The Motley Fool’s approach to investing prioritizes buying and holding quality stocks for long periods of time. We focus the most on the business fundamentals of the companies in which we invest, rather than on their stocks' short-term price changes.
When we recommend a stock to any user of our premium subscription services, we are recommending that you buy and hold the stock for a minimum of 3-5 years. We want you to invest only money that you won’t need in the next five years. For many of the stocks offered by our services, we’re also investing our own money for the long term. (We always let our members buy their shares first.)
Let’s talk about the stock market. It fluctuates. Up 5%, down 10%, flat for months, up 40%, down 15%. The stock market actually loses value in one out of every three years. But over decades-long periods, historically, the stock market's value rises and makes money for investors. Why? Because over long periods of time, companies' minor setbacks are dwarfed by their major accomplishments. A stock's long-term performance reflects the efforts, financial discipline, and creative innovation of companies, entrepreneurs, and people like you.
Investing with us means focusing on the long term. In the short term, anything can happen. One of our recommended stocks could lose 25% of its value by tomorrow. We’ve seen some of our investment portfolios lose more than 40% of their worth. It happens. You, and we, need to be able to tolerate price volatility.
The big stock market drops of this or next year are unlikely to matter in 5-20 years. While a sudden or significant market decline might seem devastating today, that setback won’t matter at all in 10 or 20 years.
We can help you to build wealth. Structuring your portfolio in a way that enables you to endure market downturns is your first step. You don’t have to invest all of your long-term savings at once, either. Let’s build wealth, together, for the rest of your life.
How to Invest The Motley Fool Way
1. Buy 15 or more stocks recommended by The Motley Fool
Buying 10 recommended stocks is the required minimum. A well-diversified portfolio typically contains 25-30 stocks, with the more stocks you own and the longer you hold them increasing your likelihood of making money. By joining one of our premium services like Stock Advisor, Rule Breakers, or Everlasting Stocks, we can help you to build diversified wealth over time. Fifteen years of Stock Advisor data shows that a subscriber who purchases 30 Fool-recommended stocks and holds them for five years has, at least historically, a 97.6% likelihood of making money.
2. Plan to hold those recommended stocks for 3-5 years or more
The shorter your investing time horizon, the more we think that you’re gambling with your investment money. A longer time horizon for building wealth allows more time for companies to work on your behalf as a shareholder.
3. Invest new money regularly
Having cash available to invest means being able to add new stocks to your portfolio without first needing to sell other stocks. Investing money from every paycheck — even very small amounts — can create a snowball effect for your portfolio. As that snowball continues to roll downhill, it keeps gaining size and momentum!
4. Be prepared for stock market declines — and take advantage of them
The stock market loses 10% of its value about once per year on average. Declines of 20% tend to happen every four or five years. Even bigger stock market crashes, with the major indexes losing 30% of their worth, occur at roughly 10-year intervals. While market declines are never fun, your best options are to either ignore them or use those turbulent times to your advantage. When the stock market is at a low point is an ideal time to buy more of your best stocks.
5. Let your portfolio's winners keep winning
Not all of our stock picks will be winners. No chance. Historically, we recommend winners 60-70% of the time. We stay invested in our winning stocks because winning companies tend to keep winning. (Remember, this isn’t like a horse race; these are actual companies.) Our highest-performing investments -- like Amazon, Netflix, Shopify, Starbucks, and Zoom -- tend to dramatically outperform our lossmakers.
6. Aim to achieve excellent returns over a 5- to 25-year period
Stock market investing is a long-term game that is best played over your entire lifetime. You can build a portfolio over time that is worth millions of dollars, just by consistently investing small amounts. We’re confident that you can win this investing game, and we’re here to help.
We believe that when investors buy at least 15 great stocks and commit to holding them for 5-10 years, they set themselves up to achieve financial freedom. Let great companies work and succeed for you as you make money with us, calmly, methodically, and over your lifetime.
Our goal is to make you smarter, happier, and richer — forever.
You've got this!
Investing necessarily involves taking some risk, but most of that risk can be mitigated by avoiding common pitfalls and mistakes. Follow these Foolish investing principles and consider joining the many investors like you who are well on their way to enjoying financial success.