Baby AAI is only crawling and has little cares in the world besides food, playing and his parents. However he’s got a portfolio that’s compounding for him already. Here’s a look at the first stocks I purchased and how I expect that portfolio to perform until his 18th birthday.
I funded Baby AAI’s account with an initial $7500 and have been contributing $100/week since 02/27/17, so 35 weeks. That’s a total of $11,000 in contributions.
You can see the stocks I have purchased so far are Carters (CRI), Hanes (HBI), Disney (DIS) and Pepsi (PEP).
Depending on how successful we are with the stocks that have already been purchased will determine whether we go on to buy any more in the near future or not. Of course, I would love to make as much money for Baby AAI as possible, as this could provide him with a great life, in terms of his financial situation anyway. Those who have already invested in different stocks within the stock market will know that their prices can increase or decrease at any given time, but this is a risk that you must be willing to take.
If our journey is successful, I think I may decide to invest in a Henkel Aktie (Henkel Share) in the hopes that this too can increase the ROI that I have already earned in my portfolio. I’ve heard it has great profits, so this shouldn’t be too hard to achieve. But, we will be playing it by ear for now at least.
This is a very short time to start looking at gains and losses. The account is currently valued at $11,105.22. That’s just a 1% increase. However, this portfolio has a long time to compound, all shares are currently turned on to DRIP. You can see I’ve already been able to purchase fractional shares by DRIPing into CRI, DIS and HBI.
So how do I expect this portfolio to perform. Well I did the math for you, and I’m hoping to achieve a 7% growth rate which will put the balance right at $200,000 by the time he’s 18. That’s by doing nothing else but contributing $100/mo and letting the power of compounding work its magic. I used a simplified actuarial formula assuming $7500 contributed right away and $5200 ($100/month) contributed at the end of each year.
Here’s a graph of what the value should be at the end of the year, of course the stock market has large swings up and down so this is in a perfect world of 7% compounding each year.
So basically, by the end of the first year, February 27, 2018, the portfolio should be valued at $13,225.00. My total contributions will be just over $100,000. You will notice that it takes a little over 12 years to reach this $100,000 number and less than 6 year later it doubles.
It will be fun to watch this portfolio grow! What do you think?