Birthday Bonanza, Part 8 OF 8 – Summing It All Up!

Good evening, all.

This is the final post in my series outlining how investing $1,000 can set your child up for life.

If you missed any part of this series, or just want to go over it from the beginning, click here.  All the posts are listed from the bottom up.

This last post is meant to serve as an inspiration to you.  It’s a list of real-life investments that your parents could have made that turned your birthday into a true bonanza.

Find the year that you were born, and take a look.  Where would you be today had your parents invested $1000 in the listed stock?

Best Birthday Bonanza Stocks Over the Last 50 Years

Birth Year Stock Initial Investment Total Value, July 2018
1968 Flowers Foods (NYSE: FLO) $1000 $1,250,000
1969 Town Centre Securities (LON: TOWN) $1000 $1,100,000
1970 Walmart (NYSE: WMT) $1000 $11,000,000
1971 Intel (NASDAQ: INTC) $1000 $1,000,000
1972 Southwest Airlines (NYSE: LUV) $1000 $3,000,000
1973 Walgreens (NASDAQ: WBA) $1000 $700,000
1974 Comcast (NASDAQ: CMCSA) $1000 $4,500,000
1975 TD Bank (NYSE: TD) $1000 $400,000
1976 Boeing (NYSE: BA) $1000 $1,300,000
1977 Applied Materials (NASDAQ: AMAT) $1000 $5,000,000
1978 Johnson & Johnson (NYSE: JNJ) $1000 $200,000
1979 Eaton Vance (NYSE: EV) $1000 $200,000
1980 Kellogg (NYSE: K) $1000 $95,600
1981 Home Depot (NYSE: HD) $1000 $8,377,680
1982 Bemis (NYSE: BMS) $1000 $2,000,000
1983 M & T Bank (NYSE: MTB) $1000 $3,100,000
1984 United Healthcare (NYSE: UNH) $1000 $2,153,536
1985 McDonald’s (NYSE: MCD) $1000 $108,000
1986 Microsoft (NASDAQ: MSFT) $1000 $1,316,158
1987 Nike (NYSE: NKE) $1000 $1,529,800
1988 Dell Computer (NYSE: DVMT) $1000 $157,000
1989 Hasbro (NASDAQ: HAS) $1000 $31,481
1990 Cisco (NASDAQ: CSCO) $1000 $440,000
1991 Qualcomm (NASDAQ: QCOM) $1000 $125,300
1992 Starbucks (NASDAQ: SBUX) $1000 $950,000
1993 Infosys (NYSE: INFY) $1000 $1,600,000
1994 Capita (LON: CPI) $1000 $50,000
1995 Monster Beverage (NASDAQ: MNST) $1000 $435,018
1996 Yahoo (NASDAQ: AABA) $1000 $60,000
1997 Amazon (NASDAQ: AMZN) $1000 $550,000
1998 eBay (NASDAQ: EBAY) $1000 $180,000
1999 Keurig Green Mountain (no longer publicly traded) $1000 $500,000
2000 Nvidia (NASDAQ: NVDA) $1000 $103,700
2001 Gilead Sciences (NASDAQ: GILD) $1000 $46,140
2002 Activision Blizzard (NASDAQ: ATVI) $1000 $22,000
2003 Marvel Entertainment (acquired by Disney, no longer publicly traded) $1000 18,926
2004 Booking Holdings Inc (NASDAQ: BKNG; formerly Priceline, NASDAQ: PCLN) $1000 $79,787
2005 Intuitive Surgical (NASDAQ: ISRG) $1000 $31,260
2006 Netflix (NASDAQ: NFLX) $1000 $89,400
2007 Chipotle (NYSE: CMG) $1000 $8,000
2008 Panera Bread (no longer publicly traded) $1000 $9,000
2009 Pharmacyclics (no longer publicly traded) $1000 $172,000
2010 Netflix (NASDAQ: NFLX) $1000 $43,837

You can do this for your child.

Study this series.  Read my guide, The Stock Market is For Everyone.  You can also reach out to me for assistance.

However you do it – please do it.

