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You May Already know the Answer. . . 8/31/16

You May Already Know the Answer. . .


    If you are like many investors, you find yourself dazzled by the sound and fury of the stock market. Years of speculation about rising interest rates, the carnage in the oil sector, continuing incidents of terrorism, all of this occurring in an environment of a rising stock market! It’s no surprise that many people are confused and uncertain. These are the times an investor needs to be levelheaded and take a step back to focus on what they know to be most important.


    Like the hero in a science fiction movie, you must find the answer within. What most of us intuitively know is that there are plenty of investments that make up the core of our portfolios specifically because they are steady, reliable, proven, and recognizable. These are the type of investments that we should focus on during turbulent times. We know that there will always be the need for food, medicine, electricity, fuel, and other basic necessities. Companies serving these needs have shown their worth over decades and are not subject to fads or fashion. The names are familiar because they have been burned into our memories over time, largely because of the needs they fill.


    We also know the value of diversification in spreading our investment risk, along with the value of investing over time, so as not to buy (or sell) at the most inopportune times. So the knowledge of these principles should serve as our guide during times of uncertainty.


    While others may be hard-pressed to find answers, we already know them if only we can tap into our accumulated learning. Are we adequately diversified? If not, what sectors should we fill? And while we understand the need to invest for our futures, can we simply show the discipline to do it gradually, rather than gambling on large, one-time purchases? If we are tempted to sell, can we take time to evaluate whether the reasons are sound and that we will accomplish something by doing so? These are the types of questions that we need to answer to our own satisfaction, rather than simply following the latest guru or talking head. If we cannot make ourselves address such questions, then we should resolve to find a way to become more capable of doing so.


    DRIP investing is one such way. By investing through such plans, you can easily build wealth by making small regular investments to build up your share holdings over time at a variety of price points. No need to decide which way the market it heading over the short term—with this strategy, you will have the benefit of buying more shares when prices are low and fewer when they high. Over the long-term prices tend to move upward—though there are plenty of occasions to sell at a loss. We have found that investing in this manner discourages emotional sales and purchases and results in significant long-term gains.


    The list below is made up of the companies that are included in the Moneypaper “All Weather Portfolio.” We have followed the progress of these 10 companies for just over five years during which time the portfolio has produced a 19.17% annualized gain. Most of the companies in the portfolio do not charge fees for investing or reinvesting or charge very small ones such as three cents or five cents per share. The exceptions, those that do charge high fees ($5 plus 10 cents per share) are marked with an asterisk. Click on the company name to get additional information about the company plan.


     

    If you are on the sidelines waiting for the right moment to get invested, I urge you to consider starting out with a single share of stock (which qualifies you join the DRIP) and building holdings systematically with routine investments of an amount that you can sustain over the long term. That routine investment amount will buy more sharers when prices drop and fewer shares when prices are high. Or you may wish to peruse the listing of no-fee DRIP companies to find the companies whose products and services you know and like for the long term.