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Should You Pay $1000 for an Investing Newsletter?

Should You Pay $1000 for an Investing Newsletter? | Around the Web

Expensive investing newsletters stress me out.

I’m very averse to paying high dollar prices but can’t help but wonder if it’s worth it in the end. After all, in my experience, I typically get what I pay for with stuff like this.

To help bring some objectivity to this, I’ve been attempting to figure out how to weigh the value of an investing service. Particularly services in the $1000+ range.

If an investing newsletter cost $1000/year, how do you know if it’s worth it?

If the research from that service results in $1000 in gains for that year, does that mean I’ve broken even and it’s paid for itself?

Investing Newsletter(Tired of trying to find a great investing resources?It’s tough when there’s 1000s and they can cost $1000s.)

If a typical advisor charges 1% fees and you have $100,000, you pay $1000/year. In that case, the investing newsletter would be the equivalent of a 1% fee, but you’d be really disappointed if you only generated $1000 for the year.

What if you only have $20,000? Spending $1000 is the equivalent of a 5% fee. Does that make it a terrible idea? Do you intend to base your entire portfolio on a single service?

What if the service is about more than returns? What if you’re learning a lot and becoming a better investor as a result of being a part of it?

So, what do I think?

At first glance, I want to take the view that if the newsletter at least generates enough returns to cover it’s costs, I’d be satisfied. Ideally, it would do much more, but at a minimum I want it to pay for itself.

The problem with that view is that it doesn’t factor in opportunity cost.

If I have $1000 for investments and I use it to pay for a newsletter instead of investing it directly, I’ve lost what that invested money may have returned.

Perhaps a better view would be that the newsletter was worth it if it returned it’s full cost, plus your targeted annual rate of return.

Example:

If your targeted annual rate of return is 10%, then the investing newsletter would need to result in returns of $1,100 after one year to breakeven.

My ideal is that a $1000 newsletter would pay for itself twice (aka earn $2000 by year end). In this case it would certainly be worth it’s cost.

Investing Newsletter(Oh the allure of the high dollar newsletter that could usher us into the good life, like this guy!)

I’m really eager to hear how you approach decisions like this.

Best,
Brian


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Should You Pay $1000 for an Investing Newsletter?

Investing Newsletter

Disclosure: This article is for information purposes only. Comments made by my guests do not necessarily represent the views of Brian or Investor in the Family. There are risks involved with investing including loss of principal. Brian and Investor in the Family makes no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made. There is no guarantee that the goals of the strategies discussed by Brian and Investor in the Family will be met.

Family Investor
 

  • Bernie

    I can’t speak for their worth, but personally I refuse to invest over $50 annually for an investment newsletter.

    • Family Investor

      Thanks for writing Bernie, I’d enjoy hearing more about your approach. Why $50? Have you been pleased with the results? Whenever I’ve purchased something in that range I’ve been pretty disappointed in the quality.

      Best,
      Brian

      • Bernie

        I’ve tried out many different newsletters over the years, mostly via inexpensive trials through stockfocus.com. I wasn’t happy with any of results. I’m now 100% into dividend growth investing (DGI) and it’s served me very well. I’m up on the index over the long term in capital gains and in income growth. I find the only newsletter worth it’s salt is suredividend.com. I happened to lock in on a very attractive rate but IMO the new subscriber rate of $79/year is well worth the money.

        • Family Investor

          That’s encouraging to hear Bernie, DGI has lots of great merits to it. I presume you follow some of the DGI community on Seeking Alpha? It’s a pretty engaged group.

          I’m always glad to hear about people finding investing success, congrats on yours.

          Mind if I ask what you like about Investor in the Family? What would you change (add, remove, alter, etc)?

          Thanks in advance for your feedback.

          Brian

  • Brett Kronewitter

    Thanks for the post Brian. I have tried a number of the Seeking Alpha premium services and from my experience that the price of the service does not reflect the amount that you are charged. I currently am signed up to four, three that I have been with for at least six months. The forth, I just started. The only newsletter that I have my doubts about is the most expensive one ($3000, although I am grandfathered at $900). The way I look at it is if you believe that the information in the newsletter can help you to achieve returns above and beyond the average of the S&P than it’s worth it. What I like about the Seeking Alpha premium service is the chats that are attached because investors can share ideas. I’ve found that it´s a good place to learn because there are a number of smart individuals in these groups.

    • Family Investor

      Great to hear from you Brett, always appreciate your insights. I think you’re ultimately right, if the newsletter helps you reach your objectives (beat the market) then it’s worth it. Of course, that also assumes we’re willing to be disciplined enough to track those results against the cost of the newsletter. One of the major mistakes so many of us make is to neglect to factor in costs. (Side note: I actually just had a great conversation with someone about how bad 401Ks and mutual funds are regarding this.)

      Do you mind sharing what SA newsletters you subscribe to? I’m using Chris DeMuth’s and Eric Parnell’s, also grandfathered in at lower prices.

      Best,
      Brian

  • Christian

    I subscribe to STW on Seeking Alpha and intend to renew this year. As I’m based in Australia I’m not overly familiar with many US companies so I’m happy to pay for the research and ideas. I think Stw is a quality service and event driven stuff is his bag. That said, I only allocated a small portion to this service as I was testing waters so to speak. The ideas I’ve invested in have paid for the subscription and probably a bit more, so I’ll be allocating larger amounts next year ! Ideally I think this cost should represent less than 1 % or so of a portfolio.

    • Family Investor

      Thanks for your comment, Christian. I’ve thoroughly enjoyed StW as well. If used wisely, I think it is well worth the cost (depending on the size of someone’s portfolio).

      Best,
      Brian