time they were picked.
They tend to pick mature companies that they predict still have a significant upside. They expect you to gain great returns, but with lower volatility than many other “hot” stock picks.
In addition to each stock pick, this service also includes 5 “Best Buys” chosen from:
- Timely Stocks – favored investment opportunities to hold for at least five years, updated twice a month (10 stocks)
- Foundational Stocks – companies with solid records to strengthen any portfolio, updated quarterly (10 stocks)
- Exchange-Traded Funds (ETFs) – ETFs are recommended to hold for broad concept investing, updated annually (5 ETFs)
These stocks may turn out to be even more valuable than their twice-monthly picks because you build a better-diversified portfolio.
At the start of May 2022, Stock Advisors’ average return since 2002 was 374% compared to the S & P 500 of 125% over the same period.
The annual subscription for Stock Advisor is $199, but only $99 for the first year, and is best suited to investors seeking moderate risk.
Since 2004, this service has accumulated more than 100,000 subscribers who get two stock pics on the second and fourth Thursday of each month. The investment focus is on volatile stocks, but with high growth potential.
Most picks tend to be in the technology sector so investing solely in Rule Breakers stocks would create an investment portfolio lacking diversification.
You also receive a “Best Buys Now” list around the middle of each month. These are five stocks believed to be sound investment opportunities.
To achieve some balance in your investment portfolio, once a year, Rule Breakers publishes a list of ten “Starter Stocks”. These are selected for their ability to supply a good foundation for your portfolio because they are more conservative and aimed to offset the volatility of their monthly stock picks.
Since its start in 2004, Rule Breakers’ average return is 188% compared to the S & P 500 of 119%.
The annual subscription is $299 but you get the first year for just $99. Rule Breakers suits investors who prefer high-risk stock.
Motley Fool Stock Advisor vs Rule Breakers
So which service is best?
Let’s look at three key elements:
- Cost – Stock Advisor is cheaper, but both services cost less than most similar services.
- Investment Strategy – Stock Advisor picks winning stocks across all sectors, supplying greater diversification than Rule Breakers, and also has a better risk/reward ratio.
- Performance – While Rule Breakers’ returns are double that of the S & P 500, Stock Advisors’ returns are double those of Rule Breakers.
Based on these three elements, Stock Advisor is the better option.
However, many other factors come into play when deciding which service is better for you. Ask yourself these questions:
- What other investments and assets do you already own?
- How much money do you have available to invest?
- Are you prepared for large falls in the value of your stocks?
- Are you an experienced investor?
The more experienced you are, the better placed you will be to understand all the information these services provide you and to choose which individual stocks are the best fit with your overall investment strategy and goals.
When comparing Motley Fool Stock Advisor vs Rule Breakers, buying them both would be the best choice, but as well as the annual fees being affordable, you need to have sufficient funds to invest in most of the picks from both services make this choice worthwhile. If investing in four picks per month is unaffordable or impractical, Stock Advisor is your best option.