Baby AAI is now walking and his portfolio is making some strides as well. He’s not talking yet and has no idea what a portfolio or equity is yet though. That’s perfectly ok because there is lots of time for compounding to work and for me to teach him about investing.
I funded Baby AAI’s account with an initial $7500 in a taxable account and have been contributing $100/week since 02/27/17, so we’re almost at the one year mark.
I made a recent transaction last week and swapped out PEP for a little more of HBI. HBI fell to below his cost basis and I couldn’t resist adding a little more under $20/share. I can always add PEP back later if I wish. So far HBI has been up and PEP has been down so it was a good trade so far. Just to be clear, I don’t plan on doing much “trading”, I plan to mostly buy stocks to hold and let them DRIP. I also added some RDS.B recently.
Below is the current portfolio after a year. Carter’s is killing it from my initial purchase, up over 38%! I actually don’t mind some of these positions staying lower for a while so I can get more shares in the near-term from compounding.
This is still a really short time frame to compare gains and losses. The account is currently valued at $13,448. That’s above my projected amount of $13,225 assuming 7% compounding, see graph below. This portfolio still has a long time to compound and all shares but RDS.B are currently turned on to DRIP. In fact I’ve already added fractional shares of DIS, CRI and HBI by DRIPing.
I’m hoping to achieve a 7% CAGR 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 each 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. I’m currently slightly ahead of schedule.
I can’t wait to watch this portfolio grow!
I’d love suggestions on a next purchase for BabyAAI.