Wednesday, July 11, 2007

New stock in my IRA

After writing that last post I decided to invest some of the cash that was just sitting around in my IRA. I added a bit to my GE position and then added Johnson & Johnson (JNJ).

I've been looking for another nice dividend investment for the last few weeks and there are an absolute TON to choose from. Some of the ones I looked at are Proctor & Gamble (PG), Colgate-Palmolive (CL), Pfizer (PFE), and Bank of America (BAC). All of them are nice, big, safe companies with good dividends, dividend growth, earnings growth, etc. Perfect for an initial investment in an IRA, to give it an anchor. I really wanted to invest in BAC but I don't like investing in financial companies. I feel like the economy (in the US and Europe) is too heavily weighted towards financials. When you look at the breakdown of the S&P 500, it's 21% financial services! That's almost twice as much as any other category.

Service economies are one thing (which I also don't really like) but financial services must be just about the worst kind. Is it sustainable if a quarter of your economy is just handling money for the other 75%?

The iShares Dividend Select Fund (DVY), which is a great fund, is over 40% financial services. These companies pay great dividends. I'll probably be adding it to my IRA at some point and that will give me plenty of exposure to financials.

Anyway, I could go on, but I won't. Any of the choices would have been good, but I chose JNJ because I wanted to get some health care exposure and I don't trust Pfizer.

Now I will be patient and not touch my IRA until January, 2008. Unless something bad happens or I see a reeeeally good deal in another company.


stealthy said...

I like JNJ and BAC! Good choice with JNJ...just be patient with it ;)

SavingDiva said...

My retirement accounts are always left alone...mainly because I don't know what to do with them!!!

GoldnSilver said...

Thanks for your comment on my blog.

What's the 1st thing you look for in terms of picking your stock? i.e. Market cap? Sector? or there are specific names that you like?

I know everyone is different, I am just curious about your decision making process.

Jon said...

Good question GoldnSilver! Right now I guess I have two approaches -- which I just tried to write about in this comment box. I'll write a whole post about it because it's definitely worth exploring (for my own good!). I'd love to hear about your process as well.