The Motley Fool vs Morningstar 2024: Full Comparison

The Motley Fool vs Morningstar Video

What is The Motley Fool?

The Motley Fool is a globally recognized investment advisory platform that was established in 1993 by brothers David and Tom Gardner. Primarily known for its flagship product, Stock Advisor, The Motley Fool provides expert stock recommendations and market analysis designed for individual investors.

The service focuses on identifying high-potential growth stocks and offers monthly stock picks aimed at outperforming the market. Stock Advisor’s approach is rooted in thorough qualitative and quantitative research, targeting stocks that show promise for substantial long-term growth.

The platform’s impressive track record, with returns significantly surpassing those of the S&P 500, is a testament to its effective investment strategy. The Motley Fool’s commitment to long-term, buy-and-hold investing makes it an attractive option for investors seeking a straightforward, reliable guide in navigating the complexities of the stock market.

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The Motley Fool Pros & Cons

Pros

• Offers top-notch investment research, elevating the standard.
• Provides an array of specialized products catering to different investing needs.
• Affordability is a significant perk.
• Their operations stand out due to the transparency they offer.
• Established history of solid returns, especially evident in their Stock Advisor and Rule Breakers picks.
• Outshines the S&P 500 in terms of returns.
• A paradise for those with their eyes set on long-term gains and retirement goals.

Cons

• Some of their newer offerings still need time to establish a proven track record.
• Premium plans can put a dent in your pocket, with costs potentially being prohibitively high.

What is Morningstar?

Morningstar is a leading provider of independent investment research. Founded in 1984 by Joe Mansueto, Morningstar is renowned for its comprehensive analysis of mutual funds, stocks, and ETFs. The platform stands out for its in-depth research and proprietary rating systems, which include the Morningstar Rating (star ratings) for mutual funds and the Morningstar Analyst Rating for stocks.

Morningstar’s approach combines robust quantitative techniques with qualitative insights, offering investors a balanced perspective on potential investments. The service caters to a wide range of investors, from novices seeking foundational knowledge to seasoned professionals looking for detailed analytics.

With tools like Portfolio X-Ray and extensive educational resources, Morningstar empowers investors to build diversified, risk-adjusted portfolios tailored to their specific investment goals and strategies.

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Morningstar Pros & Cons

Pros

• Offers picks for a range of investors, from novices to seasoned experts.
• Perfect fit for those leaning towards a buy-and-hold strategy.
• Dives deep with its stock analyses, providing rich insights.
• Boasts an impressive educational resource collection, catering to all knowledge levels.
• Allows subscribers to view historical stock prices.
• User experience is enhanced by a user-friendly interface.
• A 7-day free trial lets you test the waters.

Cons

• Tends to favor long-term investors, leaving day traders or aggressive strategists empty handed.
• One-size-fits-all: every subscriber receives identical picks without any personalization.
• It’s DIY-centric; if you’re not prompt, potential opportunities might slip.
• Basic members might find access to ratings and tools somewhat limiting.
• A yearly subscription to the Monthly Investor membership can be pricey, even with the post-trial discount.

Morningstar VS The Motley Fool: Determining Factors?

When it comes down to The Motley Fool vs Morningstar, both have their unique features, benefits, and drawbacks. Let’s see how they measure up in some of the most important factors:

Costs factors into the decisions of even the wealthiest people. That’s probably the primary reason why they are the wealthiest people.

After all, if you save an extra $20 per month in fees and invest it well, after ten years, your contributions will equal more than $3,300, assuming a 6% return. That’s how modest amounts of money grow into thousands: never underestimate the power of small amounts.

For the first factor, we’ll look at the respective costs of The Motley Fool versus Morningstar.

The Motley Fool’s Stock Advisor is Cheaper than Morningstar

• Motley Fool Stock Advisor costs $199 per year
• Morningstar Investor costs $249 per year
• Stock Advisor is $4.17 cheaper monthly than Morningstar Investor

Morningstar Subscription Cost

Morningstar does not have as many premium services geared towards individual investors as The Motley Fool, but Morningstar Investor is a powerful tool. Morningstar Investor will cost you $249 annually, slightly more than Stock Advisor.

