My Daughter's Portfolio Milestone
In fact, if I hammered my daughter on having to put her "own" money into the account or needing to "work for it," the whole experience would likely produce unintended results. We did not set out on this journey to use investing to make other points or fulfill some disciplinary agenda. Instead, we teach, model and encourage participation in investing because we believe, in and of itself, it's the right thing to do. It's valuable knowledge and know-how too few kids get exposed to in high school, let alone elementary and middle school.
Frankly, I want my daughter to be as set as is reasonably possible when she turns 18. If I ran the country, the government would fund a custodial account with $5,000 for every child born. You would receive your first account statement at the hospital. That would be cash well spent. That's not happening anytime soon and I hardly expect an 8-year old to set the course herself. As such, if financially able, I consider it a parent's responsibility to invest for their kids.
It has only been a few months, but already I have seen several light bulbs go off in my daughter's head. The other day we drove by one of Viacom's buildings. That made her smile. She associated the property with the city she lives in and it became cool to be a shareholder for reasons that extend beyond SpongeBob and iCarly.
Again, not a big deal, but these experiences -- combined with every time she looks over my shoulder to check a quote or see her account balance -- culminate into something instructional, useful and meaningful. I'm convinced of it.
The same goes for the dividend reinvestment. When I show it to her, I am guessing my daughter will respond like many full-grown investors would. Yeah, big deal, $1.94, 0.0413 shares, you call that progress, Dad? I'll do my best to not even react. I'll just keep showing her the dividends each time they roll in.
We learn plenty of lessons as investors, but after the recognition that very little, if anything, beats dollar cost averaging and dividend reinvestment, the most important lesson might be patience. Patience with relation to the early days of dividend reinvestment.
KFT and VIAB are the two companies in the portfolio that pay a dividend. The first 10 to 15 payments, admittedly, are pretty boring. But, how many investors allow this boredom to shake them out of a mundane and methodical investment strategy in favor of something that moves faster and is "exciting?"
When I was younger, I did.