DRIP PORTFOLIO
Things to Adhere to in 2000
Plus, our business(es)

By Jeff Fischer (TMF Jeff)

ALEXANDRIA, VA (Dec. 29, 1999) -- If you're fortunate enough to be able to save more than the Drip Port's $100 per month, let's run through some investment scenarios for you.

$200 saved monthly for 20 years and growing at 12% annually becomes $172,920. Over 30 years, it becomes $579,200. If you can grow that $200 per month at a rate closer to 16% (an aggressive goal, but one the Foolish Four has topped), in 30 years it becomes $1.27 million.

Add another $100 per month to your savings, and your $300 monthly investment growing at the 12% rate becomes $259,000 in 20 years, and $868,700 in 30 years. (At 16%, it would become nearly $2 million in 30 years, and over $415,000 in just 20 years.) Plus, odds are that whatever amount you invest now, you'll be able to save more and more money in future years as long as you consistently run a smooth operation on the home and work fronts.

Let's consider some simple goals to put (or keep) in place in 2000.

  1. Eliminate credit card debt and pay all of your monthly credit card bills down to zero.

  2. After all high-interest debt is paid, pay yourself first. Always make your first monthly payment to yourself after essential bills are paid.

  3. Set up a savings plan in this fashion, knowing what you can typically save, and then adhere to it.

  4. Organize your plans on paper, especially in relation to your direct investing (how much to invest in each plan, and how often).

  5. Live within your means, but don't shortchange yourself on experiences. Once you have paid yourself first by saving (and investing) money, don't hesitate to spend the rest of your disposable income, if you wish, actually enjoying yourself!

  6. Invest only in things that you understand. Be an informed investor. Don't gamble or speculate with your money. Invest it.

  7. Keep current with your investments, seeing how your companies are performing every quarter. Consider attending the annual shareholder meetings for your most substantial investments.

  8. Consider giving some money away every year. After all, this is a primary reason why we should want to accumulate money: to share it and to share experiences through it, thereby helping to improve our lives and the lives of others. If you'd like to give something this year to others, to strangers who need help, please consider Foolanthropy, The Motley Fool's charity program.

  9. Read the 13 Steps to Investing Foolishly again, or for the first time. Print them and read them one per day, for 13 days, if you wish.

  10. There are few things that equal the simple pleasure of book reading. Consider Foolish investing books if you haven't read them yet, and if you would like to hone your investing skills.

  11. Begin to plan for a full, active "retirement" period in your life. Even if for you retirement means starting your own business, you need enough "retirement" money to do so. The Fool's new retirement area and real-money portfolios are just the thing to help you.
All other goals aside, the Drip Port stands to teach that a mountain of money is not required to grow a sizable nest egg. This is the premise on which our humble port is based. If you invest regularly (even small amounts of money, put into high-quality companies) you are all but fated to grow wealth over the years.

Regarding Drip Port as we roll into 2000, I believe in Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), and Mellon Financial (NYSE: MEL) as much as -- or more than -- I have ever believed in them. All three companies are poised to continue to create long-term shareholder value.

Intel has risen nearly 43% this year, crushing the S&P 500 and putting up a respectable return against the soaring Nasdaq (up over 80%) while more than half the stocks on the Nasdaq have actually declined. Despite persistent concerns about competition, Intel continues to dominate its industry and there is no sign of this ending.

Johnson & Johnson has gained 11% this year before dividends, which is a good return compared to peers Pfizer (NYSE: PFE), Merck (NYSE: MRK), and most other stocks in the industry, because despite strong fundamentals, the industry's stocks had a negative year. Pfizer is down over 20% this year, and Merck has fallen, too. As 1999 ends, there are concerns that healthcare will be a major topic in the Election 2000 campaign. There is floating uncertainty about the desired policies of our next president in regard to drugs. These concerns are probably overblown.

Finally, before dividends, Mellon Financial is about flat this year, down half a buck from last December 31. The financial industry has been weighed down with interest rate concerns -- a nebulous, grinding shadow this year. Mellon continues to pay us a decent dividend yield, and we recognize that financial stocks are more sensitive to economics, in general, and therefore these stocks often move in waves depending on the economy. This year, Mellon tread water and we invested in it steadily.

In summary, my prognosis for all three of our active investments' businesses in 2000 is only favorable. What the stock market does is another matter, but we don't invest in the "stock market." We invest in businesses! To discuss our companies, please visit the Drip Companies message board linked below.

Fool on...

Drip Portfolio

12/29/99 Closing Numbers
Ticker Company Dly Pr Chg Price
CPBCAMPBELL SOUP1/16$39.13
INTCINTEL CORP7/8$83.88
JNJJOHNSON & JOHNSON-3$92.44
MELMELLON FINANCIAL CORP5/8$33.75

  Day Week Month Year
To Date
Since
7/28/97
Annualized
Drip .09% -.30% -2.01% 14.79% 30.55% 11.63%
S&P 500 .40% .35% 5.36% 19.06% 55.89% 20.11%
S&P 500(DA) .40% .35% 5.36% 19.63% 58.51% 20.94%
S&P 500(DCA) n/a n/a n/a n/a 31.11% 11.83%
NASDAQ 1.75% 1.81% 21.14% 84.32% 157.49% 47.75%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
9/8/9722.3909INTC44.603$83.8888.05%
11/14/9711.292JNJ80.007$92.4415.54%
11/5/9828.3741MEL34.416$33.75-1.93%
4/13/988.174CPB54.586$39.13-28.32%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
9/8/9722.3909INTC$998.70$1,878.04$879.34
11/14/9711.292JNJ$903.44$1,043.80$140.37
11/5/9828.3741MEL$976.51$957.63($18.89)
4/13/988.174CPB$446.18$319.81($126.37)
  Cash: $24.32  
  Total: $4,223.59  


Key
• S&P 500 (DA) = dividend adjusted. Dividends have been added to the total return of the index.

Note
Drip Port launched with $500 on July 28, 1997, adds $100 to invest every month, and the goal is to own $150,000 in stock by August of the year 2017. Due to the slow nature of dollar-cost-averaging and our relatively significant starting costs, we do not expect to seriously challenge the S&P 500 for the first three to five years as we build an investment base. The long-term advantages of dollar-cost-averaging still overcome the short-term disadvantages, however. Final note: our investment in Campbell Soup is frozen due to fees instituted in its investment plan. Click here for a history of all Drip Port transactions.