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Investing/Strategies / Drip Investing - The Basics


Subject:  Re: How Do You Know When to Stop?? Date:  9/5/2001  1:33 AM
Author:  myadidas Number:  20442 of 27843

You may want to sit down and sketch out a investment plan or strategy for your drips-- your time horizon, what your overall goal from having drips will be, how many you want in all, which sectors you want represented in your drip companies, which companies within those sectors, etc.

There are a couple of ways to determine how many drips you should have in all. You may want to base the number of drips you have on how much money you can send to them per month--for me I want to be able to send money to each one of my drips every month.

You may want to base your total number of drips on how many you can keep up with regularly and stay informed about--if I had 15 drips, I wouldn't be able to keep tabs on each company regularly, which could cause problems if one of the companies I invested in starts to veer off the track but I didn't find out about it until later. As MC Hammer would say, 'if you can't watch everybody, watch out.' Sorry, I had to throw that in.

One you've settled on the total number of drips you want in your portfolio and how you want to allocate that number of drips among different sectors, it'll be a lot easier to determine if you're going to be overweighted in a particular sector, and it'll narrow down any future companies you may be considering. I noticed you had three pharmaceutical companies (ABT,JNJ,PFE) and two food/beverage companies in your current list (PEP,KO)--after deciding how to allocate your drips, you may decide that you only need one food/beverage company instead of two, or that you may only want two pharmaceutical companies instead of three.

For my strategy, I decided that I wanted to have 9 drips in all to i