This is what you’ll get with a Morningstar Investor subscription:

• Their Portfolio X-Ray Tool is a great tool that provides analysis of the diversification of your portfolio, including recommendations on how you can further diversify your risk. It also ranks your investment portfolio by risk level and shows your expenses for your assets and other vital data.
• Medalist Funds contain new investment ideas and ranks of mutual funds, stocks, and ETFs.
• Quote Pages are deep dives into individual stocks, ETFs, and mutual funds.

You can read more about Morningstar Investor services here.

Independent analysis shows that Morningstar is more often right than not about its ratings. But since they are not limiting their picks to two stocks per month, you must read their reports thoroughly and decide which assets are the best match for your portfolio. This analysis is easier for intermediate or advanced investors.

You can get $50 off your first year with Morningstar Investor and a free 7-day trial by clicking here.

The Motley Fool is Cheaper

The Motley Fool offers Stock Advisor for $50 less than Morningstar Investor. This is a cost differential of only $4.17 per month, so it shouldn’t be the sole deciding factor when choosing between The Motley Fool and Morningstar.

A second factor to consider is strategy. The strategy a research firm uses to make its stock recommendations should fall in line with your investment goals in order to have the most significant positive impact on your investments.

Morningstar’s Strategy is More Diversified than the Motley Fool

• The Motley Fool gives you two stock picks per month
• Morningstar Investor analyzes stocks, ETFs, and mutual funds
• You can execute more investment decisions with Morningstar than with The Motley Fool

Morningstar Strategy

Morningstar’s analysis can enable multiple investment styles. It includes qualitative and quantitative analysis in its reports.

The “Morningstar Analyst Rating” is stylized in terms like “gold” and “silver” or “bronze.” These are qualitative ratings from their more than 150 independent analysts.

“Morningstar Ratings” are quantitatively driven. Morningstar derives them from proprietary models and data analysis.

Morningstar’s quantitative conclusions are denoted by starred ratings. The Morningstar Risk-Adjusted Return (MRAR), the foundation of their global quantitative research, uses expected utility theory to predict assets that are less likely to produce a poor outcome than an unexpectedly good one.

In other words, Morningstar’s ratings are pretty risk-tolerant. You have less chance of losing significant money than you do of making outsized gains. In combination with Morningstar’s X-Ray portfolio feature, this strategy will help you build a well-diversified portfolio all by yourself.

If you are familiar with modern portfolio theory, you already realize the importance of diversifying risk in an investment portfolio. If not, take our word for it. Building a portfolio with the right mix of diversification can help you earn positive returns while minimizing the risk of losing significant amounts of money.

Morningstar’s Strategy is Preferable to The Motley Fool

Overall, Modest Money prefers Morningstar’s diversification strategy to The Motley Fool’s, especially with Morningstar’s X-Ray portfolio option, which allows you to see how well your portfolio is diversified and how you could make it better.

The Motley Fool does have its place, however. For example, suppose you are only looking for targeted stock picks and supporting analysis because the rest of your portfolio is passively invested. In that case, The Motley Fool’s strategy is not bad at all, and in those circumstances, it might even be preferable.

Modest Money finds aggressive marketing tactics somewhat of a turn-off. When you are already paying money for a premium plan, the last thing you want is emails urging you to buy something else.

Morningstar Has Less Aggressive Marketing than The Motley Fool

• The Motley Fool sends frequent upselling emails
• Morningstar Investor does less internal marketing
• Morningstar has the edge when it comes to less intrusive promotion tactics

The Motley Fool’s Marketing

The Motley Fool sends marketing emails even after you’ve signed up for Stock Advisor. While these often contain good deals and promos for their other offerings, they can seem a bit spammy. If you already get tons of emails and are used to it, this might not be an issue at all. And, of course, you can adjust your email settings to screen them out.

You can also opt out of marketing emails from your “My Fool” account under “Email Settings.”

Morningstar Marketing

Morningstar won’t send you nearly as much clickbait as The Motley Fool will. Whether valid, this adds to the credibility of the Morningstar premium platform.

One reason that Morningstar does not try to sell you so many add-on products is that they don’t have many. Investment research services geared towards retail investors include only Morningstar’s basic and premium options.

Morningstar’s Marketing Approach is Preferable to The Motley Fool’s

In Modest Money’s opinion, The Motley Fool does a bad job by over-promoting itself in constant email barrages. Sending spammy emails is the worst approach it could take when informing customers of its other products such as Rule Breakers. It needs to find another way.

