Investment research is critical to your portfolio’s success. However, suppose you don’t have the time or expertise to do it yourself.
In that case, you may consider a research and analysis subscription that provides the information you need to make informed investing decisions.
Two of the most popular services are Motley Fool Stock Advisor and Morningstar. Here’s how the two services compare.
Motley Fool vs Morningstar
Motley Fool and Morningstar provide retail investors with professional research.
While Motley Fool is primarily a stock picking service, they also provide adequate research and reasons why they picked the stocks.
Morningstar provides more in-depth research on mutual funds and ETFs, but the information helps you build your portfolio.
Of course, like any financial service, they both have pros and cons. Let’s compare.
All About Motley Fool Stock
Motley Fool was started by two brothers, Tom and David Gardner, and began as a printed newsletter. What started as humble beginnings quickly grew into much more, helping investors create successful portfolios worldwide.
Stock Advisor is meant to help investors beat the S&P 500, which the service has done consecutively for the past 19 years.
Today, Tom and David still share their top stock picks in their weekly newsletter (two stocks per month). Subscribers receive recommended stock picks weekly on Thursdays that include the latest stock picks by the founders and ‘best buy now’ lists everyone should consider.
The subscription also has a list of foundational stocks every portfolio should start with and access to top-notch investment research and community support.
Investors can expect recommendations for stocks, ETFs, and mutual funds for all industries and investment levels, whether risk-taker or conservative investors.
What sets Motley Fool apart?
As its name suggests, it takes a fun spin on investing. The newsletter provides serious information investors can use, but it puts a fun spin on it.
The newsletter hyper focuses on 10 to 15 stocks at a time, and you’ll receive regular weekly newsletters with new stock picks and essential information investors need.
Pros:
- Has picks geared toward all investors, from beginners to experienced investors
- Suitable for investors with a buy-and-hold strategy
- Includes intensive stock analyses
- Has an extensive library of educational material for beginners to experts
- Provides access to historical stock prices
Cons:
- Primarily meant for long-term investors, so there’s not an excellent option for day traders or more aggressive investors
- All subscribers get the same picks; it’s not a personalized service
- All stock picks are for DIY investing, and if you don’t react immediately, you could miss out
All About Morningstar
Morningstar is an investment research company built for frequent investors, not set-it-and-forget-it investors.
You’ve likely come across their data or reports in third-party apps, as many platforms use them. Joe Mansueto founded Morningstar in 1984 from his one-bedroom apartment when he realized investors didn’t have adequate information to make informed investing decisions.
This was at the time when pensions were transferring to defined contribution plans, and mutual fund trading activity took off. Today Morningstar has over 10,000 employees and is a billion-dollar company.
It began strictly reporting on mutual funds but has since expanded to include ETFs, stocks, and other critical financial data investors need. Morningstar focuses on each asset’s performance, but also the education beyond that helps investors make important decisions, including the following:
Independent Stock Analysis
Morningstar has over 150 stock analysts that help quiet the noise and give you only the facts needed to make significant investment decisions.
Stock Ratings
Morningstar’s stock, ETF, and mutual fund ratings are easy to read, allowing investors to make fast decisions. Moreover, they remove the complexity usually involved in stock market decisions while using top-notch methods that cover all aspects, from company management to ESG and everything in between.
Options for Every Investor
Morningstar’s strategies fit any investor’s preferences. Combine the valuation metrics with the independent analyses to form your own opinion on which assets belong in your portfolio. They also offer pre-built lists for investors who want someone to tell them what to choose.
Portfolio X-Ray
Link your portfolio to Morningstar and let its X-Ray program evaluate your portfolio and give you insight into your next best moves. It looks at factors such as asset allocation, diversification, fees, and performance to provide you with more insight.
What sets Morningstar apart?
Investors can check in anytime with Morningstar and get real-time information. Some of the data is free, but the most prevalent information is saved for premium members. Morningstar is a much more serious subscription with detailed data for value and frequent investors.
However, anyone can use the information, whether actively investing or getting their feet wet before jumping in headfirst.
Pros:
- Good for value investors
- Access to tools and research only professionals can access
- User-friendly with some customization options
Cons:
- Screener tools can be less user-friendly
- Not all ratings look forward only to past history
Motley Fool vs Morning Star: Competitive Factors
Motley Fool and Morningstar have many factors in common, but some differences too. They are geared to help investors with their DIY portfolios, but each focuses on different types of investors. Each platform uses a different approach and provides different information.
1. Price Comparison
Cost should always be a factor when comparing investment tools, even if you’re wealthy. It would be best if you didn’t overpay for a service or something you don’t need.
The price difference between Motley Fool and Morningstar isn’t drastic. Motley Fool doesn’t offer a free trial, but Morningstar offers a free 7-day trial.
- Motley Fool costs $199 per year, but they often run promotions for the first year for $99.
- Morningstar costs $34.95 a month or $249 annually, but you can lower the price if you sign up for a multi-year subscription.
2. Discovery and Analysis Tools
Discovery and analysis tools are an area where Motley Fool and Morningstar significantly differ.
