DRIP PORTFOLIO
Drip Portfolio Celebrates Three Years

The Drip Portfolio turns three-years old today, which means it's time to evaluate its progress. It's first goal was to be worth $5,000 today. Drip Port topped it, weighing in at over $6,000. But luck was involved, and Drip Port's real goal isn't monetary at all. It's to serve as a springboard that inspires investors.

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By Jeff Fischer (TMF Jeff)
July 28, 2000

Look at the date. It's July 28, 2000. July 28! What does this mean? It means today is the Drip Portfolio's three-year anniversary!

Three years ago, we launched the Drip Portfolio with $500 in cash and no investments. It wasn't until September of that year when we purchased our first stake -- one share of Intel (Nasdaq: INTC) at a pre-split price of $94.

Now, as of Monday when Intel splits 2-for-1, we'll own 46 shares worth $3,100, with an average cost basis of about $23 per share. We also own more than $2,600 stock in two other companies, and a handful of Campbell Soup. In sum, our $500 portfolio plus $100 per month ($3,600 total) has grown to more than $6,000 in value (as of Thursday's closing prices).

Our first monetary goal set three years ago was to have a portfolio worth at least $5,000 by today. Looking back with hindsight, our $5,000 goal was too aggressive. About half of the money that we've invested the past three years has only been invested for eighteen months or less. That isn't enough time to offer much reward, typically.

But here we are, 20% above our goal thanks to good luck with our Intel investment. When we began to buy Intel at just 22 times earnings in 1997, we anticipated a P/E multiple expansion for the stock, but never to this degree (it has a P/E of 59 today). Intel's rise has driven us to our goal and beyond.

So, what was our first goal about?

We explain our goal in an old article that hasn't been touched since 1997. In a nutshell, we wanted to have at least $5,000 within three years to show that beginning to invest as soon as you have just a little money (like $100 and no debt) was better than waiting to save up $5,000 before beginning to invest by, theoretically, opening a brokerage account with your savings. If you started with $500 (as we did) and saved $100 per month (as we did), but didn't invest the savings, it would take you nearly four years to reach $5,000 in order to open your hypothetical brokerage account and start investing.

Instead, we invested our money from the start and we now have over $6,000 in only three years. If we wanted to open a brokerage account now (as our 1997 example implied), we could do so a year earlier and with more money than planned. But why would we want to open a brokerage account? Dividend Reinvestment Plans have been great to us, and we suspect that they will only get better as our dividends grow. Plus, outside of free Drip plans, we do not know of any way to regularly buy stock in small amounts and in fractional shares without any cost. Nada. Zip. Zilch. The big goose egg. Drips simply offer wonderful economics for small investors.

Our True Goal
So, we have exceeded our three-year monetary goal. But that's small potatoes compared to our real goal, which is a goal that we hope to accomplish on a weekly, if not daily, basis.

That goal is to help new investors get started investing with whatever they have -- $50, $100, $5,000. We're here to help long-term investors learn about low-cost investment options such as Drips and to help them begin to invest their money in some of the best companies in the world. We're here to remind all of us that saving and investing just a small amount of money every month, and reinvesting dividends, can lead to substantial value creation through the stock market.

That's something everyone should know about! Unfortunately, many people don't! 50% of American households don't yet own a single share of stock. They should. What better, more convenient investment vehicle exists? You can't buy real estate easily at $100 a month. Every family should own a little piece of American businesses like Johnson & Johnson, Intel, or Coca-Cola. Wait... I meant PepsiCo. Or both.

The Drip Community
Because our goal is to help people begin to invest, we're always elated when we hear from new investors, which happens typically every week. Thank you to all of you who have written to us to share your investing experiences. Also, thank you to everyone who has written to ask questions, or to send suggestions, or to praise fellow Fools, or to just say, "Hey, Drip investing is great. This was the only way that I could get started and it's excellent."

Your letters are the best indication that Drip Port is accomplishing its main goal. We hope that by the end of our 20-year stint here (we're only 15% through it!) we'll have heard from tens of thousands of more investors. Again, thank you to all of you who have been a part of this experience so far. We wouldn't be here if you weren't here too. Plus, you are what makes our Drip discussion boards among the very best on the entire Motley Fool.

Since we're reflecting on our past three years, if you have reflections or investing stories to share, please post them today! Did you recently start to Drip invest, as we have? What have you learned? What can you say to others who haven't invested yet? Your words can inspire new Fools to begin, while Fools who are investing already will enjoy relating to your experiences. How has your Drip Port performed? What are your favorite companies? What mistakes have you made? Post your investing story this weekend. Join or start the conversation! It's allllllll good.

Happy birthday to Drip Port, and Fool on!

- Jeff Fischer, TMF Jeff on the discussion boards.

Suggested Links:

  • Drip Port's Introduction, July 28, 1997
  • Drip Portfolio

    7/28/2000 Closing Numbers
    Ticker Company Day Chg % Chg Price
    CPBCAMPBELL SOUP1/160.24%$26.44
    INTCINTEL CORP-7 7/8-5.75%$129.13
    JNJJOHNSON & JOHNSON27/322.01%$93.69
    MELMELLON FINANCIAL CORP-1 1/8-2.92%$37.44

      Day Week Month Year
    To Date
    Since
    7/28/1997
    Annualized
    Drip -3.15% -4.75% -3.52% 26.42% 64.24% 17.96%
    S&P 500 -2.05% -4.07% -2.39% -3.36% 51.25% 14.77%
    S&P 500(DA) -2.05% -4.07% -2.39% -3.36% 53.87% 15.43%
    S&P 500(DCA) n/a n/a n/a n/a 23.34% 7.23%
    NASDAQ -4.66% -10.54% -7.64% -9.98% 133.37% 32.60%

    Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
    9/8/199722.9909INTC45.671$129.13182.73%
    11/14/199715.019JNJ78.956$93.6918.66%
    11/5/199834.9399MEL34.051$37.449.94%
    4/13/19988.337CPB54.179$26.44-51.20%

    Trade Date # Shares Ticker Cost Value LT $ Val Ch
    9/8/199722.9909INTC$1,050.02$2,968.70$1,918.68
    11/14/199715.019JNJ$1,185.84$1,407.09$221.25
    11/5/199834.9399MEL$1,189.74$1,308.06$118.32
    4/13/19988.337CPB$451.69$220.41($231.28)
      Cash: $0.08  
      Total: $5,904.34  


    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.