Compounding Life

Alot of people look at investing primarily as a vehicle for making money.  I on the other hand enjoy researching companies and finding stocks to buy its an interesting activity that also has the potential for financial reward. Having a passionate interest in stocks and companies is key to investing in my opinion. If you don’t posses that then you are probably better off buying an index fund or sticking your money in a safe interest earning account.  Buying something on a tip from a friend or based on market trends to make some easy money is like walking into a casino. You have no knowledge about where your money is really going, you are just interested in turning a profit.  Furthermore without this passionate interest I feel that you will be less likely to learn anything from investing mistakes and hence you will be condemed to repeat them.

My interest in companies and the market is the key motivator behind my investments. The financial pay off is almost secondary but I won’t lie making money is part of the game.  I don’t invest to lose money  However there are some investments I make purely because I want to own a small piece of certain companies . I like being somewhere and seeing there products or signs and thinking “I own a little chunk of that”.  So the point of this post is to describe how I currently buy little pieces of companies just for the sake of having a position and not nessecarily for financial reward.

Currently I use a Sharebuilder account for that.  I mention them not as a promotion but to describe how I use them because their service is somewhat unique.  Primarily with scheduled investments they only charge a $4 commision, you can invest an even dollar amount once a week and you can get fractional shares. 

Let’s take MVL (Marvel Entertainment) as an example. When I first saw that Marvel was publicly traded I thought that it would be really cool to own a piece of the comic book and movie industry. It spoke to the little kid in me. However I know little about those industries. I know very little about Marvel as a company and even after doing some research I might find it does not meet my criteria for buying stocks. But it is still a good company and the fact remains that I want to own it

That is where sharebuilder comes in.  A basic sharebuilder account is free and with the right promo code they will give you $50 4-6 weeks after your first transaction. So you open a free account make one purchase and you get $50, sweet. On top of that for the first month you can try their premium subscription free of charge which gives you 6 free scheduled investments, even better. To top it off you can schedule the premium trial to end at the end of the month so you don’t have to worry about forgetting to end the trial and then getting charged the re-occuring monthly fee. 

For the cost of eating out one night I can buy a share or two of Marvel paying a very low or in the case of a new account free comission and relish in the thought that I own part of a comic book company.

For my normal larger more researched investments I use a full featured online broker with standard comissions and real time trades. I use Sharebuilder to satisfy my desire to own little pieces of America that don’t always satsify my standard investing criteria. 

This is by no means a recomendation to follow my lead.  I am sure some people might think that buying a stock just for the sake of owning that company even in tiny positions is a bad idea. These are all personal preferences and you should always think for yourself when looking at any investment option regardless of the dollar amount.

A few other things worth noting about Sharebuilder:

1. You can setup dividend re-investment (I believe its turned on by default).

2. Scheduled investments happen every Tuesday morning and must be scheduled by the Monday before at 5pm. So you the price you pay for share is not known when you schedule the purchase.

3. Sharebuilder sells fractional shares. So if a stock you want to own is a little out of your price range, for example a Berkshire Hathaway (BRK.B) B share you can purchase a fraction of this share and add to your position over time eventually getting an entire share.