If you've spent any time in Fooldom lately, you're probably aware that your friend The Motley Fool has developed a suite of investing newsletters. But you may be wondering -- quite reasonably -- whether they're any good and which one(s) would serve you best. (Hint: They're pretty impressive indeed -- keep reading.)
After I wrote an article a while ago about investing and plumbing (of all things!), I heard from a reader who asked me how to go about choosing one or more of our newsletters. As I replied to him, it occurred to me that many others might have the same questions, wondering what the differences are between our offerings and whether their performance is really any good. So I've expanded my answer here. Please keep reading, because you can try these newsletters for free and there's a good chance you can benefit greatly from them. Really. So give me a chance to tell you more about them.
First, here's a quick look at each newsletter:
Rule Your Retirement: This newsletter, headed by longtime Fool personal finance expert Robert Brokamp, is critical for most of us. You may be investing in some terrific stocks and funds, but if you're not investing enough, or are investing inefficiently, you're at best leaving some money on the table and at worst setting yourself up for a bumpy retirement. This newsletter can help you get on track, planning and preparing for a comfortable retirement. It covers lots of financial planning and personal finance topics. Robert and his guest writers offer specific stock and fund recommendations, along with guidance on Social Security, pensions, asset allocation, diversification, and other critical topics. There are also inspirational interviews with folks who have retired early -- and well -- who explain how they did it.
Hidden Gems: This newsletter could serve you quite well. Know that it focuses on smallish companies, which can be riskier than their larger counterparts, but their size also means they can grow more rapidly. My most recent look at the scorecard showed the total average returns for Tom Gardner and his guest analysts were 31% and 35%, respectively, compared with 12% for the S&P 500. The newsletter features a watch list of intriguing companies, as well as a section on "Tiny Gems" with a lot of promise. Tom also includes many investing lessons in his writings for the newsletter. Of the first 60 picks, eight have more than doubled in value, and some 25 have gained more than 20% -- for example, education software specialist Blackboard (Nasdaq: BBBB ) , up some 60% in six months.
Inside Value: Value investing pays particular attention to paying a good price for investments, so you may find a greater margin of safety in these recommended stocks. This newsletter is not a bad choice at all for beginners -- and everyone else, too. Lead analyst Philip Durell fills each issue with close examinations of undervalued and attractive companies, explaining his thinking about their business, risks, competition, and valuation. He also maintains a watch list and offers educational articles, such as one on the effect of employee stock options. His total average return is 11%, compared with 7% for the S&P 500 over the same period. Nine of his first 32 picks are up more than 20% since he recommended them, and five have advanced more than 40% -- including tax software giant Intuit (Nasdaq: INTU ) , up some 41% in less than a year.
Income Investor: This newsletter represents, in some ways, a more conservative approach to investing, as you earn dividends or other income from your investments while also benefiting from the stocks' growth potential. The newsletter is especially worth checking out for beginning investors, though we can all profit from it. If you choose to invest via Drips -- dividend reinvestment plans -- then finding healthy, growing companies that pay significant dividends is extra valuable. The newsletter is more than two years old now, and the total average return of its picks (regular common stocks and REITs, mostly) is 15%, vs. 13% for the S&P 500. Of lead analyst Mathew Emmert's first 56 picks, about 17 were up 25% or more. Ten were up more than 35% -- such as energy enterprise TXU (NYSE: TXU ) , up almost 70% in a little over a year. Fully 46 of the picks currently sport dividend yields topping 3%.
Champion Funds: If you have an interest in mutual funds -- and they make a heck of a lot of sense for most of us, especially those who'd rather not spend hours studying and selecting individual stocks -- this newsletter is well worth considering. It's true that most mutual funds don't do as well as index funds, but some do -- and lead analyst Shannon Zimmerman works hard to find top-tier, winning funds. This newsletter is more than a year and a half old, and its total average return is 16%, vs. 9% for its benchmarks. In Champion Funds, Shannon will introduce you to many great investing minds -- ones who can invest your money for you via their funds. He even maintains three model portfolios, listing appropriate funds for conservative, moderate, and aggressive investors. Impressively, only three of his picks have lost ground, and those are down less than 5%. Nearly half of his first 33 picks are up more than 15%, and 12 are up more than 20%, which is darn impressive for mutual funds. One pick, Third Avenue Real Estate Value Fund (FUND: TAREX ) , is up more than 35% in a little more than a year.
