Beating Broke

Personal Finance from the Broke Perspective

My Personal Review: Here’s How I’m Making Money With The Motley Fool

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making money with The Motley Fool
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If you are trying to get started with investing, it can be overwhelming. There are so many different ways to go about investing your money. Many people use stock advisor services like The Motley Fool. Although I have not personally invested any money using the Fool, I have used an investment simulator to see how their stock picks perform. Over the years, I’ve seen that there are various ways you could be making money with The Motley Fool and it offers an abundance of investing knowledge too. Continue reading to learn more about my personal experience.

Discovering The Motley Fool

I first came across The Motley Fool several years ago when I was researching various stock advisor tools. A big name like The Motley Fool was certainly worth a look. The platform has a fantastic reputation for providing insightful stock recommendations. Their approach to investing, which emphasizes long-term growth and thorough research, resonated with me. I decided to give it a try with an investment simulator and I could easily see how it could be a game-changer for investors.

The Subscription Plans

One of the best things about The Motley Fool is its user-friendly interface. You also gain access to comprehensive investing resources that will make it easy for you to get started. The Motley Fool Stock Advisor gives you monthly stock picks and an in-depth analysis of each of the picks. Each recommendation comes with a detailed report explaining the rationale behind the pick. For a novice investor, it could be an amazing tool to learn more about the market.

Best of all, the subscription plans are reasonably priced. You can get one month of The Motley Fool Stock Advisor for $39. Introductory pricing for the first year is $99 for 365 days of investing insights. After the first year, that goes up to $199, which is still reasonable for the service they are providing.

making money with the motley fool

The Stock Picks

I’d say the most impressive thing about The Motley Fool is the quality of the stock picks. If I was investing my money, I’d be making money with The Motley Fool hand over fist. This is because TMF works with skilled analysts who conduct extensive research, which ensures that each recommendation is backed by solid data.

Typically, the stock picks focus on high-growth companies. In recent years, this has included a lot of tech companies and newer IPOs. Several of their picks have outperformed the market and could potentially help increase the value of your portfolio as a whole.

I think the most valuable thing about using The Motley Fool’s stock picks is gaining confidence in yourself as an investor. You’ll notice that you feel better about making investment decisions on your own.

Educational Resources

On top of being a confidence boost, The Motley Fool Stock Advisor provides investors with a ton of educational resources. You’ll get access to articles, podcasts, webinars, and forums. There is a wealth of information available through the platform.

For me, the resources available offered invaluable information that increased my knowledge of the investing world. You can learn about different strategies, market trends, and financial planning for your investments. The Motley Fool has a commitment to educating its subscribers and, personally, that set it apart from other similar services.

Community and Support

Another perk of The Motley Fool Stock Advisor is there is no shortage of community support. The site’s forums are filled with other people who are trying to make money with TMF. They are also able to share their own personal experiences and insights. There is a real sense of community in the forums and it can help provide you with some additional perspectives when it comes to your investment portfolio.

Although I’ve never had to use it myself, I’ve also heard fantastic things about TMF’s customer support. Many people say that their responses are always prompt and helpful, which can impact your overall investing experience.

Are You Making Money With The Motley Fool?

There is no doubt that The Motley Fool can be a valuable asset for you if you are trying to grow your wealth. They provide well-researched stock picks, educational resources, and a supportive community. Click here to start your journey towards financial growth with The Motley Fool today!

401(k) Loans as Recession Insurance?

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With a recession (depending on whom you ask) upon us, would it have been wise for us to have taken a loan from our 401(k)s before it started?  Bear with me here for a second.  A loan from your 401(k) is pretty simple.  You borrow the money from yourself and then repay it to the 401(k) with interest.  The interest is usually something low.  Normally, it’s a bad idea, as the market usually performs as well, if not better, than the interest on the loan.

But, if (and that’s a big if) you were able to time the market relatively well to know there was going to be a downturn, you could loan the money to yourself.  Because the money would not be in the account, it wouldn’t suffer from the loss of value in your investments.  And instead, you’d gain whatever the interest rate was that you loaned the money for.  Instead of a double digit loss, you could have a relatively decent gain.  In theory it could work.

