By: Bob Haegele
July 12, 2021Investing is never easy. Everyone wants to accomplish different things. Furthermore, there are other matters to take into account, such as sector, risk tolerance, and strategy.
In our Motley Fool review, we made it clear that this is a stock-picking service, not a brokerage. Nothing is stopping you from deviating from what the Fool recommends. In some cases, we would even recommend it.
Anyway, let’s take a look at how you should invest with the Motley Fool Stock Advisor program.
Lesson #1 – Most Investors Should Stick to Regular, Monthly Investing
While the Motley Fool Stock Advisor program regularly beats the market, our first piece of advice is to stick to their recommendations. Generally, the Fool asks investors to commit to investing a minimum of $1,000 every month and to slowly build up your portfolio.
Although you can invest differing dollar amounts, don’t expect to get the same results as the experts if you deviate too much.
But what if you do want to deviate?
There are certain areas in which we believe you can deviate from the experts without impacting your profitability, such as:
- The amount you invest each month.
- Frequency of your investing.
- When you sell out.
It’s also perfectly acceptable to make additional investments outside of their recommendations. To maintain a well-balanced portfolio, many investors will add other asset classes to their portfolios.
Lesson #2 – Take Your Risk Tolerance into Account
Although retail investors comprise 20% of the market, risk tolerance differs heavily. Not everyone wants to become a stock-picking god.
One group of investors unsuited to the Motley Fool is fund investors. If you want to invest in index funds or ETFs, Motley Fool stocks are not for you. They specialize in selecting individual stocks and selling at the right time for maximum profitability.
Motley Fool Stock Advisor doesn’t cater to funds. If you have a higher risk tolerance, you may want to essentially maintain two portfolios to spread your risk.
Many of the Motley Fool’s stocks are known for their high volatility.
Lesson #3 – Avoid Short Term Trading
The Motley Fool is not a day trading platform. None of these picks are seeing double-digit daily returns. Hedgers and swing traders are also strongly recommended to look elsewhere.
Success with a Motley Fool subscription means being willing to hold onto your purchases for a minimum of two to three years. Why? To put it simply, when the Fool makes its monthly recommendations, they are recommended based on investors holding for this time frame.
In the beginning, their picks may even lose money.
Lesson #4 – Focus on What You Know
Billionaire investor Warren Buffet said investors should never invest in what they don’t understand. Despite Motley Fool’s previous successes in recommending stocks, this advice remains current. If you don’t know anything about a stock or a company, consider whether it’s smart to invest in them at all.
The Motley Fool is not omnipotent, and they strongly recommend you carry out your own research. The Stock Advisor program also comes with a community for you to connect with for a reason.
If you want to invest in a certain industry you understand well, the Motley Fool caters to that with its customized portfolios. Some of the areas they focus on include:
- Marijuana
- Cryptocurrency
- Artificial intelligence
Do your research before paying for any of these premium Motley Fool subscriptions. Not all of them have incredible returns and you can lose money, even with the Fool.
Lesson #5 – Trust in the Experts
Finally, you need to put your trust in the Motley Fool’s stock analysts if you’re going to reap the most value from this program. Nobody can predict where the markets will move next, and the Fool is no exception.
So many novice investors fail with the Motley Fool Stock Advisor because the value of their portfolio drops down and they sell out believing the whole thing to be a scam.
If you’re not experienced enough to carry out your own investment research, put your trust in these experts. Check back to the platform regularly and they will tell you when to sell.
With a permanent record of every stock pick the Fool has ever made, you can see the results of trusting these experts yourself.
The Bottom Line
Investing for the first time is scary. Most people are scared of losing their money, or they become enchanted by the winner’s curse and assume they can do better than the experts. The bottom line is a Motley Fool subscription to Stock Advisor, Rule Breakers, or a specialized portfolio can be incredibly valuable.
However, you need to invest in the right way to extract the most value from these programs. Follow the above tips and begin creating a profitable long-term portfolio.
In the meantime, if you want to sign up for Motley Fool Stock Advisor follow this link for a significant discount on your first year.
Motley Fool Comparisons:
- Motley Fool Stock Advisor vs Rule Breakers
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- Motley Fool vs Seeking Alpha
