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Pocket Change Portfolio – Part I

May 17, 2008 Leave a comment

I started my Pocket Change Portfolio 2002, with only $150 of saved up pocket change. At that time, I was working as a server in a restaurant, so I’d end up with change from tips every night. It was a better opportunity than my current situation of having to spend money to get pocket change.

In 2003, I made my first stock purchase after a couple more deposits totaling $385. There were a couple factors I used to make my decision. First, the companies I would purchase needed to be big and stable. Since I would not be trading regularly, as commissions would kill my little stash of money, I needed a company that I could just let sit around without having to worry about its daily ups and downs (Now, several years later I don’t think that’s possible anymore). Second, the company had to pay a good dividend. The bigger the yield the better, because it was the only way to provide regular growth using free dividend reinvestment, in combination with whatever capital I could scrounge together through pocket change.

After a lot of research, my first purchase was Allied Capital Corporation (NYSE Ticker: ALD). ALD first came on my radar after reading several websites and also in Beating the Street by Peter Lynch. Since the company was founded in the 60’s it has provided a steady annual yield of around 10%. It fulfilled my two requirements, and has done well for the portfolio over the past 5 years.

Disclaimer: I am not a professional investor or anything of the sort, please do your due diligence and research your own stock purchases before deciding if any company I mention is right for your portfolio.