The Motley Fool is outstanding at what it does: finding and analyzing two stock picks per month. Take the steps early to screen out the additional emails, and its marketing will not even be a minor blip on your radar.

Cost, strategy, and marketing – these are all critical factors when selecting a stock-picking service. But how these picks perform is the ultimate factor. So how does the performance of The Motley Fool’s Stock Advisor and Morningstar Investor compare?

The Motley Fool and Morningstar Are Both Excellent Performers

• Looking at historical performance, Stock Advisor has achieved four times market gains since 2002
• Morningstar’s in-depth research and fundamental analysis are used by a wide range of different types of investors, from hedge funds and banks to individuals
• The best-performing research for you will be determined based on your investment goals and strategy

The Motley Fool Stock Advisor Performance

Since its inception 20+ years ago, The Motley Fool’s Stock Advisor picks have generated an average return of around four times that of the S&P 500.

If future results hold up to its record, choosing The Motley Fool’s Stock Advisor will earn you four times the money you would make investing in an S&P index fund, well worth the $199 annual cost.

In Modest Money’s analysis, The Motley Fool can achieve these results by maintaining its specific focus of picking two stocks per month. Anyone who subscribes to Stock Advisor can quickly and thoroughly understand what Stock Advisor is recommending you do monthly.

Stock Advisor’s sell notices should not be underestimated either. Too often, stock investors overly concentrate on what they should buy instead of what they should sell. Selling stocks that are or will be underperforming is even more critical than picking ones that will grow in value. You can lose all the money you have invested in a company if stock prices crash to zero.

The Best Buys Now is another high-performing Stock Advisor feature allowing new subscribers to do some catch-up investing on Stock Advisor’s previous picks, as well as enabling investors who passed on a stock initially not to make the same mistake twice.

Morningstar Performance

What can Modest Money say about the long-term performance of the Morningstar premium Investor service? As one of the most respected and beloved investment research services globally, it can shake markets with its recommendations.

Morningstar’s investment analysis is pervasive and thorough but is geared toward helping people take an active role in their investing journey. It will not tell you what stock to buy. Instead, it will only show you the assets which are currently performing well according to its mostly quant-driven analysis.

For that reason, the average return of Morningstar’s analysis as it compares to the S&P 500 cannot be quantified as it can with The Motley Fool.

Morningstar covers a broader amount of assets. As the dominant investment research firm globally, professional analysts and funds continue to factor their ratings into their decisions.

Recently, Morningstar has been facing criticism about its mutual fund ratings. Some analysts and financial advisors claim that they have recently overrated mutual funds that subsequently underperformed. It is an essential reminder that investment research firms are not always right, which is why diversification is needed to protect yourself and your investments.

The Motley Fool and Morningstar Both Perform Admirably

Since The Motley Fool focuses on picks and Morningstar provides a broader breadth of analysis, it is difficult to compare their performance.

Modest Money awards the ultimate category of performance to both companies in this case.

When comparing investment services like The Motley Fool and Morningstar, the ease of use and overall user experience are critical factors to consider. An intuitive, well-designed platform can significantly enhance the investment process, making it more efficient and enjoyable for users.

Morningstar’s User Experience is More Comprehensive

Morningstar offers a more comprehensive user experience, catering to a diverse audience with varying levels of expertise. The platform’s in-depth tools, like Portfolio X-Ray, provide valuable insights for building and managing a diversified portfolio.

Morningstar’s educational resources are extensive, making it an ideal choice for those who prefer a more hands-on approach to investing.

The Motley Fool’s User Experience is More Streamlined

The Motley Fool’s platform is designed for simplicity and ease of use, making it an excellent choice for novice investors. The focus on monthly stock picks and straightforward analysis allows users to make quick, informed decisions without being overwhelmed by excessive data.

The Motley Fool’s approach is particularly appealing to those who prefer a more guided, less complex investment experience.

Diversity in the range of services offered is another important aspect to consider when choosing between The Motley Fool and Morningstar. A broader range of services can provide investors with more options and flexibility in aligning their investment strategies with their personal goals.

The Motley Fool’s Range of Services is Focused

The Motley Fool primarily offers stock recommendations through its various newsletters, with a strong emphasis on individual stock picks. The services are well-suited for investors who are primarily interested in stock investing and are looking for focused, actionable guidance.

