Tuesday, September 11, 2007

My niece's first purchase

Today being Tuesday, Sharebuilder executed my (one-time) automatic savings plan in the new account I set up for my niece. The account now has 2.0738 shares of... wait for it... Pfizer! I know in previous posts I've gone on at length about why I didn't like Pfizer as a stock to own (if not as a company), but they've taken a real beating in the market lately and it looks good to me. The dividend yield is just about 5% and is set to increase regularly. Since I'm honestly planning not to sell these shares for 20 years (think of what the $19.95 real-time commission would do to the profits!), I feel like that gives Pfizer plenty of time to come up with a few great new drugs, raise the dividend significantly, and perhaps buy a few smaller drug companies to stimulate growth.

Speaking of the real-time commission, at some point these shares *will* have to be sold. Therefore my strategy is going to be to invest in just a few securities (some individual stocks and some ETFs) so that each position is big enough in 20 years that the commission won't seriously hurt it.

Since I just opened the account, I was able to participate in a free trial of Sharebuilder's standard pricing program, which means there was no commission on the purchase. However, after this month is up I'm going to have to come up with a strategy to minimize commissions. It will probably involve investing her birthday and Christmas presents together.

Another idea is to use this account for my other niece and nephew rather than opening separate accounts for them. Even though I'll miss out on potential promotions (like the $50 I got for opening this account), over the long run it'll save quite a lot in commissions. The downside is that transferring the shares to them will be more complicated. Well, I don't have to decide now!

1 comment:

stealthy said...

congrats... well I guess its congrats to her.

What if you just transferred her christmas and birthday money into the sharebuilder account along with your other neices and nephews and then once a year invest it all at one time into maybe 3 or 4 different companies. You'll still be earning pretty decent interest from the money market fund.