<THE DRIP PORTFOLIO>
A Drip Diary
An Investor is Born
by Brian Graney (TMFPanic)
ALEXANDRIA, VA (July 8, 1999) --
Last Friday was a day I will remember for a long time. No, I didn't run into Bill Clinton at the bar down the street. Nor did I come home to be greeted by Ed McMahon and a fat check. Instead, I received my first share of Intel Corp. (Nasdaq: INTC) in the mail and joined the ranks of the company's thousands of shareholders.
As you are well aware, diary, Intel is my very first Drip investment. In fact, outside of 401(k) contributions, it represents my first foray into the world of stocks. With a certain sense of pride (but by no means haughtiness), I can honestly think of myself now as an investor, even though I only own one share in a single company. That situation will change over time, I'm sure. But as a new investor, I think having the proper investing mindset matters most right now, not the size of the investment portfolio.
Coming to an investment decision was a slow process. I started to familiarize myself with Intel's business over a year ago, when I first started working at the Fool. I was attracted to the company's dominant position in its industry, its stellar track record for building shareholder value over the past decade, its manufacturing efficiency and managerial know-how, and its bright future in a world ever more dependent on computers. In April, after months of study and reflection, I determined on my own that the quality of the business and the stock price were attractive enough to justify an initial investment. Although it was a long time coming, the decision to invest was ultimately simpler than I thought it would be.
Next, I had to figure out how to acquire my first share, since Intel does not offer a direct stock purchase (DSP) plan. Should I open a discount brokerage account, or should I contact a Drip enrollment service such as First Share (www.firstshare.com), National Association of Investors Corp. (www.better-investing.org), or Temper of the Times (www.moneypaper.com)? Decisions, decisions.
My goal was to acquire my Intel share through the least expensive means possible. Since I only wanted to buy Intel (and only one share at that), I ruled out tying up a lot of money by opening a discount brokerage account. The Drip enrollment services offered a cheaper solution, but wasn't there some other way to lower expenses even further? Of course! My friend Jeff is an Intel Dripper. Maybe I can get my first share from him, I thought to myself.
After talking it over with Jeff, we agreed that he would transfer one of the shares in his Drip to me, which most, if not all, companies allow their Drippers to do free of charge. Jeff simply notified the transfer agent of his intentions and included my personal information in his next correspondence. The hardest part was walking to Jeff's bank down the street to get the appropriate (and required) medallion stamp for the transfer.
Jeff sent in the paperwork and on Friday the transferred share showed up in my mailbox. When Jeff gets back from France, I'll give him the money he will need to replace the share he transferred to me in his optional cash purchase (OCP) next month. Intel's selling price on the date it buys shares for those making OCPs will become the cost basis of my first share. Then I will thank Jeff, maybe treat him to dinner, and promise to stop making so much fun of his bad haircut.
I've already called Intel's transfer agent and requested a brochure for setting up my Drip account, which should arrive any day now. After filling out the form and sending it back, I should be able to start making my own monthly OCPs pretty soon.
All in all, I must tell you, diary, that the whole Dripping process so far has been very simple. I'm amazed that more investors, especially new ones, don't take advantage of it. There is no broker to call, no huge monetary or time commitment to make, and no hassle from anyone. And the financial reward that can be reaped by making regular stock purchases in a market-beating company over long stretches of time are well documented.
That's it for now, diary. As always, thanks for listening.
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