The Weekly Investment

Dividend Investing


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Mutual Funds Purchase

20120530_182446By the year 2000 I had invested a total of $4000.00 into my Roth IRA. My Conexant stock value dropped from $2000.00 to hundreds of dollars but I was relieved to see that my portfolio value had returned to its original amount due to the immediate growth of recently purchased P&G stock. I knew that I would not be able to invest for about 1.5 to 2 years because I planned to go back to school in 2001 and would no longer be working full time.

I returned to school in January of 2001. I had a small amount of money in savings that I was living on during my time spent in school. I worked a few hours a week at a local deli and went to school full time so I did not add anything to my Roth IRA in 2001. Fortunately I was not in any debt.

By the summer of 2002 I was 28 years old and would soon graduate. I used most but not all of my savings so I was excited to obtain a new job in July. My bills were low and I did not have any debt so I immediately began saving my earnings. I planned to restart investing as soon as possible.

Even though I believed in investing my knowledge and understanding were limited. My knowledge was limited to one simple task:  adding the annual contribution limit to my Roth IRA so it would grow over time and create a large next egg by the time I was 65. Although good advice that I heard repeated over and over and took to heart, I thought that this method, as well as annual 401K contributions, were the only ways to invest.

Over the next couple of years I followed some advice that I believe to have hindered my investment’s growth. For example, I decided to forgo investing in single stocks and instead invest in good growth stock mutual funds. I could personally relate to this advice because of my experience with Conexant. After purchasing another $2000.00 of P&G stock in 2003 I decided to never buy a single stock again.  Instead of purchasing single stocks I bought and added to three separate mutual funds from 2002 to 2008. Because of my belief system I bought and forgot about the mutual funds until the next year when I could add the next Roth contribution limit. I never checked the account statements that recorded the passive income I received in the form of distributions and dividends earned. The mutual funds I purchased were Fidelity Freedom 2020, Fidelity Balanced, and Fidelity Canada.

I also started to believe at this point in time that owning a house would give me more return than investing in the stock market. This decision may have been influenced by the soaring housing prices during that time, which, in 2006, was just before the housing bubble burst.  Witnessing the minimal growth of my own Roth IRA I decided to continue to only contribute the annual Roth limit, steer clear of purchasing single stocks, and save the rest of my income for a house.


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Conexant and P&G

20120530_182429I opened my Roth IRA on November 8, 1999 and immediately mailed a check for $2000.00 to Fidelity. Aware that I had opened a new account, I took advice from someone I knew who suggested buying a promising technical stock by the name of Conexant because it was quickly growing in value.

Once the funds were available, I bought 32 shares of Conexant stock at $62.50 per share. The value of the stock quickly rose, I checked my Fidelity account on a daily basis, watching it double, increasing to $4000.00. I was pleasantly surprised to witness my new Roth IRA immediately double.   I did not plan to purchase additional shares because the limit for a Roth at that time was $2000.00 annually.  Believing that investing was easy due to the seemingly easy growth filled me with contentment…but only for a short time.

Unfortunately Conexant’s stock value fell drastically a couple of months later. My investment decreased as fast as it increased and I learned immediately as a beginner that one’s money can quickly vaporize in the stock market. The stock’s value plummeted and I was looking at a loss. By the early 2000’s the stock’s value was in the hundreds of dollars. I lost almost all the money I put into the stock. I never sold Conexant but held on and watched it dip into cents per share as well as branching into two new companies, Mindspeed Technologies and Skyworks.

This was a learning experience and I was relieved that it was only $2000.00. I hoped I could recoup the lost money by the many years of investing that I had ahead of me.  Shortly after opening my Roth someone suggested buying stock in P&G since it’s value dipped to near $50.00 per share.  Because it was a new year I was able to invest another $2000.00 into my Roth. Undeterred, I mailed a second check to Fidelity and bought about 38 shares of P&G. Not long after, I watched the value of my minuscule portfolio return to normal as the value of the P&G stock rose, bringing it near $4000.00, my original investment amount. I was happy to break even and planned to continue to invest in the years to come.


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Investment Beginning

I began investing in 1999 when I was 26 years old and worked for a temporary agency.

During that time I often listened to a financial radio program hosted by Bruce Williams who consistently recommended opening a new form of IRA called a Roth IRA because of its tax free benefits. I decided to open an account.

The maximum annual contribution in 1999 was $2000.00. I saved and readied the maximum amount for investing with a nearby broker.  The process was very exciting: planning, selecting a broker, calling, making an appointment, and leaving work to go to the appointment. A moment in time on a cool autumn afternoon remembered to this day.

I was looking forward to opening my Roth IRA. I believed it was a wise decision because I was starting at an early age which would give the investment many years to grow.  Surprisingly, after being seated and speaking with the broker, I quickly grew uncomfortable towards the idea of having someone else involved with my investments plus paying them a fee. The question bore down on me, “Why is a middleman necessary?” I was under the impression that in order to invest one must go through a broker.

Ironically, I was working temporarily at Fidelity Investments. Because of my apprehension during the appointment I began to consider other ways to open an IRA. Knowing little about investing basics, I relied upon my gut instinct, suspecting that Fidelity might possibly provide a more suitable service. This hope alleviated the acute unease that I felt and I told the broker I would forgo opening an account. Later, after a short amount of research, I confirmed that the correct decision had been made. I discovered that investing with Fidelity would enable me to deposit my money directly into my account and manage solely the decisions and transactions of the account.

Having direct control over my future investments, with no middleman, was the best decision for me. I believe my intuition served me well. Looking back, I recall the broker suggested that I start my new account with an investment in a small airline company. The recommended company shut down in 2012. It is understandable that this is the risk one takes when investing but I preferred facing the risk solely on my own.