Motley Fool Stock Advisor vs Motley Fool Rule Breakers

When Dave and Tom Gardner started Motley Fool in 1994, people didn’t take it seriously. But for a firm still known for its elaborate annual April Fool’s Day jokes, investors are now making serious money from its research. For many people, the question is not if they should go with Motley Fool, but which of its subscriptions best serves their needs.

Stock Advisor is Better for:Rule Breakers is Better for:
Beginner InvestorsIntermediate+ Investors
Portfolio BuildingStrong Consumer Appeal Stocks
More Conventional AnalysisUnconventional Approaches
Moderate Risk InvestingHigh Risk Investing
Beating Market ReturnsFinding Standout Stocks
Lower PriceNew Technologies Investing
Wider Sector InvestingFocused Growth Stock Investing

Motley Fool has many subscriptions, but the two most geared towards active retail investors are its Stock Advisor and Rule Breakers subscriptions.

Stock Advisor is Motley Fool’s flagship subscription. It has the most impressive track record of Motley Fool’s current offerings and has beaten the S&P 500 by four times since it started more than 20 years ago.

Rule Breakers started at the end of 2004. While it initially struggled to beat the market, its returns since inception have doubled market averages, another impressive showing by Motley Fool in the stock-picking space.

Which of the Motley Fool stock picks services is best for you?

Most investors will find more value from Stock Advisor vs Rule Breakers, although there are some situations in which the latter might be the better choice.

Read on to find out which is best for you.

Motley Fool Stock Advisor Motley Fool Rule Breakers
Annual Subscription Fees

Stock Advisor $199 ($89 for the first year with Modest Money)

$299

Securities Analyzed

Stocks, ETFs (over 300)

High-growth stocks (over 200)

Investment Strategies

Stocks across sectors to build a well-diversified portfolio,
companies with a strong record of pricing power, good management, innovation, value stocks

High momentum, strong price appreciation, strong consumer appeal, top movers in new industries, emerging technologies stocks

Portfolio Diversification Score

Moderately diversified portfolio of high performing stocks

Less diversified, stocks primarily clustered in emerging technology sectors

Performance

400+% returns since 2002

200+% returns since 2005

Best Use

Moderate Risk Investing

High Risk Investing

Current Promotion

Click Here!

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Modest Money Overall Rating
4.9 rating based on 5 ratings
4.5 rating based on 5 ratings

Stock Advisor vs Rule Breakers: Determining Factors?

Motley Fool has a ton of subscription options, but Stock Advisor and Rule Breakers are its most popular. Both services recommend two new stock picks per month to help you build your well-diversified stock portfolio. The way they work is slightly different, though, as well as the types of stocks they recommend. It’s not hard to figure out how to use Motley Fool Stock Advisor or Rule Breaker as the user interface is pretty easy to understand.

Typically, when evaluating products from different companies, Modest Money would look at four or five factors to help you decide which is best for you. In the case of Motley Fool Stock Advisor vs Rule Breakers, there are really only three factors to consider when considering the difference between Motley Fool Stock Advisor and Rule Breakers.

Stock Advisor and Rule Breakers track very closely in terms of how they present information to subscribers, so we will mainly look at the comparative costs and strategies of these two subscriptions. A final factor is their relative performance.

Let’s take a closer look.

Factor 1: Cost

The first evaluation factor is costs between Motley Fool Rule Breakers VS Stock Advisor. If you are a new investor or just new to the investment research game, you may not want to obligate yourself to subscriptions that cost hundreds each year unless you are sure this research will benefit your financial position.

Motley Fool’s Stock Advisor is Cheaper than Rule Breakers

  • Motley Fool Stock Advisor costs $199 per year.
  • Rule Breakers costs $299 per year.
  • Stock Advisor is $8.33 cheaper monthly than Rule Breakers.

Motley Fool Stock Advisor’s Cost

Its regular price is $199 per year, but you can get Motley Fool’s Stock Advisor for as low as $89 for the first year by clicking here. That’s a savings of 56%, working out to a weekly cost of $1.71.

