The Franklin Utility Fund.

On Black Monday, October 19, 1987, I was enrolled in an investment class at the University of San Diego and I was able to witness the stock market correction from the safety of a classroom.  It was a tremendous learning experience to examine and review the correction in real time, especially since I didn’t have any money to invest.

A week after the crash I met with a broker from Dean Witter Reynolds to help me set up my first investment – The Franklin Utility Fund.  We discussed the correction, mutual funds, and long-term goals.  After an hour I handed him a check for $125 and established a monthly investment program of $25.  He made $5 in gross commissions ($1.40 net) for his efforts.

I was finally an investor and could hardly wait for my monthly contributions to credit my fund, so I could buy more shares.  I didn’t care if the market was up, down or sideways.  In fact, on most days I had no idea what the market was doing.

Two years later I entered the investment business and transferred the fund to my new firm.  I owned it for a few more years before I sold it to buy more growth-oriented funds and individual stocks. Owning the Franklin Utility fund taught me a lot about investing and it was the seed that sprouted my current portfolio. If I had held the Franklin Utility fund from 11/1/1987 to 2/28/18 my original investment would’ve grown to $41,233, a gain of 1,082%!

Here’s a few thoughts about my initial purchase.

  • I’m forever thankful for the broker at Dean Witter who educated me about my investment choices and treated me with respect. He was instrumental in my career choice.
  • My college professor and the broker were extremely calm during the correction. Their tranquil demeanor has been a reminder that markets rise, fall and recover.
  • The amount of money you save will have a larger impact on your net worth than will the daily gyrations in the stock market.
  • Small beginnings can have big endings. A small amount of money invested monthly will grow, especially if you start at a young age.
  • A boring investment can pay huge dividends. Utility stocks aren’t exciting, but they’ve performed well over the past 31 years and then some.

Successful investing requires patience, discipline, and courage. Establishing a dollar cost averaging program will help you put these traits to practice so you can take advantage of the long-term trend of the stock market.

Great things are done by a series of small things brought together. Vincent Van Gogh

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm in Austin, TX.  For more information please visit www.parrottwealth.com.

3/29/2018

Note:  Past performance is not a guarantee of future returns.  Your returns may differ than those posted in this blog and investments aren’t guaranteed.

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