Morningstar Review: Pros, Cons, & What We Like

Investing
Updated: 8th Jun 2021
Written by Drew Cheneler
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Investing successfully takes a lot of time and effort; even the experts still make mistakes! Because of this, many people are loathing to jump into stock market investing without accurate information with which to make investment decisions.

Where can you get that information aside from spending hours analyzing stock charts yourself? Services like MorningStar.

As an investment research firm, MorningStar is a popular choice for long-term investors looking for smart investment decisions so they can retire comfortably, pay for college, or meet other financial goals.

Let’s take a closer look at MorningStar to determine whether it’ll be a good subscription choice for you.

What Is MorningStar?

MorningStar is an investment research firm that provides “stock picks” and other in-depth financial information for individual investors to then use to make smart decisions with their own portfolios.

It offers a few tiers of membership, with Premium-level membership being the most valuable and including several key resources to help guide profitable investment strategies.

In other words, it’s an excellent service for investors to believe in “fundamental” or value investing: investing in stocks or companies based on their real value, not speculative trends or fads.

However, MorningStar doesn’t provide a lot of charts for specific information. So it’s not necessarily the best choice if you like to view technical charts before making your investing decisions.

Instead, MorningStar focuses more on proper asset allocation and finding investments that generate consistent returns for investors.

How Does MorningStar Work?

MorningStar has teams of financial experts constantly analyzing the stock market and the big players that affect stock prices both during and after market hours.

As they analyze this information, MorningStar’s experts then take that information and provide it to standard and premium subscribers.

The service originally began in 1985 with rating mutual funds. Nowadays, subscribers sign up as premium members and get instant access to a range of data analysis sheets and special tools, including analyses of over 600,000 individual investment assets.

Even better, every asset in the collection gets a detailed page.

Then it’s up to individual subscribers/investors to take the information they get from MorningStar and decide whether to use it for their own investments.

MorningStar does not manage your accounts for you or act as an investment service – it’s instead a very digestible and extremely useful information resource.

Thus, investors’ performance will be based more on how they take the information they get from MorningStar than MorningStar itself.

What Is Morningstar Premium?

MorningStar Premium is the company’s paid information service. While anyone can use MorningStar for free, you only get access to basic analytics information and newsletters. You don’t get most of the extra tools or features mentioned below.

In truth, MorningStar is really only worthwhile if you subscribe to Premium. Premium includes more analyst insights, special cyclists to help you choose the best investments, and more.

If you want MorningStar to really save you the analysis legwork, Premium is the way to go.

>> Dive Deeper: How to Research Stocks

How Much Does Morningstar Premium Cost?

Since MorningStar is free by default, many investors wonder whether the increased cost is worth it. However, you can pay for MorningStar Premium either monthly or annual or pay for up to several years in advance (which gets you some good discounts).

MorningStar Premium Prices

Plan:Price:
Monthly:$29.95
Annual:$199
Two-Year:$349
Three-Year:$449

As you can see, it’s cheaper to pay for several years in advance if you plan to use MorningStar for some time.

Paying for 12 months using the monthly rate will cost you $359.40: much more than paying a one-time fee of $199 for access for the whole year.

Morningstar Premium Features and Benefits

Should you subscribe to MorningStar Premium, you’ll get access to various excellent tools and special features that more than make up for the cost of the service.

Analyst Insights & Stock Picks

All MorningStar subscribers get immediate access to analyst reports, which are produced regularly.

These cover over 2000 stocks, mutual funds, and exchange-traded funds, providing actionable information that subscribers can use to determine whether a given asset will be wise investments for their goals.

New Investment Ideas

Want to grow your portfolio? MorningStar regularly provides analyses of new or up-and-coming stocks and ETFs that investors hungry for growth can use to invest for future success.

Evaluate Investment Ideas

MorningStar’s built-in tools can help you evaluate different stocks or investment propositions, comparing them to your overall financial goals.

They’ll also tell you whether investing in a given stock or ETF will help you stay on track for retirement, for example.

Monitor Investments

MorningStar’s Portfolio Manager lets you monitor and track your investments and determine whether your portfolio is properly diversified.

You can quickly track your financial goals and evaluate asset allocation using this tool, especially in conjunction with the X-Ray tool (more on that below).

14-Day Free Trial

MorningStar also offers a 14-day free trial for its Premium services. This is great for those who might be on the fence about spending hundreds of dollars per year.

It’s an excellent way to see if the website suits your needs before putting a lot of money down.

Easy-to-Use Mobile App

Don’t forget MorningStar’s easy-to-use mobile app, which is downloadable for iPhone, iPad, and Android devices.

The app is totally free and easily links to your MorningStar account. In addition, you can sync your portfolios from the main website to your device; it’s an excellent perk if you want to quickly analyze a stock or check your portfolio while you are away from your computer.

However, note that you don’t get access to all of your tools and controls on the mobile app.

Stock Screeners

One of the best MorningStar features is its stock and mutual fund screener, which users can leverage to find investments suitable for their portfolios by using and sorting through hundreds of key data points or attributes.

For example, you can use this to find stocks that are within a certain price range if you have a limited investment budget.

Portfolio X-Ray Tool

There’s also the X-Ray tool, which you can use to make sure your portfolio is not over-allocated or weighted too heavily in a specific stock or even industry or sector.

