Stock-picking subscription services are nothing new. If you’ve ever visited a financial website before, chances are, you’ve seen the ads everywhere. Some services claim massive returns on high-risk investing strategies, whereas others take a more moderate approach over time. The specifics of each offer vary from company to company, but the general idea is always the same: subscribe to our service, follow our portfolio management strategy, and reap the rewards. So, are these services an effective way to manage your funds, or are they just a waste of time & money? Let’s take a closer look and find out.
The Upfront Costs
First things first: every one of these services has an upfront cost. While some companies offer a discount if you purchase an annual subscription, this means you’ll need to pay for the entire year upfront. This isn’t always a realistic option. The alternative is monthly billing, but this generally means paying a higher rate in exchange for a lower upfront cost. The exact expenses will vary from company to company, but so will the services offered. It’s important to ensure that you have enough to cover both the upfront costs and the initial investment on hand.
Speaking of the initial investment, how much will you need? Well, that’s the nice part: there isn’t any set number! Since these services only suggest stocks, you’ll still need to take care of the actual portfolio management (i.e. trades) yourself. Thanks to online brokers like Robinhood, it’s possible to purchase fractional shares, rather than needing enough money to buy entire stocks. Essentially, this means you could start with next to nothing!
That said, you’re trying to make money, not lose it. If you spend more on the services than you make in returns, it’s not a worthwhile endeavor. Most of these services will advertise a specific return rate that they’ve achieved in the past. We recommend using this percentage to calculate how much you’ll need to initially invest to at least earn the subscription costs back via returns!
The Strategies
As mentioned earlier, every subscription service provides different strategies and recommendations. While some services might suggest cryptocurrency and alternative assets, others use strictly stocks in their portfolio management strategies. You should try to first identify your financial goals, and then find a subscription that matches these goals.
Are you:
- Open to risk and hoping for big profits?
- Looking for a moderate-risk approach with consistent returns?
- Interested in making large gains over time?
- Preparing for retirement?
- Considering investing in alternative assets?
These are just a few of the questions you should ask yourself. Once you’ve clearly defined your investment goals, it will be much easier to select a subscription plan that matches your portfolio management style.
Bundle & Save
If you have lots of money to invest and multiple investment goals, it may be worth looking into bundled services. Many companies allow you to subscribe to multiple subscription services at a reduced rate, which can save you a lot of money over individual subscriptions. These offers can certainly be appealing, but it’s important to consider both the subscriptions offered and the ongoing costs. If you only plan on utilizing half of the services in the bundle, it might not make sense to choose the bundled option. Alternatively, the offer might make sense, but the price makes such an ongoing financial responsibility unmaintainable. While it’s true that offers aren’t available forever, that’s no excuse to subscribe excessively. Only pay for services that will make you money!
Selecting a Service
There are definitely many subscription services to choose from, which can make selecting a service confusing. Fortunately, you can find lots of information about any reputable company online. If they have genuinely helped previous customers, you can feel comfortable relying on them for portfolio management suggestions and guidance. That said, not every subscription service is created equal.
You should consider the individual subscription services, rather than the companies themselves. While a company overall can offer great products, it’s possible that the specific subscription you’re looking at has a history of underperforming. Compare multiple services that align closely with your investment goals before making a final decision.
Portfolio Management Made Easy
To summarize, yes: stock-picking subscription services can offer an easy way to streamline your portfolio management process! With specific recommendations consistently being sent to you, you’ll only need to make the investments as suggested. That makes these types of services perfect for the hands-off investor who doesn’t want to spend hours researching individual assets While it’s important to still do your own research before blindly making investments, subscribing to a reputable stock-picking service can certainly help your portfolio grow without much effort. As time goes on, you’ll learn more about the market and be able to take a more hands-on approach. However—thanks to the convenience of stock-picking services—you’ll always have the option to “set and forget!”
Disclaimer: This content does not necessarily represent the views of IWB.