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HackFab
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Survivor of many lost decades. I'm a non-professional investor that trades stocks and options. I like good cigars, smooth bourbons, rare steaks, and dry martini's.
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The Grandson Project
  • The Grandson Project 4 comments
    Mar 4, 2013 11:22 AM

    My first grandchild was born on February 5th, 2008. Needless to say, as new grandparents, we were thrilled. His name is Max, named after his father's grandfather Max (my dad), who died in 2008 at the age of 89 never to become a great grandparent. But this isn't an article about little Max or my family. It is an article about investing. Long term investing, and long term re-investing of dividends. I've dubbed it: The Grandson Project.

    This (hopefully) series of articles, is about setting up Direct Stock Plans (DSPs) and Dividend Re-Investment Plans (DRIPs) for him. The SEC, on their web site: www.sec.gov/answers/drip.htm, provides a decent description of what each is, if by chance, any reader is unfamiliar with either.

    The Project blueprint:

    1. Select 8-10 companies that have a solid history of paying dividends. Dividend growth rate, in excess of inflation, is a plus. But not a requirement.
    2. Select the above companies from a variety of sectors to diversify the portfolio. However, don't exclude a company for that reason alone.
    3. Select only companies that charge very low or (preferably) no fees for re-investing dividends and for additional investments.
    4. Select companies that a child can relate to. Example kids love trains, so one of the companies might be a railroad.
    5. Establish Uniform Transfer to Minor or Uniform Gift to Minor accounts for the grandson in the selected companies, by purchasing the minimum or greater number of shares required, by those companies plans.
    6. Make automatic monthly investments in those selected companies in an amount sufficient to purchase at least 1 additional share. Invest more if able to. Monitor stock prices and make adjustments as needed. Note: Some companies have a minimum amount for subsequent investments.
    7. Re-invest all dividends back into the selected companies.
    8. After five years, evaluate continuing monthly investments. If a decision is made to discontinue those investments, purchase enough additional shares to have at least 100 shares in each company.

    If in investing, diversification is the only free lunch, then compounding must be it's complementary appetizer. We've all heard those stories about some nice old lady that bought a few shares of KO when she was young, and became a millionaire just holding the stock and re-investing the dividends. Well, The Grandson Project is going to attempt to duplicate and improve upon that concept.

    There is nothing 'glamorous' about this project. Select companies, purchase stock, add small amounts monthly, re-invest dividends, monitor holdings, make changes if necessary, and watch the portfolio slowly grow.

    In the next post I'll show the companies I've picked, how the Grinch Stole Christmas, and discuss some of the in and outs of setting up the custodial accounts.

    Disclosure: I am long KO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Themes: dividend-ideas
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Comments (4)
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  • Detail Investor
    , contributor
    Comments (174) | Send Message
     
    Great Job HF, I wish my parent did this for me when I was a kid.

     

    I think the reward for your grandson will be in the investing/financial knowledge more than the portfolio value.
    4 Apr 2014, 03:14 AM Reply Like
  • HackFab
    , contributor
    Comments (1152) | Send Message
     
    Author’s reply » Thanks! Did you read all five articles, or just the first? I'm working on a one year update to the series, which I hope to have out before the end of this month.
    4 Apr 2014, 08:29 AM Reply Like
  • Hardog
    , contributor
    Comments (7902) | Send Message
     
    Nice article would send it to my kids if they ever have any kids
    26 Jul 2014, 10:46 PM Reply Like
  • HackFab
    , contributor
    Comments (1152) | Send Message
     
    Author’s reply » Appreciate you reading it! Did you read all five parts? Or just the initial post? I was planning an update, but my daughter is getting married in September, and my spare time has been limited. Hopefully before the end of the year, I can gather all the facts and put up another blog post.
    26 Jul 2014, 11:59 PM Reply Like
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