Compared to most other investment research firms, this is cheap. Here is what you get with a subscription to Stock Advisor:

  • Two monthly stock market picks
  • 10 “timely buys” out of 300 stocks
  • Foundational stock recommendations
  • Community and investing resources

This adds up to 12 monthly stock picks. Motley Fool typically releases its Stock Advisor picks on the first and third Thursday of each month.

Stock Advisor sends emails around 1:45 pm, but the Motley Fool Stock Advisor stocks are typically posted to their website at 1 pm and sometimes even a few minutes earlier. Once Motley Fool issues its recommendation, prices can rise quickly.

Assuming you have $1,000 to invest in Stock Advisor picks, you could theoretically recoup your $89 first year’s Motley Fool subscription cost in under six months if future returns are consistent with past results.

Stock Advisor and Motley Fool’s other products are inappropriate if you are a day trader or other short-term investor. Motley Fool recommends you hold at least 25 stocks for five years or more to benefit from its research services.

This is sufficient to build a stock portfolio with a reasonable amount of diversification, providing you some protection should one or more of their picks not perform as expected.

Motley Fool Rule Breakers Cost

Rule Breakers runs $299 per year, $100 more annually than Stock Advisor. Motley Fool has a current promotion of $99 for the first year of Rule Breakers, a 67% savings, which breaks down to a weekly cost of just $1.90 if you click this link.

These are the services that you get with Rule Breakers:

  • Two monthly stock market picks
  • 5 “Best Buys Now” out of 200 stocks
  • Foundational stock recommendations
  • Community and investing resources

If these look familiar, you are right. Rule Breakers’ interface and subscription products are similar to Stock Advisor’s.

So, is it worth it to pay $100 more for Rule Breakers?

While Rule Breakers’ track record is impressive, it has not done as well as Stock Advisor. Established in late 2004, Rule Breakers mostly followed S&P 500 results for the first five years of its tenure and started to break out in 2010.

Rule Breakers stock picks are published twice a month, on the second and fourth Thursdays.

Stock Advisor is Cheaper

Considering that it costs $100 less annually for the Motley Fool Stock Advisor VS Rule Breakers, Motley Fool’s Stock Advisor is significantly cheaper than Rule Breakers, even though the subscription interfaces are virtually identical. Rule Breakers cannot be ignored, however, as it is with this service that you have the best chance of finding early-stage high-growth prospects.

Factor 2: Investment Strategy

A second factor you should consider when choosing your investment research firm is the strategy that they are using to make their stock picks. The optimal strategy will nest well with your investing goals.

Stock Advisor Beats Rule Breakers in Investment Strategy

  • Stock Advisor picks winners across sectors.
  • Rule Breakers focuses on high-risk, high-growth stocks.
  • Stock Advisor has a better risk-reward ratio.

Stock Advisor Strategy

Stock Advisor searches every sector of the market for potential winners. Past twice-a-month picks have included Amazon, Walt Disney, and Netflix, none of which were by any means guaranteed “wins” when Stock Advisor first started recommending them

Sometimes Stock Advisor’s picks are mature companies that Motley Fool predicts still have a significant upside. Investing in these companies can not only earn you market-beating returns, but they can also have lower volatility than many other “hot” stock picks.

Looking at Stock Advisor’s picks, many of them are NOT technology companies. Stock Advisor divides its “Best Buys” section into these three lists:

  • Timely Stocks are Stock Advisor’s favorite investment opportunities to hold for at least five years, updated twice a month (10 stocks)
  • Foundational Stocks are companies with solid track records and which Stock Advisor believes can strengthen any portfolio, updated quarterly (10 stocks)
  • Exchange-Traded Funds (ETFs) are the list of ETFs Stock Advisor recommends holding for broad concept investing, updated annually (5 ETFs)

This Best Buys list is arguably even more valuable than Stock Advisor’s twice-monthly picks. They can help you build a better-diversified portfolio, and you can choose between up-and-comers as well as established companies.

You can read more here about the strategy Stock Advisor uses to pick its stocks.