Financial freedom is the ultimate gift.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

 

 

Advertisements

Birthday Bonanza, Part 3 of 8

Hi, everyone!  As promised, tonight I’m going to discuss how to go about investing $1000 in the stock market for your child.

This is going to be a lot of information, so you may need to read it a few times.  That’s a good thing!  I read many pieces more than once and find that each time, I tend to learn something more.

So without further ado, here goes!

What should I invest in?

If you are looking to invest $1000 on behalf of your child , my recommendation would be to invest that money in one individual stock.

At this point your child is a newborn, or not much older.  Your goal over the next 18 years is to try and grow this investment as much as possible.

Mutual funds will not give you the potential returns that an individual stock will.

What kind of company should I look for?

There is nothing wrong with buying shares of Coca-Cola (NYSE: KO), Procter & Gamble (NYSE: PG), or Cisco Systems (NASDAQ: CSCO).  These are all members of the Dow Jones Industrial Average, and very stable companies.

When selecting a company to invest in for your child, however, I would look toward the future.

To maximize your return, you need to invest in growth – and I mean hyper growth.

Growth stocks tend to carry more risk.  But they also carry a greater return.

What are some characteristics of a growth company?

Here is a list of characteristics you should look for in a potential investment:

1. A company that is a disruptor.

A disruptor is a company that is changing the way things in a particular industry are being done.

Examples include Amazon (NASDAQ: AMZN), which disrupted retail, and Netflix (NASDAQ: NFLX), which disrupted TV.

2. A company that is a leader in an investment theme that has significant upside.

An example here would be a company like Nvidia (NASDAQ: NVDA), which makes general processing units (GPUs) for gamers.  This is a very fast-growing industry – and they have close to 80% of the GPU market.  Nvidia is also a leader in super-hot themes like self-driving cars and artificial intelligence (AI).  The company’s dominance in these two areas has been a major catalyst for the increase in its share price from $26 to $250 over the past five years.

3. A visionary leader who has the foresight to see new business opportunities before others.

Take Netflix CEO Reed Hastings, who made the decision to start streaming content in 2007.

At the time, streaming video wasn’t on anybody’s radar.

That’s what’s great about investing in companies with innovative leaders.  They have the ability to see, and create, the future that they envision, before anyone else can see it.

4. A company that has a high P/E (price/earnings) ratio and/or is labeled as overvalued in the media.

This goes against what most TV and newsletter pundits will tell you!

However…companies that are disruptive are game-changers.  Game-changers tend to have high valuations.  In other words, they are usually considered expensive by Wall Street.

Don’t let that keep you from buying shares in game-changing companies!

These are the companies whose stock price can go up 10, 20 or 30 times over an 18-year period – resulting, of course, in your $1000 investment going up as well!

What price should I pay?

Try not to quibble about the price.

We all want to own shares at the lowest possible price, but sometimes that is difficult to do.

I’ll give you a couple of real-life examples:

A few years ago, I purchased shares of Nvidia at $68. It had run up from $16 over the previous five years, and was already up four times in value.  To this date, the stock has continued to go up.  It has not come close to $68 again.

If I had waited for the price to go back down, I would either a) still be waiting to this day, or b) would have eventually bought the shares for a higher price.

Another stock I invested in was Splunk (NASDAQ: SPLK).  I purchased shares of Splunk at $68. The price dropped to about $56 over the next two to three months.  Then it proceeded to go to $120 per share!

Buy when you have the money.  Don’t try to “time” your investment.

When should I sell?

In a word…NEVER!

The whole purpose of this series is to encourage parents to purchase stock for their children at the time they are born, or soon after, in order to build wealth by their young adulthood.  For this reason, you should not remotely consider selling your investment for the next 18 years.

The reason why doing this is so powerful is that the stock market, over the last 100 years, has had an upward bias.  The amount of compounding that can take place over 18 years is significant.  (Remember…$1000 invested in Amazon back in 2001 would be worth $116,000 today.)

Once you invest your $1000, do absolutely nothing but be a spectator for the next 18 years.

More to come in the next segment!  For now, read and study this post.  Develop a short list of stocks that fit this profile,  Later this week, we’ll delve into how and where to open an investment account for your child.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)