- Motley Fool Stock Advisor doesn’t offer tools. It’s a stock-picking service that pushes out new recommendations monthly. You don’t get stock screeners, backtesting tools, or other tools to help you choose your stocks. It’s a stock-picking service to help you form a profitable portfolio. You aren’t required to buy the stocks they push out, but if you’re paying for the subscription, it makes sense to invest in at least a few.
- Morningstar requires more legwork, but it may provide the information you need to pick your own stocks. Morningstar offers recommended stocks, but they are accompanied by a stock analysis and access to in-depth fundamental analyses and tools to help you choose the right stocks. Subscribers have access to the stock’s history and a fair value estimate, which provides insight into the stock’s potential gains.
3. Marketing Approach
Marketing tactics can play an integral role in which plan you choose. If ads pushed through to subscribers upset you, Motley Fool may not be the subscription for you.
- Once you’re a subscriber of Motley Fool, you’ll receive emails meant to upsell you on their services. They often contain promotional offers and will save you money, but it can feel frustrating if you aren’t interested in upgrading. The good news is that you can opt out of the emails and enjoy the subscription for what it’s worth.
- On the other hand, Morningstar doesn’t have many other subscriptions to upsell investors, so you won’t get a lot of spammy emails. Naturally, some investors prefer this over Motley Fool’s approach, but as I said, you can always opt out of the emails if they bother you; it shouldn’t be a determining factor.
4. Tactics and Strategies
Investors should always consider the strategies a stock picking or advisor service uses to ensure it aligns with their beliefs and goals.
Motley Fool’s strategy is simple. They invest in stable businesses predicted to beat the market slowly and steadily. They aren’t looking for ‘hot picks’ that will soon crash or aggressive investments. Instead, they focus on investments borrowers can buy and hold for at least five years.
Motley Fool stocks consider the business’s market opportunity, competitive edge, and leadership before suggesting it as a stock pick.
With Motley Fool, you’ll mainly invest in value stocks expected to grow over time.
Morningstar’s strategies are more complicated and include qualitative and quantitative analyses. In addition, they provide lists of investments, including mutual funds, ETFs, and stocks that cover 600,000+ securities.
They don’t pick stocks for you but provide the information and analyses needed to make informed decisions. For example, Morningstar doesn’t offer a list of ‘best stocks now’ or even their top picks. Instead, they give you free rein with their analyses and information to help you create your portfolio.
Stock Picking
- Motley Fool picks stocks for you, pushing them out in newsletters weekly. They provide a list of foundational stocks every investor should have, plus new stock picks weekly. Each month, investors receive the founder’s top two picks (every other week) and a list of 5 to 10 best buys now the remaining two weeks of the month.
- Morningstar doesn’t pick stocks but helps investors in other ways by providing in-depth analyses and use of their Portfolio X-Ray to give you insight into your exact portfolio. As a result, you’ll earn if your asset allocation is sufficient, if your diversification isn’t enough, and even get insight on fees and if you’re paying too much.
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5. Performance
The most important factor when choosing a stock analysis service is its performance. No matter how much you like their strategy or prices, performance is the key factor in your portfolio.
Motley Fool vs Morningstar: Which Is Best For You?
Motley Fool has continually beaten the market by three times. Of course, this doesn’t mean they’re perfect nor that every stock performs as expected, but their track record speaks for itself. The key is following the two stock picks they send monthly to achieve the returns they promise.
Motley Fool’s pushed-through sell notices also shouldn’t be ignored. If they feel you should sell a stock they recommended, they’ll push notifications between the weekly newsletters.
Their Best Buys Now are also a great feature because they often repeat stocks recommended previously. If you skipped on them at the time, you could pick them up when they hit the Best Buys Now selection.
No one can quantify Morningstar’s performance because they aren’t a stock-picking service. Instead, they provide investors with the analysis and tools to pick their own stocks. They offer lists of the top securities to consider, but their focus is far and wide, so it’s impossible to track the performance.
Instead, you should focus on the performance of your portfolio, which Morningstar’s Portfolio X-Ray can help you do.
Frequently Asked Questions
Motley Fool and Morningstar are both valuable services that serve different purposes. In the end, however, you’ll have the same results – a portfolio built on expertise, research, and possibly recommendations of expert investors.
Who is Motley Fool best for?
Motley Fool is ideal for investors with well-diversified portfolios looking to add market-beating stocks. However, that doesn’t mean beginners shouldn’t try it too. If you haven’t created a portfolio yet, following Motley Fool’s foundational stock picks plus their monthly stock picks can help you build a well-diversified, market-beating portfolio.
Who is Morningstar best for?
Morningstar is best for investors who want a hands-on approach to all aspects of their portfolio. You won’t get individual stock picks but will have access to numerous analyses and tools that help you create a well-diversified portfolio. Morningstar’s Portfolio X-Ray is a bonus helping you monitor your portfolio and its allocations to keep your investing at the top of its game.
Motley Fool vs Morningstar: The Bottom Line
Motley Fool vs Morningstar, which is better for you? Again, it comes down to your approach.
Are you looking for a service to pick your stocks that you can hold for several years and come out beating the market? Or do you prefer a service that offers extensive research but leaves the stock picking up to you?
Those looking for a more defined approach should choose Motley Fool, and the DIY investors who want more freedom will find more value in Morningstar.
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