Baby AAI is only crawling and has little cares in the world besides food, playing and his parents. However he’s got a portfolio that’s compounding for him already. Here’s a look at the first stocks I purchased and how I expect that portfolio to perform until his 18th birthday.
I funded Baby AAI’s account with an initial $7500 and have been contributing $100/week since 02/27/17, so 35 weeks. That’s a total of $11,000 in contributions.
You can see the stocks I have purchased so far are Carters (CRI), Hanes (HBI), Disney (DIS) and Pepsi (PEP).
Depending on how successful we are with the stocks that have already been purchased will determine whether we go on to buy any more in the near future or not. Of course, I would love to make as much money for Baby AAI as possible, as this could provide him with a great life, in terms of his financial situation anyway. Those who have already invested in different stocks within the stock market will know that their prices can increase or decrease at any given time, but this is a risk that you must be willing to take.
If our journey is successful, I think I may decide to invest in a Henkel Aktie (Henkel Share) in the hopes that this too can increase the ROI that I have already earned in my portfolio. I’ve heard it has great profits, so this shouldn’t be too hard to achieve. But, we will be playing it by ear for now at least.
This is a very short time to start looking at gains and losses. The account is currently valued at $11,105.22. That’s just a 1% increase. However, this portfolio has a long time to compound, all shares are currently turned on to DRIP. You can see I’ve already been able to purchase fractional shares by DRIPing into CRI, DIS and HBI.
So how do I expect this portfolio to perform. Well I did the math for you, and I’m hoping to achieve a 7% growth rate which will put the balance right at $200,000 by the time he’s 18. That’s by doing nothing else but contributing $100/mo and letting the power of compounding work its magic. I used a simplified actuarial formula assuming $7500 contributed right away and $5200 ($100/month) contributed at the end of each year.
Here’s a graph of what the value should be at the end of the year, of course the stock market has large swings up and down so this is in a perfect world of 7% compounding each year.
So basically, by the end of the first year, February 27, 2018, the portfolio should be valued at $13,225.00. My total contributions will be just over $100,000. You will notice that it takes a little over 12 years to reach this $100,000 number and less than 6 year later it doubles.
It will be fun to watch this portfolio grow! What do you think?
Two things:
1 – have you considered a 529 as well?
2 – will be in Austin next weekend for a wedding … what spots do we need to hit? Better yet, where’s your bar??
Noah,
1.) I don’t like the fact that if the money isn’t used for college (you never know what might happen) then you are penalized an additional 10% on any gains to withdraw it.
2.) My bar wasn’t actually in Austin, it was in northeast Texas. I’ve since sold the business and leased the space to another restaurant but haven’t really mentioned that here yet.
However, I can recommend plenty of places to go in Austin. Let me know what you are looking for and I can help. Since you mentioned bars, you have to go to Rainey Street, it’s a street full of bars in the downtown area. If you’ve never been to Austin, you will have to go to 6th Street, there’s “dirty” six and west 6th. West 6th is a little more upscale and drink prices are higher. “Dirty” six is where the college kids mainly hang out and it’s full of bars. East of I-35 is where the hipsters hang out if that’s your crowd. If you are into craft beer there’s more than 10 breweries you can tour or check out also. Hopefully that gives you a start.
I considered a 529 but ended up not opening one. I hold mine in a taxable account. We mange about 100$ a month. baby AAIS has an awesome portfolio to inherit. Congrats!
dividendgeek recently posted…Canadian dividend increases (Oct 23 – Oct 27)
Dividend Geek,
Yeah, I just don’t see enough benefits with a 529 in my situation. Thanks, hopefully it can keep growing as expected.
Take care!
Love that you added HBI to your child’s stock portflio! It’s amazing that HBI can grow their earnings consistently in the current environment where retail stocks have been hurting. It probably helps that Hanes is more commoditized compared to other retail stocks. I own a tiny position in my Robinhood account and I look forward to consistently buy more!
Collecting Dividends,
Thanks! I like the company at these prices, it was brought down with the rest of the retail sector but I don’t believe they have quite the risk as many of the other companies in the sector. I know I’ll continue using their products. That’s great that you own some of the company, I’ll think we’ll like the price here in another 10 years.
Cheers!
I love your article, Good, you added HBI to your child’s stock portfolio! It’s an amazing choice.
WizXpert,
Thanks! HBI actually just dropped a bit, if I can build up enough money for another purchase I may add more.
Thanks for stopping by!
What do I think? I wish I was baby AAI! What a great start to this portfolio. Nice work.
Investment Hunting recently posted…Stock Buy and Sell – HIVE Blockchain Technologies
IH,
LOL, it’s true he’s got a nice head start and doesn’t even know it yet. I wish my parents had taught me about investing at an early age. Time is certainly on his side.
Thanks for stopping by!
Awesome! I love reading about these portfolios started from birth or at least childhood. Looks like more of our fellow DGI members (with kids) are creating long term passive income generating portfolios. It can be 529s or like what you did, a general taxable custodial account like I also did for baby DivHut, but the results should be the same…. Insane compounding over multiple decades! Take advantage of their greatest asset, time. Love the holdings and look forward to seeing the portfolio grow over time. Curious to see what other stocks you plan on adding.
DivHut recently posted…Dividend Income Update October 2017
DivHut,
I’m going to be keeping up with this portfolio and plan to provide quarterly updates to see how the progress is coming versus the expectations.
You are absolutely right, time is on their side. Starting early with many years of compounding really makes a difference!
Thanks for stopping by!