Tuesday, August 09, 2005

Give Me Those Stocks.....ARGH!

Ok lil' guy, here are the stocks we picked out for your DRIP (no, you cannot put them in your mouth or feed them to Rex, the insane Viszla).

Paychex - PAYX
McGraw Hill -MHP
Bank of America - BAC
3M - MMM
Cash America - Csh
Textron - TXT
Dow Chemical -DOW
AON - AOC

We picked these stocks for a number of reason:
- Well established companies. Yes, they go through some rough patches, but these are not start ups
- Low cost of entry. Most of the DRIP's have low minimum purchases (as low as 10 bucks) and no fees on cash purchases or dividend reinvestment, so aside from the $300 to set up the plans, all of your money goes to work for you. Sometimes, you will even get a discount on your buys.
-This helps diversify your holdings geographically. It is too bad you can not hold these stocks inside your RESP as you can't run a proper DRIP plan due to registration requirements.

- So, if we put 1000 a year into these stocks (DRIP's let you buy fractional shares) for the next 21 years and assume a conservative growth rate of 5%, by the time you finish your Ph.d in computer science at the age of 25, you should have about 37,000 USD put away. If by some dumb luck, I mean sell side analytic skill, you manage to earn 10% a year, you should have about 70K USD by the time you are 25.

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