Rule Breakers Strategy

Motley Fool Rule Breakers VS Stock Advisor is more aggressive than Stock Advisor regarding the stocks it chooses to recommend. Rule Breakers picks stocks it believes to have the highest growth potential, but they might be volatile.

Rule Breakers also publishes its latest recommendation every other Thursday, opposite Thursdays from when Stock Advisor announces its picks.

Rule Breakers tends to focus on more volatile stocks to identify companies with the highest growth potential well before they break out into the marketplace on a large scale. For more information on the criteria Rule Breakers uses to pick its stocks, read our Rule Breakers review.

In addition to its twice-a-month stock recommendations, which come out on the second and fourth Thursdays of the month, Rule Breakers publishes its own “Best Buys Now” list, organized differently from the one on Stock Advisor. Rule Breakers chooses five best buys around the middle of every month, along with an in-depth explanation of why it believes these are good investing opportunities.

Each year, Rule Breakers publishes a list of ten “Starter Stocks,” which they believe represent a good foundation for your portfolio, both in terms of risk and reward. Here are some features of Rule Breakers’ Starter Stocks:

  • High-growth stocks in growing industries
  • Sizeable companies
  • Outperform the market
  • International exposure
  • Generate enthusiasm among investors
  • Innovative
  • Represent how business can be done better

The idea behind Starter Stocks is these are slightly more conservative picks than monthly Rule Breakers recommendations. They are there to help cushion your portfolio if the Rule Breakers recommendations don’t work out the way their analysts predict.

Stock Advisor Has a Better Overall Strategy than Rule Breakers

In Modest Money’s opinion, Stock Advisor represents a better balance of risk and reward than Rule Breakers. Stock Advisor’s across-sectors recommendations are more diverse than Rule Breakers Motley Fool stock picks, which focuses on break-out technology stocks.

If you must choose one or the other, Stock Advisor will do a better job of helping you build a well-rounded portfolio with excellent returns.

Factor 3: Performance

Performance is the ultimate defining factor when it comes to any financial product. As far as investment research goes, both Stock Advisor and Rule Breakers outperform the general market.

Stock Advisor Outperforms Rule Breakers

  • Stock Advisor has achieved four times market gains since 2002.
  • Rule Breakers has achieved two times market gains since 2005.
  • Stock Advisor has a better overall track record than Rule Breakers.

Stock Advisor Performance

Since the subscription service began in 2002, Motley Fool Stock Advisor has achieved an average return of over 400%. In comparison, general stock market returns have averaged around 100% during the same time frame.

Modest Money analyzed Stock Advisor’s five earliest stock picks and concluded that if you had invested $1,000 in each of these in 2002 when they were published, your investment would have grown to around $305,000 today. That’s without dividend reinvestment or additional investments.

One thing to remember about Stock Advisor is that you are not likely to realize gains by investing in the short term. In fact, you could lose money if you implement day or swing strategies using Stock Advisor picks.

Motley Fool advises its subscribers to stick to a five-year investment horizon for a reason. If you don’t, you risk your investments underperforming compared to the general market. You can read more here about the best investing style to use with Stock Advisor and other Motley Fool products.

The other thing to remember is to diversify, diversify, diversify. Even Motley Fool’s recommended minimum of 25 stocks is probably not sufficient to diversify your entire portfolio. According to modern portfolio theory, minimizing risk while maximizing returns does not just mean holding many different assets but also depends on how those assets are correlated to each other.

In other words, in addition to investing in Stock Advisor’s monthly stock picks, you should consider investing in index funds, either in the form of mutual funds or ETFs. You can also use other means to diversify your investments outside of the portion of your portfolio that consists of actively managed stocks.

That being said, as long as you are diversified, Motley Fool’s Stock Advisor provides excellent research and advice to power your stock investments.

Rule Breakers Performance

Compared to its flagship Stock Advisor, the performance of Motley Fool’s Rule Breakers might seem underwhelming. As of the date of this publication, Rule Breakers has achieved over 200% overall returns, more than doubling what the S&P 500 has achieved over the same time frame.