In theory.  The catch here is that you would have to time the market correctly.  If you missed it by a day, you could cost yourself some money.  If you were totally wrong and the market rallied, you’d end up missing out on possible gains.  But, if it worked, it could work out pretty well.  In the end, the more I look at it, it’s really a form of gambling.  You’re gambling that you can time the market and save your money.

Gambling is never a safe bet when it comes to your retirement.  It’s always tempting though.  It’s important to remember that a fall like we had over the last few years almost always comes back up.  You haven’t really lost money so much as lost value.  There’s a big difference there.  And if you keep contributing, which you should, you’re buying the very same investments at a bargain price.  So, instead of trying to minimize your losses by pulling your money out, you should be increasing your investment to maximize your return when the account finally bounces back up.

Yes, Peer-to-Peer Lending is Risky, But Not Cursed

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After my last two posts, and then this one, you must be beginning to think that this is P2P lending week here at Beating Broke.  I hadn’t intended it to be this way, but it just seems like that  is what’s on the brain and it’s getting a bit of buzz lately too.

Jim, from Bargaineering, wrote an article today about how risky peer-to-peer lending can be.  I completely agree.   But, he also made it sound like he thought that they should be avoided altogether.   And that I disagree with.

P2P lending is risky.  It’s just as risky as bank lending is for banks.  And look at the mess they found themselves in not too long ago.  But, as P2P lenders, we can learn a lesson from that.  First, you shouldn’t be investing your nest egg in anything this risky.  Once again, diversification is the key.  On a scale of risk, P2P lending lands somewhere on the risky side of stocks.  So, if you properly diversify, P2P should probably only make up about 2-5% of your portfolio. Also, the banks lent out way too much of their portfolios to way too many people that they really shouldn’t have.  If you’re careful about who you lend to, you should be able to significantly reduce the risk.  What that means is that you probably won’t be lending to to many people who will be paying 20% on their loans, and will be lending to more people who are paying in the 4-7% range.  That’s OK.

Why any at all?  Because the returns can be pretty good.  Depending on the model you take, your return can be in the 5% range.  The riskier loans you lend to, the higher the potential return.  Some of them are in the 20% range.   Of course, the caveat there is that those are also the most risky loans and the most likely to default.  And, much like in the banking world, if a borrower defaults on a loan, you will lose money.  You might manage to recover some of the money through collections, but it will only be a percent of what you lent out.

My advice?  (not that it’s worth much) Be cautious.  Don’t lend more than you can stand to lose, and keep the ratio of P2P investing pretty low in your diversified portfolio.  Do your research.  Lending to some 24 year old who is using the money to finance a class on real estate investing is probably not the best idea.  Chances are, that loan is headed for default.  On the other hand, lending to a mother/father of 3 who is going to use the money as a down payment on a house could be a safer loan.  In the comments of Jim’s post, he mentions that he doesn’t invest in anything that he doesn’t understand.  He doesn’t invest in options or futures because he doesn’t understand them either.  That’s a very valid point, but I think it really boils down to how much information you want.

I think if Jim wanted to, he could find all the information he wanted to learn how to use option and futures investing.  (note: I don’t understand them either and don’t invest in them.)  P2P lending is a bit of a different cookie though.  The bones of it are simple.  One person is lending money to another person.  In essence, as a lender, you are the bank.  Using the available data, you review the loan applications and decide on which ones have the least risk of default.  If you feel like taking on some riskier loans, you decide how risky and modify your acceptance practices to reflect.  Is there more to it than that?  Of course.  But, if you keep your wits and only dabble a little while you’re learning the ropes, you can learn all of the intricacies from trial and error while not losing your shirt.

As with anything, there is risk involved.  P2P lending has much more than most investing models.  If you are adverse to risk, you really should probably avoid it.  If not, get your feet wet.  And per the usual disclaimer, seek the advice of a professional before making any major decisions.

Update: It seems the original story that spawned all of this (here at The Big Money) caused a bit of a stir at Prosper.com headquarters.  They’re asking for a retraction and refuted the article with some of their own facts.