Starting your investing journey begins with education and understanding. Fortunately, there are more learning resources available today thanks to the internet than there ever has been outside of a college environment. Some of these resources are websites, dedicated forums, and even comprehensive web courses taught by professionals. Another tool in the new investor’s toolbox is the stock picking service/subscription. So, should you use a stock picking service? In this article, we’ll give you a quick overview of these services and help you decide if using one is right for you.
What Is A Stock Picking Service?
Remember, this is not investment advice, just a look at stock picking services and whether they’re worth it or not. When learning to invest, it’s always better to start slow and try to understand as much as possible about what you’re doing. These services are usually subscription-based as newsletters, websites, or apps. What they all have in common is they offer generalized advice and suggest which stocks to buy, based on analysis of the stocks quarterly earnings, market share, profit exit, and other factors. The best services don’t make guarantees that a stock will perform well or rise. They merely supply suggestions based on heavy research and past performance.
How Does It Work?
The way stock picking services work depends on the service itself. Stock picking services essentially work on a subscription basis. The service analyzes comprehensive stock data, trends, and other relevant information to make stock selections. The data they assess includes financial statements, quarterly earnings, market share, and other performance metrics. The services then make a few stock suggestions and send them to their user base/members. Aside from sharing their stock picks, these services offer various benefits including educational resources, investment tools, and online communities.
What Are Membership Fees Like?
Since every service is unique, they will have different membership fees and likely offer tiered services for their members. Membership fees can vary wildly. Some services like Motley Fool are only $99/year. Other services cost more (like Trade Ideas, running $2,268/year!) or less (Mindful Trader at only $47/year). Of course, each service is aimed at a different segment of the investing market. So determining which one is right for you comes down to assessing what kind of stocks you want to invest in, how you want to invest (long term, swing trades, day trading, penny stocks, dividend growth investments), and what you’re willing to pay to benefit from such services. Do plenty of research and check out the reviews for services you’re interested in checking out before making a commitment. Ultimately, it’s up to you to decide what’s best for you and if you’re looking for more detailed analysis/instruction, then seeking the services of a financial advisor is probably the best move to make.
Are They Worthwhile?
Stock picking services can be worthwhile depending on how you use them. Whether it works for a particular member or not is highly subjective and using a service never guarantees a return on investment. It’s simply an advisory service to help guide investors to potentially good opportunities. Take the Motley Fool Stock Advisor for example. In their Motley Fool review, Investor’s Handbook highlights the benefits of using such a service. It’s a fairly popular service with over 1,000,000 subscribers. This particular service gives users two stock picks every month, info on getting started, past performance data, discussions, and stock profiles. Additional educational tools and resources like a stock screener, simulator, and portfolio tools are also available to paid subscribers. And that’s all on top of the online forums and highly informative websites that come with the overall package. Not all stock picking services have these exact resources, but many of them do and offer a unique take on investing in the market. So are they worthwhile? Just from an educational standpoint, they certainly can be. Since there are never any full proof or guaranteed investment strategies, taking advantage of these resources can guide new investors in the right direction and help them learn more about the nuances and strategies of investing in stocks.
How Long Does It Take To Make Money?
Earning money from stock picks can take some time, depending on what you’re investing in. For swing trading investments, you may see earnings in as little as two weeks to a few months. Day trading, for instance, is a type of investment where it should only take a day to make money. Long-term trading takes at least a year to see a return from stocks. Investing more money typically leads to more earnings thanks to compound interest, but it’s still prudent to understand the risks associated with each investment type and how to leverage them to your advantage. Stock picking services (especially the additional resources they provide) can help in this regard.
The Motley Fool example we used above tends to recommend growth and blue-chip stocks from the tech, finance, and consumer sectors. These stocks tend to beat the market by a wide margin over time but aren’t ideal for day trading. Other services will have different metrics and picks, so your mileage may vary. As always, be careful about your investments, understand what you’re doing, and seek financial advice from reputable sources for all your investment strategies/needs.