As it did with Stock Advisor, Modest Money also calculated the returns of investing $1,000 in each of Rule Breakers’ first five stock picks. In this case, your initial investments in Rule Breakers stock picks totaling $5,000 would have grown to more than $130,000, still a very respectable return, considering the S&P 500 would have only returned around $55,000.

It should be noted that Rule Breakers didn’t come around until almost three years after Stock Advisor, which partially explains why Rule Breakers’ performance lags that of Stock Advisor.  You can find out more about Rule Breakers’ historic performance by reading this.

Investment research is critical, but you should also make some judgments about whether the assumptions of Motley Fool and other companies are valid. Both Stock Advisor and Rule Breakers provide supporting analysis about why they made their picks. You should read this before deciding to invest.

Given the higher volatility of these picks, it is especially critical to read Rule Breakers’ supporting analysis. Rule Breakers does a great job pointing out the “red flags” and “green flags” of its stock recommendations. Studying these can help you understand the risk of the investment before you undertake it.

Stock Advisor Has Better Historical Performance than Rule Breakers

Any way you slice it, Stock Advisor has done a better job picking winners than Rule Breakers.

Rule Breakers’ performance is certainly nothing to sniff at, however, and might be your best chance to find the next heavyweight, high-growth stock before it pops.

Stock Advisor vs Rule Breakers: The Bottom Line

Stock Advisor is better than Rule Breakers for most investors in terms of the factors Modest Money evaluated—cost, strategy, and performance.

Both services pick a few stocks per month, along with other features to help you build a reasonably diversified stock portfolio. With only two new recommendations monthly, it might be tempting to blindly buy everything Motley Fool puts on its Stock Advisor and Rule Breakers lists.

However, since you are actively trading stocks, you should read each recommendation’s supporting research closely. If something doesn’t make sense to you, you don’t have to buy it just because you subscribe to Stock Advisor or Rule Breakers.

If you try Stock Advisor and like it, you may want to consider Rule Breakers as an add-on feature.

Stock Advisor is Better for:Rule Breakers is Better for:
Beginner InvestorsIntermediate+ Investors
Portfolio BuildingStrong Consumer Appeal Stocks
More Conventional AnalysisUnconventional Approaches
Moderate Risk InvestingHigh Risk Investing
Beating Market ReturnsFinding Standout Stocks
Lower PriceNew Technologies Investing
Wider Sector InvestingFocused Growth Stock Investing

Stock Advisor

There is no best stock advisor out there, but Motley Fool’s services come pretty close. The Stock Advisor is Motley Fool’s first and best subscription service. Stock Advisor combs every sector for investment opportunities with excellent risk-reward ratios. Is Motley Fool Stock Advisor worth it? Well, its services are optimal if you are seeking to buy stocks from multiple sectors.

Stock Advisor also makes available a wealth of resources to learn about various investing topics, beneficial to beginning investors. With its low annual price, Stock Advisor is one of the best investment research deals globally.

If this sounds good to you, click here to get Stock Advisor at the current best price of $89.

Rule Breakers

Rule Breakers seems inadequate compared to Stock Advisor, but it has its place in the Motley Fool universe. Motley Fool Rule Breakers is a great resource to help you choose high-growth stocks in high-growth industries that will go on to be tomorrow’s stock market leaders.

You will assume a bit more risk with Rule Breakers, but it also might help you find the market’s next kingmaker stock. Starter Stocks can help you provide a measure of diversification to your Rule Breakers portfolio.

The Rule Breakers service is best used by intermediate to advanced investors or as an add-on to the Stock Advisor subscription.

You can click here to buy a Rule Breakers subscription at the current best price of $99.

If both Stock Advisor and Rule Breakers sound good or you are having a hard time deciding between them, you can bundle them both for a first-year price of $199. All Motley Fool products are backed by a 30-day money-back guarantee, so if you find you are not satisfied with either service, you will be refunded if you cancel during the trial period.

Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. After working many years in the website marketing industry, he decided to take on blogging full time and also get his finances headed in the right direction. Also check out his contributions to Equities.com and Benzinga.