As a result, MorningStar is great for making sure you maintain a balanced and diverse portfolio at all times.

How Does Morningstar Figure Its Ratings?

When you use MorningStar to analyze stocks or other assets, you’ll use their iconic five-star rating system, which explains the value of funds or assets on a five-star scale.

MorningStar analyzes funds based on their three-year history – those with high ratings will have five stars, and those deemed not worth your time will have one star.

To determine the star ratings, MorningStar checks each fund’s risk-adjusted trailing performance, including costs and the returns that investors might see after deducting fees.

Granted, this doesn’t guarantee how a fund will perform in the future. As a result, MorningStar’s analyses will seem more valuable if you put a lot of stock (pun intended) into a stock’s past performance as opposed to its potential future performance.

While MorningStar can be an effective analysis tool, especially if you don’t have the time to analyze as many funds as you would like, you’ll still need to make your own judgments regarding where you invest your cash.

Morningstar Research Pros and Cons

Pros:

  • MorningStar offers extensive research resources that cover all types of financial assets, like stocks, bonds, mutual funds, and more
  • Easy to read “best investments” lists allow you to choose the best assets and funds with a minimum of effort
  • Has coverage for over 620,000 different investments
  • Plenty of discounts available if you want to subscribe for multiple years

Cons:

  • Annual prices are the same as if you pay monthly
  • Paid membership is needed if you want the truly valuable, premium content

How Does Morningstar Compare?

Although MorningStar is a good investment research firm overall, let’s take a look at how it compares to similar companies so you can make an informed decision.

#1. Motley Fool vs. Morningstar

Motley Fool is MorningStar’s chief competitor and can be subscribed to for about half the price of an introductory cost of just $99 per year.

This service also comes with a 30-day free trial, although it doesn’t include some of the above tools, such as stock screeners.

Motley Fool instead sends you premade monthly stock picks and lengthy reports explaining their analysts’ decisions.

This may be a better service if you want someone to make your investment choices for you.

>> Learn More: Full Motley Fool Review and  Motley Fool vs. Morningstar

#2. Morningstar vs. Zacks Research

You might also consider Zacks Research, another popular investment research firm that offers a wider variety of subscription tiers.

It suits a more varied investment audience; for example, you can subscribe to focus on trading ETFs or short-term investment gains.

Zacks can be cheaper than MorningStar, but it can also be more expensive – to access all 21 stock analysis subscriptions from this company, you have to pay $299 per month.

>> Learn More: Full Zacks Research Review

#3. StockRover vs. Morningstar

StockRover is a stock screening specialty service: perfect for folks who like to do a deep dive into ideal stocks for their investment goals.

However, it lacks some of the advanced features and tools MorningStar provides.

Morningstar Review: FAQs

Is Morningstar legitimate?

Yes. MorningStar has been in business for decades and has solid reviews from many of its longtime users.

Is Morningstar a reliable source?

Yes. MorningStar gets all of its information and analyses from experienced stock market analysts and financial advisors. However, as with any stock information resource, this company can and does make occasional mistakes.

Is Morningstar Premium Worth the Money?

In our opinion, yes. MorningStar Premium is a solid service for long-term investors that want additional information or analysis for their investments.

Moreover, it’s pretty affordable considering the returns you might get from following this service’s advice.

Which is Better Zacks or Morningstar?

It depends on your goals – Zacks might be better for specialty investors, but MorningStar is a better all-around pick in our eyes.

Which is Better Morningstar or Motley Fool?

Motley Fool is ideal if you want to be told which stocks to choose. MorningStar is ideal if you want more analysis tools and greater options.

How Much Does a Subscription to Morningstar Cost?

You can get a monthly subscription to MorningStar Premium for $29.95 per month. For the best bang for your buck, you can subscribe to MorningStar for three years for $449, which costs $150 per year.

How Does Morningstar Make Money?

MorningStar gets money from both its Premium subscription service and a variety of other products and services. Additional revenue comes from subscription products used by professional investors, advisors, etc., according to MorningStar’s 2019 annual report.

Is Morningstar Basic Free?

Yes. But basic users don’t get the same tools or features described above, so they don’t get nearly as much value out of MorningStar as those who subscribe to the premium service.

Is a 5-Star Morningstar Rating Good?

Yes. Regardless of how important you consider past stock performance to be, a five-star rating from MorningStar does indicate that it has a history of success. This can be useful for investors looking for assets in which to invest their cash for long-term wealth growth.

Bottom Line: Morningstar Review

Ultimately, MorningStar is a solid investment analysis resource. Moreover, the Premium service is relatively affordable given that it may only cost $150 per year for access to all of its stock screeners, specialized tools, analysis sheets, and more.

Think of it this way – if signing up for MorningStar gets you at least a $150 return per year, it pays for itself.

Fortunately, you can try out this service with a 14-day trial, risking no money in the process. This investment information service is most useful for investors who want long-term growth rather than day-to-day stock analysis for day trading or similar strategies.

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Drew Cheneler
Drew Cheneler
Drew is a recognized Credit, Small Business, and Personal Finance Expert. He has been quoted in CNBC, Fox Business News Section, The Huffington Post, Business.com, Moneyunder30, US Chamber of Commerce, and more. He is known for breaking down complex personal finance topics into action-oriented advice, so you can make the most of your hard-earned money.