Stock Advisor: This newsletter, our oldest (launched in April 2002), offers a nice mix of approaches, with both Tom and David recommending stocks in it. David tends to favor more aggressive investments, while Tom looks for more established good values. While each has picked some stocks that are down, the overall average return for each brother handily beats the S&P 500's 20% in the same period. (You want specifics? David's average return was 49%; Tom's was 78%.) Tom's big winners include UnitedHealth Group (NYSE: UNH ) , which he recommended twice. The stock has more than quadrupled since the first recommendation and more than doubled since the second. David has had similarly eye-popping results with Marvel Entertainment (NYSE: MVL ) , recommending it several times and reaping gains of nearly 20%, nearly 200%, and nearly 400%.
Rule Breakers: Headed by Fool co-founder David Gardner, Rule Breakers is designed for more experienced investors. This is investing at its most aggressive and should only be a part of a diverse portfolio. That said, when Rule Breaker investing pays off, it does so in a big way, rewarding investors very handsomely. Last time I checked, eight of the newsletter's 30 picks had seen returns of more than 40%, with three well above 100%. Vertex Pharmaceuticals (Nasdaq: VRTX ) , for example, has gained around 140% since it was recommended less than a year ago. But it's not all rolling around in piles of cash. This style comes with risk. Huge swings are the norm with Rule Breakers. The newsletter pays special attention to cutting-edge fields such as biotech and nanotech, and has a regular feature devoted to early adopters. Overall, its recommendations were recently beating the S&P 500 handily, with total average returns of 23% vs. the S&P's 7%.
You get more than monthly stock and fund picks with these newsletters. You'll also get access to an online nook maintained for each one, which features a scorecard for picks, articles, and interviews by and with our analysts, dedicated discussion boards where you can interact with our analysts and other readers, and special reports and updates.
You can access various special reports just by trying out a newsletter for free. The reports include: "6 Picks for Ultimate Growth," "Companies on the Road to Ruin" (15 companies to avoid), "5 Value Investing Secrets," "Dividend Timebombs" (seven prominent companies with hefty dividends that are headed for disaster), "Supercharge Your Retirement" (eight specific, practical steps to preserve and enhance your retirement income), and "Slam-Dunk Mutual Funds: Building the Perfect Portfolio."
Why we charge, and don't
If you're bummed, thinking that it's annoying that you have to pay for all this great information, here are some things to consider:
- We're a business. We have to charge for something if we want to keep the lights on. (Few people bought our Motley Fool Cheese, so we're putting out newsletters instead.) That said, we're taking our responsibility seriously, working hard to offer you superior investment ideas that are well worth what you pay for them. Spend $100 or several hundred on our newsletters, and we'll be trying mightily to help you make several thousands of dollars -- if not more -- in return. So yes, they cost money, but they should prove well worth it. We aim for them to pay for themselves in short order.
- We don't charge you for everything. Our website is full of free guidance and education and even some investing ideas (make this page a favorite and check it regularly for our news and investment stories). You can learn some basics in our 13 Steps to Investing Foolishly and in our Fool's School area. You may also find this page useful, though it has a lot of resources on it. I created it for teens, but it should serve post-teens just as well.
Just try one
Whether you're now sold or are merely curious, you owe it to yourself to give one of our newsletters a whirl. Take advantage of some free trials. We make it painless and you'll be able to see many of our stock and fund recommendations and how they've done. I wouldn't subscribe to all of them -- that would be information overload. Instead, take some time to get more comfortable with investing and decide which approaches make sense to you.
Here are some additional related reads of interest -- they're some of the many, many articles on our website, all available for free:
This article was originally published on Feb. 18, 2005. It has been revised and updated.
SelenaMaranjian'sfavorite discussion boards includeBook Club,TheEclectic Library, andCard & Board Games. She does not own shares of any company mentioned in this article. For more about Selena, viewher bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.