The Motley Fool’s streamlined offerings make it easier for users to follow and implement the recommended strategies.

Morningstar’s Range of Services is More Diverse

Morningstar provides a wide array of services, including in-depth analysis of stocks, mutual funds, and ETFs.

The platform’s tools and resources cater to a broader audience, from beginners to experienced investors, and cover various investment strategies. Morningstar’s diverse range of services offers greater flexibility and options for investors looking to diversify their investment approach.

Factor 7: External Customer Reviews & Ratings

External Motley Fool Reviews & Ratings

External Morningstar Reviews & Ratings

The Motley Fool vs. Morningstar: The Bottom Line

The bottom line when choosing between The Motley Fool’s Stock Advisor and Morningstar Investor is that they are both top competitors providing investment research services.

The Motley Fool is better for investors with an already diversified portfolio who want to buy individual stocks separately to beat the market with some of their investments.

Morningstar is better for the hands-on investor who wants to build their own well-diversified portfolio of stocks, mutual funds, and ETFs.

Overall, Modest Money awards 5.0 stars to Morningstar, but The Motley Fool is a close second at 4.9 stars.

Who is The Motley Fool Best For?

The Motley Fool Stock Advisor is designed for long-term investors who plan to hold stocks for 5 years or more. It’s particularly suitable for those who prefer individual stocks over mutual funds and aim to outperform the market. If you’re looking to add new stocks to your portfolio regularly, either monthly or annually, this service offers guidance.

It’s especially useful for newer investors because of its clear and easy-to-understand information. The service emphasizes growth stock investing with moderate risk. One significant advantage is its affordability, and it consistently aims to beat S&P returns. Overall, it’s an excellent choice for those seeking reliable investment guidance.

Who is Morningstar Best For?

Morningstar primarily caters to value investors interested in understanding the core fundamentals of their investments. Initially, the firm only analyzed mutual funds, but they’ve since expanded to include stocks. Their rating system is widely recognized in the investment sector.

Ideally suited for experienced investors, Morningstar provides detailed analysis on stocks, ETFs, and mutual funds. One of its advantages is that users won’t be inundated with marketing emails. It’s particularly valuable for those aiming to build a low-risk portfolio, offering extensive information to minimize investment risks.

The Motley Fool

Building a portfolio of 25 stocks that you hold for at least five years is the goal and the best use of The Motley Fool. If past achievements predict future market performance, you could beat the return of the S&P 500 by four times if you go with The Motley Fool’s subscription service.

This investing style is especially ideal if you already have access to diversification in your current portfolio through other investment advisory plans.

The Motley Fool’s pros include its easy user experience, targeted picks, and low price.

The Motley Fool free trial is great, but to get Stock Advisor’s monthly stock picks for an introductory price of $89 per year, click here to open your account for The Motley Fool discount.

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Morningstar Investor

Our Morningstar review is a favorable one as well. Suppose you are a modern investor that is into building your own well-diversified portfolio that includes multiple asset classes and making your own stock investing choices. In that case, Morningstar Investor is probably a better fit.

As a premium service, Morningstar’s approach to providing subscribers with thorough and well-vetted information is unbeatable.

Morningstar’s pros include its reputation and historically correct analysis. Morningstar’s X-Ray Portfolio service helps you achieve optimal asset allocation.

Morningstar Investor pricing is slightly higher than that of Stock Advisor.

With its 7-day free trial, you lose nothing by trying Morningstar Investor out. Additionally, you can click here to get Modest Money’s special Morningstar subscription discount of $50 off the first year.
Save $50 on an annual membership with coupon code MM50

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FAQs

Is there a free membership to Morningstar?

There are no free memberships to Morningstar. Previously, Morningstar offered a free, limited basic membership. The free membership in no longer offered.

Is there a free membership to The Motley Fool?

The Motley Fool offers a wealth of free content on their website, but an account or membership is not required to access this information. The Motley Fool also offers paid premium investment services.

Does Morningstar Have A Mobile App?

Morningstar does have a mobile app available for both Google Play and the Apple App store. The Morningstar App currently has a 4.2 rating out of 6,550 reviews in the App store.

Does The Motley Fool Have A Mobile App?

The Motley Fool has an app available for Mac or Android users through Google Play. At the time of writing this, The Motley Fool’s App had a rating of 3.1 out of 164 votes.